Netflix Tosses in Support for Charter-TWC Deal

If MSO Extends ‘Settlement-Free’ Interconnection to Acquired Systems
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Netflix, a thorn in Comcast’s ultimately failed pursuit of Time Warner Cable, is extending its support to Charter Communications’ pending acquisitions of Time Warner Cable and Bright House Networks, so long as Charter intends to extend its current "settlement-free" interconnection policy to the acquired systems.

Netflix’s support (explained in this filing) came about as Charter filed a document with the FCC today tied to its proposed deals pledging to maintain its current settlement-free policy “until December 31, 2018,” holding that the “commitment will further ensure that approval of the Transaction is in the public interest.”

Netflix has reluctantly entered paid interconnection deals with Comcast, TWC, AT&T and Verizon Communications (Bright House is drafting off of the TWC-Netflix agreement), holding that they violate network neutrality rules. Under the FCC's new rules, which are being challenged by the National Cable & Telecommunications Association, the agency will review interconnection-related complaints on a case-by-case basis. Netflix has not said if it plans to file any complaints; Cogent has put the idea of lodging a complaint on the back burner as it tries to negotiate separately with ISPs.

But Netflix likes what it’s hearing from Charter.

“Charter’s endorsement of the policy as an enforceable merger condition will ensure consumers will receive the fast connection speeds they expect,” Christopher Libertelli, Netflix’s vice president of global public policy, noted, hopeful that the commitment will also apply to “New Charter,” which will include TWC and Bright House. “Accordingly, Netflix supports the proposed Charter-Time Warner Cable transaction if it incorporates the merger condition proposed by Charter.”

Charter’s filing sheds some light on its current settlement-free policy, which takes effect today (July 15) and calls on interconnecting parties to meet with or report to Charter on a “periodic basis to participate in planning network status reviews and forecasting network traffic.”

And it has some caveats.

If there’s an increase in the maximum data transfer rate into or out of Charter’s network of more than 5.9% per month over a rolling 12-month period, Charter and the interconnecting party agree to upgrade interconnection capacity within 90 days after that peak period, if it’s sustained for a time period greater than 10 days and has surpassed 70% of a circuit's port capacity, according to the policy.

Per the policy's lawyer-speak, Charter also reserves the right to change its interconnection policy before the end of 2018 to accommodate changes to its IP network (such as growth in or changes to the geographical reach of its IP network), so long as such policies do not result in payment for interconnection, as well as changes required to comply with any applicable law, or resulting from a change in law that could render the MSO’s compliance with the terms of any interconnection agreement impracticable or impossible.