1. Monthly archive
  2. May 2015

May 2015

Zero rating: The FCC’s war on affordable broadband

[Commentary] In the world of broadband, the Federal Communications Commission would prohibit an entire classification of popular sales known as zero rating. Zero rating is best understood as a category of business practices that try to tempt consumer purchases by providing more of what consumers want at lower prices. Under zero rating, a broadband carrier may lower consumer prices in one of two ways: it can decide not to count certain data against a consumer’s monthly data cap, or it can facilitate content providers “sponsoring” their own data (i.e. paying the broadband carrier a fee so that the sponsored data do not count against the consumer’s monthly data cap). The result of either business model is that consumers are able to enjoy more data for no additional charge -- it’s a data sale!

Because the immediate benefits of zero rating are so clear, it is difficult to understand why it has become the target of such vehement opposition at the FCC and in the blogosphere. Zero-rated plans are a form of marketing, and marketing is simply one of many options competitors use to compete. Competitors often don’t like price competition – it cuts into their profits – but consumers and ultimately society benefits from it. Some companies spend money on marketing and some don’t, but it is a grand American tradition that the government stays out of that corporate decision.

[Babette Boliek is an associate professor of law at Pepperdine University School of Law]

What Periscope Reveals About US Telecom Infrastructure

[Commentary] When Periscope exploded onto the scene in April, it quickly set a new industry standard for the possibilities of video-streaming. Launched by Twitter, Periscope carries significant potential to change not only the speed and intimacy by which we interact, but to ultimately redefine the power of citizen journalism. Amplified by Spotify’s newly announced video-streaming service and the recent launch of Reddit’s own video curation service, the demand for digital video shows no signs of slowing down, leaving us with a very important question: can the current telecommunications infrastructure keep up with consumer data demand?

If the US can shell out billions of dollars to ensure its public safety agencies have 21st century wireless networks like FirstNet, surely the same can be done for its people. Because yes, in summary, we can be prepared for video-streaming en masse -- but, in reality, telecom companies are choosing not to be. The real question is why? The responsibility falls to those of us who work in these fields, who understand how these networks and systems function, to continue asking the tough questions and holding the overarching telecom industry accountable. The future of Periscope  --  and mobile app innovation at large -- may very well depend on it.

[Vienna Rye is strategist and activist in NYC]

For tech in politics, thinking beyond echo chambers

[Commentary] Listen to campaign managers, and they'll tell you that the holy grail for tech in politics is increased segmentation; tracking opinions based on demographic information and reaching people through the media they’re most likely to consume. Yet for groups and movements, the apps that serve them, and voters, the future of tech will prove to be the exact opposite.

The dichotomy isn't quite as drastic as it may sound. While increased segmentation serves a real purpose for campaigns, for groups and civic tech start-ups, those same predictions of how people will and will not react to issues, and where they receive their information, has a hard limit, where growth essentially stops. On the other hand, the political apps and websites that will find success are the ones that will place less emphasis on divisions. They will drive constant reengagement by introducing people to a wider array of issues and causes that audiences might not have been aware of, but care about. Tech in politics is so exciting. At its best, it can become a true game changer, if it is used in the right way. It can lend itself to paradigm shifts on many issues, dynamically altering the staid course that we seem to have been on for so long. Ditching divisions means that the future can be limitless.

[Bart Myers is the CEO of Countable.us, a legislative advocacy and congressional engagement app]

This start-up is helping the government keep track of social media

When Anil Chawla built a start-up that uses software to archive social media posts, he never imagined that his biggest clients would be government agencies. Chawla, a former IBM engineer, founded ArchiveSocial in 2011 to design an efficient way to store and search social media content. The Durham (NC)-based start-up recently picked up a $100,000 check from Steve Case’s Washington-based investment firm Revolution Ventures. Federal, state and local agencies have embraced the use of social media Web sites such as Facebook and Twitter to connect with citizens, but many do not have an easy way to capture all their interactions to comply with public records laws.

