FCC signs off on Charter-Time Warner Cable deal

The Federal Communications Commission said on Friday it had voted to approve Charter Communication’s purchase of Time Warner Cable and a smaller company, advancing a deal that would create the second-largest broadband internet provider in the country.

Charter’s purchase of Time Warner Cable and smaller operator Bright House Networks is worth roughly $88 billion. It was formally approved on Thursday, according to the commission.

{mosads}Details of how the five-member commission voted on the order approving the deal with conditions floated by Chairman Tom Wheeler were not immediately made available.

However, news reports late in the week indicated that both Democratic commissioners, Mignon Clyburn and Jessica Rosenworcel, had voted for the deal with conditions attached.

Republican Commissioner Michael O’Rielly reportedly voted for the underlying deal while dissenting on the conditions. His Republican colleague, Ajit Pai, voted against approving the deal to protest the way he says Wheeler abuses the merger review process to get policy victories through conditions placed on deals.

Details of the conditions the agency will apply to Charter or the reasoning behind the approval were not available on Friday. However, Wheeler’s order proposed forbidding the company from capping the amount of data customers could use or charging them based on their data consumption. He said that those stipulations, along with another condition related to so-called interconnection agreements, would protect the market for video from being disturbed by the deal.

Those conditions could be in place for as long as seven years. It is possible the conditions could have been changed as the commissioners deliberated.

The Department of Justice is also planning to enforce conditions on the merger. Regulators in California still need to sign off on the deal and could as soon as later this month.

Charter’s CEO hailed the approval. 

“The significant benefits of these transactions are clear; greater competition, more consumer and OTT friendly broadband policies, broader access to affordable broadband, and added U.S. jobs,” said Charter CEO Tom Rutledge in a statement. “The conditions are largely extensions of the longstanding consumer friendly values and practices of our company, and based on the commitments we put forward during the review process. Charter will be a stronger competitor in the broadband and video markets, well positioned to deliver these benefits and more to consumers.”

The deal, which would create not only the second-largest broadband provider in the United States but also its third-largest cable video provider, comes as many legacy businesses look to consolidate in light of the rise of streaming video providers like Netflix.

Earlier this week, the FCC approved the purchase of Cablevision by Altice, a European firm. It signed off on AT&T’s purchase of DirecTV last year.

That merger activity has critics in Washington, who said that the Charter merger would simply create a cable market with two major players that could exert their power over the video marketplace in ways that would reduce competition.

“The best way to confront cable monopolies isn’t with inadequate and unenforceable merger conditions, but by ensuring universal and affordable access to big, open pipes, with network owners barred from discriminating against the content that flows over them,” said Craig Aaron, the president of Free Press, in a statement following reports that the deal had been approved.

“Approval of the Charter merger moves us in the opposite direction, toward an Internet and pay-TV landscape dominated by an even smaller number of cable gatekeepers.”

But another group that had been skeptical of the merger, Public Knowledge, said that although it had pushed for tougher conditions on the deal, it supported those that were approved on Friday.

“These efforts to protect consumers and emerging competition should be viewed in the context of an FCC and an Administration that is working to promote the public interest in broadband and video competition, programming diversity, and consumer choice in a number of ways,” said John Bergmayer, senior staff attorney for the group, in a statement.