The ACA and NTCA have filed petitions for reconsideration to the FCC, second-guessing the agency's decision to require Charter Communications (NASDAQ: CHTR) to overbuild its broadband footprint in rural markets as a condition of the Time Warner Cable and Bright House Network takeovers.
For its part, the American Cable Association fears that its small-operator constituency will be hurt if a much larger competitor like Charter is suddenly forced onto their rural turf. The ACA wonders why the FCC, which said that Charter is too big while announcing approval for the mergers, wants the MSO to get even bigger.
"The overbuild condition imposed by the FCC on Charter is stunningly bad and inexplicable government policy," said ACA President and CEO Matthew Polka, in a statement. "On the one hand, the FCC found that Charter will be too big and therefore it imposed a series of conditions to ensure it does not exercise any additional market power. At the same time, the FCC, out of the blue, is forcing Charter to get even bigger."
Speaking two weeks ago at the MoffettNathanson Media & Communications Summit, Charter President and CEO Tom Rutledge downplayed the overbuild threat to smaller cable operators.
"When I talked to the FCC, 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."
For their part, phone companies are, generally speaking, wracked with debt, short on cash, and won't be making fiber upgrades soon. Smaller MSOs, meanwhile, are in the process of making DOCSIS 3.0 and 3.1 upgrades, and offer substantially stiffer competition, in many cases.
"Why would we go where we could get killed?" Rutledge asked.
Separately, the NTCA — Rural Broadband Association filed its own petition, calling the FCC's intentions good but labeling the impact as creating "artificial competition."
The lack of consideration and coordination with other public policy efforts will lead to duplicative and wasteful efforts to reach certain locations, even as other unserved locations remain ignored altogether in frustration of the commission's stated objectives," said Rural Broadband Association CEO Shirley Bloomfield, in a statement. "The last-minute, unforeseeable imposition of this condition has the unintended potential to harm consumers."
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Update: This story was updated to correct the name of the NTCA.