In many states, even deleted posts need to be recorded, but trying to access them once they are gone is virtually impossible or requires a subpoena to the company in question. That’s one problem Kristi Wyatt was trying to solve when she discovered ArchiveSocial. Wyatt is the director of communications and intergovernmental relations for the city of San Marcos (TX), which uses the company’s software. Many officials still use cumbersome manual methods to save their social media posts, she said. Chawla said the company soon realized that government was a huge untapped market. “We discovered that most agencies had gone ahead with social media without figuring out how to comply with archiving laws,” he said. Now 85 percent of the company’s business comes from a mix of federal, state and local customers. ArchiveSocial’s largest federal client is the National Archives and Records Administration.

May 26, 2015 (Senate rejects NSA compromise; Charter to Buy TWC)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for TUESDAY, MAY 26, 2015

Following the Lifeline debate? So are we at https://www.benton.org/initiatives/lifeline

SECURITY/PRIVACY
   Senate rejects compromise bill on surveillance
   Congress Pursues Deal on Phone Data Collection in Rare Talks During Recess [links to web]
   An ex-NSA chief and ACLU adviser can agree on surveillance reform. Why can't Congress? - Keith Alexander, Geoffrey Stone op-ed [links to web]
   End the NSA’s collection of phone data - Eugene Robinson op-ed [links to web]
   Senate is ‘playing chicken’ with NSA spy program, White House says [links to web]
   Pass the USA Freedom Act - Sen Lee (R-UT), Sen Sensenbrenner (R-WI) op-ed [links to web]
   Edward Snowden: Sen Rand Paul's 'Filibuster' Is a 'Sea Change' [links to web]

OWNERSHIP
   Charter Deal for Time Warner Cable Signals Shift in TV Industry
   Charter Deal With TWC More Likely to Get Approval Than Comcast
   Univision Acquires The Root [links to web]

LIFELINE
   FCC’s Wireline Competition Bureau Low-Income Broadband Pilot Program Staff Report - research
   Driving Lifeline Updates With Data - press release
   Remarks of Commissioner Clyburn at SHLB Coalition - speech
   Sen Wicker Sets Hearing on FCC Lifeline Program
   FCC Seeks Comment on Proposed Eligible Services List For the E-Rate Program [links to web]

INTERNET/BROADBAND
   USDA Announces Funding Opportunity for Distance Learning and Telemedicine Projects - press release [links to web]

NET NEUTRALITY
   FCC wants quick court decision on net neutrality
   Dish, Others Ask Court to Reject Title II Stay [links to web]
   Public Knowledge Asks DC Circuit to Keep Net Neutrality Rules in Effect During Legal Challenge - press release [links to web]
   AT&T et al challenging net neutrality order on 1st Amendment grounds [links to web]
   Broadband in Greenland: How non-neutral traffic management betters society - AEI op-ed [links to web]

TELEVISION
   FCC Grants TiVo a Pass [links to web]
   Next-Gen TV Benefits Well Worth The Cost - TVNewsCheck editorial [links to web]
   FCC Makes DBS Pay Per-Sub User Fee [links to web]
   Why network TV is collapsing, in two data sets - Vox analysis [links to web]
   The a la Carte Conundrum: How Much Would You Pay for These Channels? - Motley Fool analysis [links to web]

EMERGENCY COMMUNICATIONS
   CBO Scores Integrated Public Alert and Warning System Modernization Act - research [links to web]

CONTENT
   SBA Wants To Know How Big Data Affects Small Business [links to web]

DIVERSITY
   Are podcasts the new path to diversifying public radio? - CJR op-ed [links to web]

FCC REFORM
   ‘Phase One’ of Communications Law Rewrite Weighed Down by Net Neutrality [links to web]

POLICYMAKERS
   DC Chorus Sings Praises of FCC’s Rosenworcel

COMPANY NEWS
   AT&T hunts for 700 MHz spectrum in Kentucky, Ohio and West Virginia [links to web]

