Tuesday, 26/9/2017 | 6:09 UTC+0

FCC removes competition requirement from Charter-TWC merger conditions

The FCC has reworked one of the key requirements it put on Charter’s 2016 merger with Time Warner Cable and Bright House, governing where the massive cable company expands to in the coming years.

Under the original requirement, Charter had to expand its service to 2 million additional households within five years. But half of those households had to already be served by another broadband internet provider, forcing the cable giant to compete.

The commission has now voted to change that qualification. Charter will still have to reach 2 million more households within the next five years, but all 2 million will have to be households getting wired for the first time. Charter actually won’t be allowed to count areas where it’s competing.

Reuters first reported that the change had been approved. An FCC spokesperson confirmed the measure’s adoption in an email to The Verge and said the item should be publicly released soon. Charter did not immediately respond to a request for comment.

While the change is bad for competition, it isn’t bad on the whole. One of FCC chairman Ajit Pai’s core goals is to expand broadband access to rural areas that still don’t have it; and viewed in that light, changing this requirement makes a lot of sense. Instead of serving a million homes that already have broadband, Charter will end up wiring a million homes that had no high-speed options before.

The downside is that competition in the wired cable market is still embarrassingly poor in the US. Most households only have one option for wired internet provider, which gives cable companies the leeway to charge high prices for speeds slower than what are offered in other countries.

To see how far a little bit of competition can go, you can just look to the rollout of Google Fiber. Even the threat of Fiber’s expansion got AT&T and Comcast to start deploying gigabit internet. That’s likely the reason the commission, during the Obama administration, decided to force Charter into competing.

Cable companies tend to avoid competing with each other whenever possible, which is what’s caused this problem. In fact, it wasn’t strictly Charter pushing to end this requirement — Charter seemed to be trying to find a way to squirm around it. It was smaller cable companies, which complained that Charter would likely end up competing with them and possibly putting them out of business.