Charter gets court OK to charge streaming video companies interconnect fees

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Charter accepted the conditions in 2016 when the FCC signed off on the company’s acquisition of Time Warner Cable and Bright House. (Charter Communications)

Charter received a favorable ruling in its effort to lift merger conditions that have prevented it from charging interconnect fees to streaming video companies like Netflix.

The U.S. Court of Appeals for the D.C. Circuit decided late last week that by not allowing Charter to charge interconnect fees to streaming video providers – something that Charter’s peers are allowed to do – the condition has caused harm to consumers by raising their cable bills.

The complaint was filed by three consumers – represented by the Competitive Enterprise Institute – who claimed they were negatively impacted by conditions imposed on Charter after its merger with Time Warner Cable and Bright House.

“To begin, the condition plainly caused New Charter to forgo revenue from edge providers. Before the merger, Time Warner, the largest broadband provider among the merging companies, raised substantial revenue from paid interconnection agreements,” the court wrote in its ruling.

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The Court said that the FCC declined to defend the interconnect fee condition on its merits.

Charter accepted the conditions in 2016 when the FCC signed off on the company’s acquisition of Time Warner Cable and Bright House. However, in a filing from June, Charter asked the FCC for early release from the conditions preventing it from implementing data caps and charging interconnect fees. The cable provider argued that online video distributors have flourished in recent years despite Charter’s peers being allowed to institute data caps and interconnection agreements.

“With no such Interconnection Condition imposed upon them, broadband providers other than Charter have voluntarily entered into interconnection agreements with OVDs in ways that have not inhibited OVD growth in any way; quite the opposite,” wrote Charter.

The FCC opened Charter’s request to public comments and several consumers and companies have argued against lifting the conditions. Roku argued in a filing that the FCC determined Charter’s expanded broadband footprint post-merger would be incentive for the cable provider to “act anti-competitively,” and that Charter’s broadband footprint has grown larger since then.

“Thus, the Commission’s prior finding that Charter will be able to act anti-competitively by imposing data caps and usage-based pricing and charging higher interconnection fees not only still holds true, but also has even greater force now,” wrote Roku.