STORIES FROM ABROAD
   Russia 'will block' Google, Twitter and Facebook if they withhold blogger data
   As Facebook Sweeps Across Europe, Regulators Gird for Battle [links to web]
   Who’s the Watchdog? In Europe, the Answer Is Complicated [links to web]

back to top

SECURITY/PRIVACY

SENATE REJECTS COMPROMISE ON SURVEILLANCE
[SOURCE: Washington Post, AUTHOR: Mike DeBonis, Ellen Nakashima]
Senators left Capitol Hill May 23 without taking action to extend or replace a controversial surveillance program set to expire at the end of May, paralyzed by a debate over the proper balance between civil liberties and national security. In an after-midnight vote, the Senate turned back a House-passed bill that would end the National Security Agency’s bulk collection of private telephone records, the only legislation that offered a smooth transition ahead of a June 1 deadline. A procedural vote on the bill failed 57-42, unable to gain the 60 votes necessary to proceed. A small cadre of senators, led by Rand Paul (R-KY), then rejected a variety of short-term extensions to the current authority in a dramatic floor exchange. That led Majority Leader Mitch McConnell (R-KY) to recall senators to the Capitol a day earlier than planned, on May 31, for a rare Sunday session hours ahead of the deadline. An Obama Administration official said that because Senate did not take action, the process of winding down the surveillance program is now underway.
benton.org/headlines/senate-rejects-compromise-bill-surveillance | Washington Post | The Guardian
Share: Twitter | Facebook
back to top

OWNERSHIP

CHARTER-TIME WARNER
[SOURCE: New York Times, AUTHOR: Michael de la Merced]
Trying to succeed where Comcast failed, Charter Communications has struck a deal to buy Time Warner Cable, an acquisition that would create a powerhouse in the consolidating American cable and broadband industry. Charter plans to announce on May 26 a $55 billion deal for its larger rival and an approximately $10 billion takeover of a smaller competitor, Bright House Networks. With those deals, Charter will become a significantly stronger rival to Comcast, the giant of the cable industry, which had until last month sought to buy Time Warner Cable itself until the plan met resistance from federal antitrust regulators. Buying Time Warner Cable, as well as Bright House, will transform Charter — a small operator born in St. Louis in 1993 — into the most serious competitor to Comcast to date. The two acquisitions will approximately quadruple Charter’s customer base to about 24 million, compared with Comcast’s 27 million. Under the terms of its deal, Charter will pay about $195 per Time Warner Cable share in cash and stock. That is almost 14 percent higher than Time Warner Cable’s closing stock price on May 22 — and 47 percent higher than Charter’s original bid for its rival from early 2014. To help finance the deal, Charter will sell $5 billion worth of stock to Liberty Broadband, part of the telecom empire owned by the billionaire John C. Malone. Time Warner Cable operates in 29 states, from Maine to Hawaii.
benton.org/headlines/charter-deal-time-warner-cable-signals-shift-tv-industry | New York Times | WSJ | FT | FT - industry upheaval | LA Times | WashPost
Share: Twitter | Facebook
back to top


APPROVAL FROM REGULATORS?
[SOURCE: Wall Street Journal, AUTHOR: Gautham Nagesh, Joe Flint]
A Charter Communications merger with Time Warner Cable stands a better shot at regulatory approval than Comcast’s ill-fated attempt to purchase the cable giant, according to cable-industry analysts and executives. The deal must pass muster with antitrust officials and the Federal Communications Commission, who were prepared to block the Comcast-Time Warner Cable deal on the grounds the combined company would have too much power over the broadband and online video markets. “The reason Comcast-Time Warner Cable was a problem for the government was because they were going to have a dominant share of the national broadband market,” said Jonathan Chaplin, an analyst at New Street Research. One possible advantage for Charter: It doesn’t own marquee national programming assets that it could potentially leverage against other distributors, which was a concern for regulators with Comcast which purchased NBCUniversal several years ago. “The facts here are a lot more favorable to Charter than they were to Comcast,” said Former Justice Department antitrust official Gene Kimmelman, now the head of the advocacy group Public Knowledge. Despite a mood of optimism, some cable-industry observers emphasize caution.
benton.org/headlines/charter-deal-twc-more-likely-get-approval-comcast | Wall Street Journal
Share: Twitter | Facebook
back to top

