Under the Obama administration, the Federal Communications Commission approved the merger of Charter and TWC, subject to a few conditions. One of the conditions was that Charter would extend service to one million households that already have service from another provider.
This “overbuild” was designed to force competition in the broadband space, and to create choice for customers when it comes to picking a broadband provider. Force Charter onto another provider’s turf, so the thinking goes, and both Charter and the other company will have to compete or die.
But under the Trump regime, the FCC has taken a new look at the TWC-Charter merger and decided that nah, competition is overrated, choice is bad, and so has changed the conditions to remove the overbuild clause from the TWC-Charter merger.
Reuters confirmed the vote by the FCC, which overturned the rules put in place by the Obama-era FCC in May 2016. Under the new rules voted on by the FCC, Charter will still have to extend service to two million new customers. However, none of those new customers can be served by an existing broadband provider.
The change looks good on paper, because households in areas without any broadband access will now at least be able to be overcharged by big cable companies! But in reality, it’s forcing an extension of the existing cable oligopoly that sees a majority of Americans with no real choice over their internet provider. You can be sure that in rural areas that Charter expands to, no small, local provider is going to try and compete with a government-mandated rollout of Charter’s service. In effect, the FCC just handed Charter a license to go and monopolize two million more households.
It’s worth noting, however, that it was small cable companies that lobbied the hardest against the Obama-era “overbuild” rules. The American Cable Association was prominent in lobbying the FCC to change the rules, saying that the rule would have “devastating effects on the smaller broadband providers Charter will overbuild.”
The American Cable Association represents a number of smaller TV channels, cable technology companies including Comcast’s technology wing, and some smaller cable companies. Its interest in maintaining local monopolies and the status quo would appear to be significant.
There is certainly an argument to be made that the FCC’s previous rule forcing Charter into competition with other providers was overzealous. But it was at least an attempt by the previous administration to tackle the very serious issue of competition in the internet market. Obama’s FCC did its best to allow business to expand and grow — for example, by approving the TWC-Charter merger — while still trying to encourage competition by any means possible.
The vote by the FCC is just the latest in a series of moves to undo consumer-friendly actions taken by the Obama administration. The FCC’s new chairman, Ajit Pai, supported a move by Congressional lawmakers to undo an FCC rule that would force ISPs to gain customer consent before selling browsing data. Pai’s FCC is being rapidly rebranded as a technical organization with no say in consumer rights, competition or the business side of the industry. Instead, Pai — a former Verizon lawyer — is focused on the FCC’s role administering spectrum and handling technical telecoms matters.