Dish Network led a chorus of complaints against the proposed merger of Charter Communications with Time Warner Cable and Bright House Networks. In filings with the FCC, Dish, set-top maker Zoom Telephonics, Comptel, public-interest groups and others generally argued that the proposed transaction would limit competition in the cable industry, thus affecting Charter's competitors and broadband Internet users across the country.
Interestingly, AT&T -- fresh off its mega-merger with satellite TV provider DirecTV -- said that it does not oppose Charter's deals with TWC and Bright House, but the company warned of "the impact of cable consolidation and coordination on emerging competition." Specifically, AT&T noted that Liberty Broadband chief John Malone will be the single largest shareholder in the "New Charter" that would be created by the combination of Charter, TWC and Bright House. AT&T also said that TWC and Comcast both have financial interests in SportsNet New York and that the iN DEMAND partnership among Comcast, Cox, Time Warner Cable and Bright House provides pay-per-view and other types of video on-demand.
"Because cable companies have chosen not to compete against one another but face common competitors, they have an incentive to share programming with each other at reasonable rates, while using that same programming to raise their rivals' costs," AT&T said in its filing to the FCC. "AT&T has firsthand experience of this kind of exclusion. A national online distribution platform created through cable coordination could likewise pose a threat to OVD [online video distribution] development."
Meanwhile, Dish took an aggressive stance against the proposed New Charter merger, arguing that it is similar to the previously proposed combination of Comcast and TWC that the FCC eventually struck down. Dish also said that New Charter would "have an acute incentive to thwart the quality of Sling TV," which is Dish's new online video service.
Dish said New Charter "would have a substantial negative impact on the ability of Sling TV to serve its customers and impose competitive pressure on New Charter. New Charter could sufficiently degrade Sling TV's service so that the consumer would be more easily persuaded to drop the Sling TV service in favor of New Charter-provided linear video programming service."
Similarly, the public-interest groups Common Cause, Consumers Union, Public Knowledge and The Open Mic Initiative jointly argued that the combination of Charter, TWC and Bright House -- without proper oversight and conditions -- would be in a position to "detrimentally affect the programming market, or use its clout as a video distributor to impose contractual prohibitions that would inhibit online video's access to programming in ways that are less visible than the blunt instrument of data caps, Open Internet violations, and congested interconnection points."
As for Comptel, the trade group said that New Charter will have increased market power as a buyer of video programming for 17.3 million customers. "The proposed merger represents retrenchment -- not competition -- and would serve as a significant new barrier to expanded future broadband competition," Comptel said.
Although Dish and others have voiced concern about New Charter's potential position in the Internet industry, Charter has already managed to receive support for its TWC and Bright House purchases from Internet industry heavyweights like Netflix and Cogent.
But the topic of Internet competition and net neutrality wasn't the only issue raised by opponents to New Charter. For example, set-top box maker Zoom said that if the FCC approves New Charter, the combined company would continue to pose challenges to Zoom's efforts to sell its products directly to consumers. "Unlike these cable MSOs, Charter has been hostile to customer-owned cable modems," the company said in its FCC filings.
"Charter continues to impose unreasonable conditions for allowing attachment of customer-owned modems to its network. In particular, Charter insists on evaluating wireless performance on cable modems integrated with wireless routers and Charter requires such cable modems to have Wi-Fi Alliance certification. This is unrelated to the security of Charter's network and therefore violates Sections 201, 202 and 629 of the Communications Act, Section 706 of the Telecommunications Act of 1996, the public interest standard and FCC rules promulgated thereunder. In imposing requirements related to wireless local area networking, Charter inappropriately extends its reach into customers' local area networks, well beyond the permissible practice of protecting Charter's wide area network. This is a dangerous intrusion into the customer's home," Zoom said. "The extension of Charter's business practices to its newly-acquired subscribers would grievously harm Zoom's ability to sell cable modems to its primary customers, U.S. retailers which sell cable modems including Best Buy, Walmart, Micro Center, Amazon and others."
But not all of the filings on the topic to the FCC were against the merger. For example, the Free State Foundation argued in favor of the transaction. "Under the proposed merger, consumers will not lose a choice among video service providers or broadband providers. Subscribers in the markets served by any of the merging entities will have exactly the same number of choices of providers after the merger as before if it is approved," the group said.
The Free State Foundation bills itself as a non-profit, nonpartisan think tank that promotes "understanding of free market, limited government, and rule of law principles at the federal level."
The FCC remains in its initial stages of its review of Charter's deals for TWC and Bright House: The agency in in its 32nd day of its informal 180-day clock to review the merger and make a decision. Analysts have generally predicted the FCC will approve the deal.
The proposed merger among Charter, TWC and Bright House would create the nation's second-largest cable company in terms of subscribers, just behind Comcast.
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