LIFELINE

LOW-INCOME BROADBAND PILOT PROGRAM STAFF REPORT
[SOURCE: Federal Communications Commission, AUTHOR: ]
Participating carriers in the Federal Communications Commission’s Low-Income Broadband Pilot Program were required to collect and submit a large amount of anonymized data so that the FCC and others could use such information for their own studies and observations. The data collected during each project is being released with this Report to further enrich the public’s understanding of low-income broadband use. This Report highlights several important patterns in the data relevant to any consideration of Lifeline support for broadband:
First, many of the pilot projects provide information about Lifeline-eligible consumers’ preferences for service and their willingness to pay for services or hardware. Within the fixed service projects, in particular, patterns suggest consumers were willing to pay for speeds within the mid-range of options, though there was little interest in the highest speed tiers. For mobile service projects, when consumers were given the option between hotspot plans versus smartphone plans, the majority selected smartphone service plans.
Second, several of the pilot projects tested varying subsidy amounts or discounts offered to consumers for both the service and a device. Patterns within the data indicate that cost to consumers does have an effect on adoption and which plans they choose. In several of the projects, when given the choice among service plans, new adopters were willing to pay for broadband service, but tended to choose more modest and affordable speeds and data allowances.
Third, requiring ETCs to offer or provide digital literacy training does not appear to be an efficient or effective model for converting non-adopters to adopters. Participating consumers generally had little interest in training provided by the ETCs. This raises the question of whether other organizations specializing in digital literacy training may be more successful at such training.
Additionally, it is important to note that, by design, the pilot projects only studied broadband adoption among the subset of low-income consumers who were not current subscribers to any broadband service.
benton.org/headlines/fccs-wireline-competition-bureau-low-income-broadband-pilot-program-staff-report | Federal Communications Commission
Share: Twitter | Facebook
back to top


DRIVING LIFELINE UPDATES WITH DATA
[SOURCE: Federal Communications Commission, AUTHOR: Julie Veach]
In 2012, the Federal Communications Commission started looking ahead about gathering the data to consider Lifeline support for broadband, which has become essential to modern life. Specifically, the FCC launched the Low Income Broadband Pilot Program to study what policies might overcome the barriers to adoption of broadband by low-income households. I’m happy to say that the data are now in from these 14 varied pilots, and we’re releasing the data to the public for analysis, along with our own short report with a few immediate takeaways:
First, consumers respond well to having a choice of plans. Households have different needs for data speeds, usage amounts, service type and devices. The pilots showed low-income consumers do not all want or need the same products.
Second, while price is not the only barrier to broadband adoption, price matters.
Third, carriers aren’t necessarily the best at addressing other barriers to broadband adoption - lack of digital literacy and relevance to one's life.
The pilots have helped staff begin to understand the challenge of tackling low-income broadband adoption. For starters, there is no silver bullet. And, while the pilots were focused on different approaches for adoption, let's be clear that Lifeline is focused on ensuring services are affordable, not to solve the broadband adoption challenge. As the Commission moves forward to consider how to restructure the Lifeline program for the digital age, the pilot report will help provide useful data for the Commission and public to consider.
[Veach is the Chief of the FCC’s Wireline Competition Bureau]
benton.org/headlines/driving-lifeline-updates-data | Federal Communications Commission
Share: Twitter | Facebook
back to top


