Charter's Low-Cost Broadband Plans Raise Questions About Weight They'll Carry in Regulatory Review

While Charter Communications plans to roll out a low-cost home broadband plan if its buys of Bright House Networks and Time Warner Cable get FCC approval, it's unclear whether that offering moves the needle noticeably toward regulatory OK, cable merger experts tell us. The broadband offering seems to indicate the FCC might be starting to ask questions about the actual public benefits of the $89.1 billion pair of deals, with Charter maybe feeling the need to sweeten the pot, one cable attorney with no clients involved in the transaction told us. The low-cost plan appears to be a supplement to the work Charter has done upfront to mute opposition in a regulatory environment that's skeptical of major deals, another cable attorney with no clients in the proposed acquisition told us.

A company spokesman said Thursday that last week's Charter broadband announcement -- 30/4 Mbps speeds at $14.99/month (see 1512170070) -- filled in details on what the company promised in its June public interest statement when it said BHN's low-income broadband program would get a higher-speed offering and be offered across Charter's footprint within three years (see 1506250039). In a filing Thursday in docket 15-149, Charter said it worked out the terms through "extensive outreach with interested parties, including groups representing communities with low levels of broadband adoption, in order to develop a plan that meets the needs of such communities." Charter said it also looked at shortcomings in the Connect2Compete discounted Internet service program offered by EveryoneOn and ISPs. New Charter's low-cost broadband "will be the only service on the market that provides low-income households access to the Internet at speeds that exceed the FCC's new benchmark definition of an advanced telecommunications capability," Charter said.

An estimated 5.24 million households in New Charter's footprint will qualify for the low-income broadband offering due to having at least one child enrolled in the National School Lunch program and/or one person 65 or older receiving Supplemental Security Income, Charter said, saying New Charter broadband penetration among those households is likely about 56 percent now. For those existing low-income customers, the annual savings of the broadband program will range from roughly $180 to $452, it said. The company also said such benefits as higher job growth, business growth and increased earnings will likely come in rural areas New Charter serves, since additional broadband options have been associated with those improvements.

The filing is the latest in a recent stream by Charter in recent weeks elaborating on public benefits such as pricing (see here) and its peering policy (see here). When asked if Charter anticipates having to make further voluntary concessions in order to get regulatory approval, the company spokesman said it "continues to work with the FCC." The FCC didn't comment.

AT&T offered in July to roll out a low-cost broadband service as part of its planned buy of DirecTV (see 1507020047), and the FCC gave it regulatory approval later that month, with conditions including a low-cost broadband offering (see 1507240055). In the AT&T/DirecTV order, the FCC said less expensive broadband was a potential benefit of the merger, but "the public interest requires us to ensure that a bundle of video and broadband services is not the only competitive choice for low-income subscribers who may not be able to afford bundled services." Meanwhile, the California Public Utilities Commission in 2014 pointed to Comcast's administration and implementation of its low-income broadband Internet Essentials program when raising questions about that company's ill-fated attempt to buy TWC (see 1408270036).

While Charter/BHN/TWC was sometimes seen as having a far better chance than Comcast/TWC, it's also "not a slam dunk," considering comments made this fall by FCC General Counsel Jon Sallet (see 1509290024) about the weight the agency seems to be giving to increasing competition and that Charter deals don't have much to say about that, one cable lawyer told us. While Charter likely has other conditional steps it might take, it probably wouldn't go as far as overbuilding into other cable operators' footprints, the lawyer said.

Some of Charter's commitments "could serve as a model for the rest of the cable and broadband industry," Public Knowledge Senior Staff Attorney John Bergmayer said in a statement, pointing to the lack of subscriber data caps. “Similarly, Charter's effort to make it easier for low-income seniors and families with children to access broadband service has many good attributes, including fast broadband speeds. In conjunction with a modernized Lifeline program, Charter’s proposal can help the nation achieve universal affordable access.”