FCC eliminates Obama-era Charter merger condition

FCC eliminates Obama-era Charter merger condition
© Greg Nash

The Federal Communications Commission has voted to do away with a condition imposed on Charter Communications by the Obama administration as part of its approval of the company’s acquisition of two other cable groups, an agency spokesman confirmed on Monday.

The FCC voted last year to allow Charter to acquire Time Warner Cable and Bright House Networks on the condition that it provide broadband access to 2 million additional households and that 1 million of those homes should have access to broadband competitors.

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The FCC’s new order, approved on Friday, eliminates the requirement that Charter “overbuild” in areas where other broadband providers operate.

Reuters first reported the commission's move on Monday.

The new order is a win for the American Cable Association, which had petitioned the FCC to remove the overbuild requirement, arguing that it would harm smaller cable companies.

In a statement announcing the move Monday afternoon, FCC Chairman Ajit Pai said that the reversal would let the company focus on bringing broadband access to underserved communities.

“This condition was not and is not in the public interest, and it runs directly against the goal of promoting greater Internet access for all Americans," Pai said.

“Following our decision today, Charter Communications is still obligated to build out to two million new locations. The difference now is that the beneficiaries will be consumers currently on the wrong side of the digital divide. That’s a major difference, and one that will go a long way toward helping deliver online opportunity to all Americans.”

Charter praised the move.

"By modifying the overbuilding condition, the FCC enables Charter to more fully devote our resources and attention to building out high-speed broadband to areas without it today," the company said in a statement.

Under former Democratic Chairman Tom Wheeler, the FCC in 2016 imposed the condition on the roughly $88 billion deal in an attempt to increase competition for broadband consumers.

Current Chairman Ajit Pai, then a commissioner in the GOP minority who has generally viewed industry consolidation favorably, voted against the deal in opposition to the overbuild caveat, arguing that it would result in Charter bulldozing smaller service providers, rather than increasing competition with other giants like Comcast.

—Updated at 3:41 p.m.