REMARKS OF COMMISSIONER CLYBURN AT SHLB COALITION
[SOURCE: Federal Communications Commission, AUTHOR: FCC Commissioner Mignon Clyburn]
What a pleasure it is for me to be able to say thank you in person for the Schools, Health and Libraries Broadband Coalition's (SHLB) advocacy on a wide range of issues, from the FCC's four universal service programs to Open Internet....We must ensure that the funding, which flows from E-rate reforms to deploy fiber and robust Wi-Fi into all of our schools and libraries, is leveraged so that every child has access to world-class education. The FCC has embraced the goal of having 100 Megabits per 1,000 students to all of our schools in the near term, and 1 Gigabit per 1,000 students to all going forward. Ambitious? Yes. Achievable? Yes, but only, with your help. I am optimistic, however, because SHLB understands that e-rate modernization was about far more than just adopting speed targets and revamping a budget. And I am optimistic, because the FCC remains focused on its objective of ensuring access to world-class digital learning tools - an objective shared by SHLB and the education community. But the FCC needs your continued feedback. Tell us how the reforms are working in practice, share any concerns you have and, of course, tell us what we are doing right, because positive feedback is welcome as well.
https://apps.fcc.gov/edocs_public/attachmatch/DOC-333628A1.pdf
Bridging the Affordability Gap (FCC Commissioner Mignon Clyburn)
benton.org/headlines/remarks-commissioner-clyburn-shlb-coalition | Federal Communications Commission | FCC Commissioner Mignon Clyburn
Share: Twitter | Facebook
back to top


SEN WICKER SETS HEARING ON FCC LIFELINE PROGRAM
[SOURCE: Multichannel News, AUTHOR: John Eggerton]
In the wake of a Government Accountability Office (GAO) report on the Federal Communications Commission's Lifeline program, Senate Communications Subcommittee Chairman Roger Wicker (R-MS) has scheduled a June 2 hearing. Lifeline is a Universal Service Fund subsidy to provide basic communications service to low-income and hard to reach Americans. The FCC is migrating the fund from support of telephone service to broadband. Chairman Wickers's office said the hearing would look at the efficiency and effectiveness of the program -- the GAO advised it to evaluate those performance goals -- and at preventing waste, fraud and abuse. Scheduled to testify are Randy May, Free State Foundation; Michael Clements, GAO; Scott Bergmann, CTIA - The Wireless Association; Commissioner Ronald A. Brisé, National Association of Regulatory Utility Commissioners (NARUC); and Jessica Gonzalez, National Hispanic Media Coalition.
benton.org/headlines/sen-wicker-sets-hearing-fcc-lifeline-program | Multichannel News
Share: Twitter | Facebook
back to top

NET NEUTRALITY

FCC WANTS QUICK COURT DECISION ON NET NEUTRALITY
[SOURCE: The Hill, AUTHOR: Mario Trujillo]
The Federal Communications Commission and those trying to kill its new network neutrality rules agree on at least one thing: The court should make quick work of the case. The FCC filed a brief urging the court not to put the agency's newly approved net neutrality rules on hold while the broader legal challenges are worked out. But the FCC agreed with another motion by Internet service providers -- like AT&T and CenturyLink -- to expedite the case, so it can be resolved as soon as possible. "Although petitioners have not met the standard for a stay, we believe that the public would be served by the Court’s expedited consideration of this case," The FCC said in a brief to the US Court of Appeals for DC. A group of companies and advocates supportive of the new Internet rules made similar arguments in their own legal filing.
   FCC wants quick court decision on net neutrality

benton.org/headlines/fcc-wants-quick-court-decision-net-neutrality | Hill, The
Share: Twitter | Facebook
back to top

