The Justice Department on Monday approved Charter Communication’s 65.5 billion acquisitions of Time Warner Cable and Bright House Networks.This deal will pave the way for the creation of a new cable giant, even as the value attached to traditional television depreciates.
The Federal Communications Commission and Justice Department listed conditions guiding the acquisitions meant to protect streaming video companies, as well as providing cheaper broadband services for low-income families. With the designation of broadband as a utility, regulators tacked on the restrictions to ensure that the emergence of the Charter merger will not stifle the competition.
With the acquisition of Time Warner Cable and Bright House Networks, Charter Communications will become the nation’s second largest home Internet provider, and the third largest video provider, behind Comcast which acquired DirecTV last year.
Part of the strategy to maintain competition in the online video services field is to prevent Charter from restricting what media companies make available online. Such a ban will make online services more competitive, according to the Justice Department.
The FCC is also expected to prevent Charter from charging customers more for using more data, especially since video consumes a lot of data. Adding caps or usage-based price will make users less willing to watch video online, the Justice Department reasoned.
“The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet,” Tom Wheeler, chairman of the F.C.C., said in a prepared statement. There will be an independent monitor to ensure compliance with the conditions, he added.
In the last year, the F.C.C. has also increasingly used conditions imposed on merger approvals to advance its regulatory goals. In approving the merger between AT&T and DirecTV last year, for instance, regulators required a building out of more broadband services to millions of households and the offering of cheaper broadband option for low-income homes.
Justin Venech, a Charter spokesman, said in a statement that the conditions ensured the company’s “current consumer-friendly and pro-broadband business practices,” adding that the combined entity “will be a leading competitor in the broadband and video markets.”
The approvals will have significant implications on the telecommunications, media and technology domains, with the combined company set to have greater influence over program pricing, new technologies in broadband infrastructure, and business models emerging in streaming video. Consumers have also come to rely on the Internet as a utility, but see prices increase with few options for providers.
Some consumer advocates opposed any approval of the deals, fearing that a combined entity would eliminate competition and increase prices for customers.
“Creating broadband monopoly markets raises consumer costs, kills competition, and points a gun at the heart of the news and information that democracy depends upon,” Michael Copps, a former Democratic member of the F.C.C. and a special adviser to the Common Cause public interest group, wrote in an email. “F.C.C. approval of this unnecessary merger would be an abandonment of its public interest responsibilities,” he added.