A California administrative law judge (ALJ) has recommended that the states Public Utilities Commission approve the Charter-Time Warner Cable/Brighthouse deal, with a bunch of conditions on the operation of their respective systems in the state.
The PUC still has to vote -- the decision is likened to an FCC order that must be voted to be approved -- and the decision has no legal effect by itself, but Judge Karl Bemesderfer's decision was another hurdle cleared for the deal.
The next opportunity for the PUC to vote will be its May 12 meeting.
"Weighing Charter’s commitments to increased Internet speeds, increased numbers of wireless access points, less onerous contracts, more effective competition in the enterprise space, unbundling of services, equal treatment of content providers and greater diversity in hiring, contracting and programming, all of which will be made explicit conditions of approval of the Transaction, against the increase in concentration of the market for broadband Internet access without the threat of discrimination against competing content creators, we conclude that the benefits of the Transaction outweigh its drawbacks...." the judge said.
As to the negative effects of concentration, the judge essentially said that horse has already left the barn. "To the extent that monopoly, or near-monopoly, power translates into the ability to engage in monopolistic pricing and other anti-competitive practices, existing customers of the merging cable companies already face that reality," the judge said, saying that "[t]hroughout their respective southern California footprints, the customers of Charter and TWC are effectively foreclosed from obtaining high speed broadband from other than their local provider."
Judge Bemesderfer said that the difference between Charter/TWC and the aborted Comcast/TWC deal is that unlike Comcast, Charter is not a content creator, so combining it with TWC does not present a censorship risk, though he said there was opportunity for the combined company to discriminate against online video competitors.
He conceded many of the conditions were codifying promises Charter had already made.
Among the broadband conditions are that New Charter will, within a year: 1) "increase broadband download speeds for those households in its California service territory that are currently on an all-digital platform to not less than 60 Mbps"; will within 30 months convert all California subs to digital, with that 60 Mbps broadband speed; "shall offer customers the option of acquiring their own modems and cable set-top boxes without any associated increase in the price of services"; "shall fully comply with all the terms and conditions of the Federal Communications Commission’s Open Internet Order, regardless of the outcome of any legal challenge to the Open Internet Order"; and "for a period of not less than three years from the closing of the Transaction, New Charter (a) will not adopt fees for users to use specific third-party Internet applications; (b) will not engage in zero-rating; (c) will not engage in usage-based billing; (d) will not impose data caps; and (e) will submit any Internet interconnection disputes not resolvable by good faith negotiations on a case-by-case basis"; and for a period of not less than three years from the closing of the Transaction, New Charter shall continue its settlement-free interconnection policy."
The Stop Mega Cable Coalition, a coalition of deal opponents said the conditions were too weak, and suggested the proposal did not necessarily advance the deal's prospects.
“The decision recommended by the California Administrative Law Judge to approve the transfer of licenses in Charter’s acquisition of Time Warner Cable and Bright House Networks with only weak conditions that fail to address the harms posed by this merger is disappointing, but not surprising," the group said in a statement. "After all, this is the same judge who last year put his stamp of approval on Comcast’s attempt to acquire Time Warner Cable just weeks before that deal collapsed in the face of certain rejection by the FCC. Now, it is up to the California PUC to stand up for consumers and competition by insisting on conditions that actually solve for the many harms this deal would inflict on California and consumers nationwide."