POLICYMAKERS

DC CHORUS SINGS PRAISES OF FCC'S ROSENWORCEL
[SOURCE: Multichannel News, AUTHOR: John Eggerton]
Industry players, public-interest groups and prominent members of Congress weighed in May 21 on President Barack Obama's intention to renominate Jessica Rosenworcel for a second term on the Federal Communications Commission, echoing a theme of public service and passionate advocacy for her positions. Benton Foundation Executive Director Adrianne B. Furniss said, "The Federal Communications Commission is playing a crucial role in shaping our digital future. FCC Commissioner Jessica Rosenworcel understands quickly-evolving technologies and has the vision to see how these changes will impact the traditional, American values of access, equity and diversity. In her time at the FCC, Commissioner Jessica Rosenworcel has been a vocal advocate for harnessing telecommunications to build stronger schools, improve city services, and unleash more Americans' creative potential. This is critical to US competitiveness in the global economy. Commissioner Rosenworcel has also ensured our telecommunications policies honor public safety, universal access, competition and consumer protection. The Benton Foundation looks forward to continuing to work with Commissioner Rosenworcel on many issues and especially on the 'the homework gap' in which households without broadband struggle to get their children the connectivity they need to do basic schoolwork."
http://www.multichannel.com/dc-chorus-sings-praises-fcc-s-rosenworcel/39...
Benton Foundation Statement on Nomination of FCC Commissioner Rosenworcel (Benton)
benton.org/headlines/dc-chorus-sings-praises-fccs-rosenworcel | Multichannel News | Benton
Share: Twitter | Facebook
back to top

STORIES FROM ABROAD

RUSSIA 'WILL BLOCK' GOOGLE, TWITTER AND FACEBOOK IF THEY WITHHOLD BLOGGER DATA
[SOURCE: The Guardian, AUTHOR: ]
Russia’s media watchdog has written to Google, Twitter and Facebook warning them against violating Russian internet laws and a spokesman said they risked being blocked if they did not comply. Roskomnadzor said it had sent letters this week to the three US-based Internet companies asking them to comply with laws that critics of President Vladimir Putin have decried as censorship. “In our letters we regularly remind [companies] of the consequences of violating the legislation,” said Roskomnadzor spokesman Vadim Ampelonsky. He added that because of the encryption technology used by the three firms, Russia had no way of blocking specific websites and so could only bring down particular content it deemed in violation of law by blocking access to their whole services. To comply with the law the three firms must hand over data on Russian bloggers with more than 3,000 readers per day and take down websites that Roskomnadzor saw as containing calls for “unsanctioned protests and unrest”, Ampelonsky said.
benton.org/headlines/russia-will-block-google-twitter-and-facebook-if-they-withhold-blogger-data | Guardian, The | The Hill
Share: Twitter | Facebook
back to top

Congress Pursues Deal on Phone Data Collection in Rare Talks During Recess

Senior lawmakers are scrambling in rare recess negotiations to agree on a face-saving change to legislation that would rein in the National Security Agency’s dragnet of phone records, with time running out on some of the government’s domestic surveillance authority.

House Intelligence Committee Chairman Devin Nunes (R-CA) said a series of phone calls and staff meetings over the weeklong Memorial Day break should be enough to reach agreement on changes to the USA Freedom Act. Three senators need to be won over for the Senate to pass the USA Freedom Act, which has already been approved by the House and would change the post-Sept. 11 Patriot Act’s provision that the NSA has used to sweep up phone records in bulk. If negotiators accept minor changes to the House bill, it will mark a significant retreat for Senate Majority Leader Mitch McConnell (R-KY) and Senate Intelligence Committee Chairman Richard Burr (R-NC). The two men have said phone companies, which would collect the data instead of the NSA under the USA Freedom Act, are not equipped to handle the task. Even face-saving changes will be difficult.

An ex-NSA chief and ACLU adviser can agree on surveillance reform. Why can't Congress?

[Commentary] The current debate over surveillance has been divisive and polarizing. But if a constitutional law professor and an American Civil Liberties Union advisory board member can find common ground with a former director of the National Security Agency and Army general, then Congress should be able to arrive at a compromise on surveillance reform as well.

As Americans, we share these bedrock principles: that freedom, privacy, and individual liberty are fundamental American values; that a core responsibility of our government is to keep our nation and our people safe; that the collection of intelligence is essential in the modern world to protect our nation’s security; and that, at present, the trust of the American people has been eroded and needs to be reestablished with new safeguards that ensure that the agencies charged with carrying out the collection of intelligence do so in a manner that is consistent with our deepest national values. We both support taking a hard look at surveillance laws to find ways to maintain the operational effectiveness of our counterterrorism tools, while safeguarding privacy and civil liberties. With that goal in mind, we both support crafting new legislation that would restore the American people’s trust in our intelligence agencies and ensure both legitimacy and support for critical intelligence collection.

