FCC approval of Charter-TWC deal expected soon with multiple conditions

FCC chairman Tom Wheeler could reportedly circulate a draft order as soon as this week approving cableco Charter Communications’ takeover of rival Time Warner Cable (TWC) with numerous conditions, many aimed at boosting competition from online video distributors (OVDs).

FCC chairman Tom Wheeler (pictured) could reportedly circulate a draft order as soon as this week approving cableco Charter Communications’ (NASDAQ:CHRTR) takeover of rival Time Warner Cable (TWC) (NYSE:TWC) with numerous conditions, many aimed at boosting competition from online video distributors (OVDs).

The draft order will be sent to four other commissioners for review, which could lead to modifications, the Wall Street Journal cited people familiar saying. Final approval could still be a few weeks away, according to one person.

In its current form, the order includes several conditions which could help to boost the development of OVDs, making them stronger competitors to cable, the report stated.

These include preventing Charter, the country’s second-largest cableco behind Comcast, from including clauses in its pay-TV contracts that restrict content providers’ ability to offer programs online or to new entrants.

Charter is also likely to have to extend its high-speed broadband network which could allow some customers to choose alternate internet services offered by telcos such as Verizon and AT&T, the report stated.

Charter has already made commitments to help convince regulators that its planned merger with TWC and smaller player Bright House Networks is in the public interest.

The Connecticut-based company has said the enlarged company, New Charter, would make significant investments in its broadband network and ensure customers get minimum speeds of 60mbps.

It has also pledged to go further than the FCC’s 2015 Open Internet Order, which bars blocking and throttling traffic and paid prioritization, by not imposing data caps or usage-based billing. It has also promised to waive interconnection fees for OVDs such as Netflix and long-haul telcos.

It has made these commitments for three years, but the commission could choose to extend them.

Charter has argued that New Charter would have no incentive to harm OVDs, programmers and multichannel video programming distributors (MVPDs) as its broadband business is more critical than its video business.

The FCC is also likely to require Charter to appoint an independent monitor to ensure it complies with the conditions, as AT&T was compelled to do to win approval for its purchase of DirecTV, the report stated.

Earlier this month, New York City cleared the Charter-TWC merger. It still needs the approval of the Department of Justice (DoJ) and California.

Charter CFO said last week that the California review is due 12 May.

The FCC is on day 173 of its 180-day review.

John Malone-backed Charter agreed to buy TWC and smaller cableco Bright House Networks for US$56bn and US$10.4bn respectively in May 2015.

The merger would create the second-largest broadband internet provider in the country with 19.4 million subscribers across portions of nearly 40 states, and the third-largest MVPD with some 17.3 million customers.