One fascinating reason cable companies won’t willingly compete against each other

Recently, Charter chief executive Tom Rutledge said the company's plan is to focus on telephone companies in its overbuilding strategy, not cable companies. “When I talked to the [Federal Communications Commission], I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge said. “It’s really about overbuilding telephone companies.” Several important things are going on here, so let's unpack them one at a time.

First, Rutledge is confirming there will be no overbuilding of cable, meaning that Charter won't try to deploy new cable infrastructure in places where there's already a cable company. In effect, Charter is committing to a non-aggression pact with other cable companies. Rutledge's justification for not competing with other cable firms appears to boil down to an anticipation of more mergers and acquisitions. What Charter really wants is the flexibility to buy up other cable companies in the future, and it'll have a harder time selling those deals to government regulators if Charter has been competing with the target firms the whole time. You see, antitrust officials tend to be skeptical of acquisitions that wind up eliminating a competitor from a market. It's why they didn't bite at AT&T's effort to buy up T-Mobile back in 2011, which would have reduced the number of national wireless carriers from four to three.