[Gen. Keith Alexander (ret.) served as the director of the National Security Agency from 2005-2014. He is currently the CEO and president of IronNet Cybersecurity Inc. Geoffrey Stone is the Edward H. Levi Distinguished Service Professor of Law at the University of Chicago and a member of the National Advisory Council of the American Civil Liberties Union.]

End the NSA’s collection of phone data

[Commentary] Once in a great while, House Republicans get it right. So let me praise them for leading a bipartisan effort to curtail the National Security Agency’s bulk collection of data on the phone calls of innocent Americans.

The USA Freedom Act, which the House passed this month by an overwhelming 338 to 88 vote, would end the NSA’s vast effort to compile phone call “metadata.” I agree with Sen Rand Paul (R-KY) that the bill passed by the House doesn’t go far enough to restore our privacy. But it is light-years better than what Senate Majority Leader Mitch McConnell (R-KY) wants, which is to allow the blanket surveillance to continue pretty much as is. This is an issue on which progressives and libertarian-minded conservatives find common ground — and shared passion. Following the 9/11 attacks, our elected officials exchanged a measure of our liberty for the promise, or the illusion, of greater security. It was a hasty and foolish bargain. President Barack Obama has promised to reform the metadata program, but he didn’t go far enough. It should just be ended. Any other secret reinterpretations of our laws must be brought to light. Kafka needs to be put back on the fiction shelf, where he belongs.

Charter Deal for Time Warner Cable Signals Shift in TV Industry

Trying to succeed where Comcast failed, Charter Communications has struck a deal to buy Time Warner Cable, an acquisition that would create a powerhouse in the consolidating American cable and broadband industry.

Charter plans to announce on May 26 a $55 billion deal for its larger rival and an approximately $10 billion takeover of a smaller competitor, Bright House Networks. With those deals, Charter will become a significantly stronger rival to Comcast, the giant of the cable industry, which had until last month sought to buy Time Warner Cable itself until the plan met resistance from federal antitrust regulators. Buying Time Warner Cable, as well as Bright House, will transform Charter — a small operator born in St. Louis in 1993 — into the most serious competitor to Comcast to date. The two acquisitions will approximately quadruple Charter’s customer base to about 24 million, compared with Comcast’s 27 million. Under the terms of its deal, Charter will pay about $195 per Time Warner Cable share in cash and stock. That is almost 14 percent higher than Time Warner Cable’s closing stock price on May 22 — and 47 percent higher than Charter’s original bid for its rival from early 2014. To help finance the deal, Charter will sell $5 billion worth of stock to Liberty Broadband, part of the telecom empire owned by the billionaire John C. Malone. Time Warner Cable operates in 29 states, from Maine to Hawaii.

Charter Deal With TWC More Likely to Get Approval Than Comcast

A Charter Communications merger with Time Warner Cable stands a better shot at regulatory approval than Comcast’s ill-fated attempt to purchase the cable giant last year, according to cable-industry analysts and executives.

The deal must pass muster with antitrust officials and the Federal Communications Commission, who were prepared to block the Comcast-Time Warner Cable deal on the grounds the combined company would have too much power over the broadband and online video markets. “The reason Comcast-Time Warner Cable was a problem for the government was because they were going to have a dominant share of the national broadband market,” said Jonathan Chaplin, an analyst at New Street Research. One possible advantage for Charter: It doesn’t own marquee national programming assets that it could potentially leverage against other distributors, which was a concern for regulators with Comcast which purchased NBCUniversal several years ago. “The facts here are a lot more favorable to Charter than they were to Comcast,” said Former Justice Department antitrust official Gene Kimmelman, now the head of the advocacy group Public Knowledge. Despite a mood of optimism, some cable-industry observers emphasize caution.

© 1994-2024 Benton Institute for Broadband & Society. All Rights Reserved.