Charter/BHN/TWC Foes Have New Vehicle for Opposition: Stop Mega Cable Coalition

A new coalition of companies, public interest groups and trade associations is promising Capitol Hill lobbying, consumer outreach and a host of other steps to block Charter Communications' proposed buy of Bright House Networks and Time Warner Cable. A similar Stop Mega Comcast coalition launched in 2014 in opposition to Comcast's now-dead attempt at buying TWC, and many of the same members are part of the Stop Mega Cable Coalition announced Thursday.

Stop Mega Cable members repeatedly point to the nascent over-the-top (OTT) world as potentially vulnerable to New Charter. Charter/BHN/TWC could "become a dominant force that could easily coordinate with the No. 1 company, Comcast, to harm broadband video's development," Public Knowledge CEO Gene Kimmelman said. He also said Comcast and New Charter collectively would have a stranglehold on the device interface market. With Charter and TWC routinely at the bottom of cable industry customer satisfaction surveys, "letting them get more powerful could only make things worse," said George Slover, Consumers Union senior policy counsel. Such cable industry consolidation also raises dangers about increased controls over programming, said Kevin Rupy, vice president-law and policy, USTelecom. Charter didn't comment.

A coalition that represents a broad cross section of stakeholders "potentially carries more weight [than individual parties] because at a minimum it means that parties to a merger can't say, 'This is just the usual suspects complaining,'" said antitrust lawyer Allen Grunes of The Konkurrenz Group, who assisted opponents of Comcast/TWC. "If you've got the whole ecosystem complaining, it carries more weight. Sometimes it really does take a village to stop a merger."

Stop Mega Cable members also include Cincinnati Bell, Common Cause, Dish Network, FairPoint Communications, Future of Music Coalition, Greenlining Institute, ITTA, Media Alliance, Open Technology Institute at New America, NTCA, Sports Fans Coalition, USTelecom, Writers Guild of America, East and West, and Zoom Telephonics. Stop Mega Cable has more members at its launch than Stop Mega Comcast did, Dish Deputy Counsel Jeffrey Blum said.

Kimmelman said the potential harms of Charter/BHN/TWC and of Comcast/TWC "are parallel." While New Charter and Comcast could act in parallel in their treatment of programmers or device makers, Kimmelman said, parallel concerns are not as directly severe, "which is why conditions are plausible here." Blum said: "Comcast/Time Warner was a Category 5 hurricane. Charter/Time Warner is a Category 4." Charter has argued it wouldn't have nearly the market power Comcast/TWC would have had, nor the same incentives to act, but "that's not a persuasive argument," Blum said. "That's not a demonstration the merger is within the public interest." Whether Stop Mega Comcast played a role in that deal's demise, or whether a coalition in Charter/BHN/TWC will be more effective than opponents acting individually, is hard to say, one lawyer with OTT expertise said: "FCC proceedings are like snowflakes -- no two are exactly alike. [In a coalition] you have the advantage of sending a consistent message or harmonized message. The trick is how well do you keep the coalition together as circumstances change."

Stop Mega Cable members aren't in lockstep on whether Charter/BHN/TWC could be made palatable through conditions. ITTA President Genny Morelli said it would prefer to see the deals blocked, but "we're open to consideration of conditions." Kimmelman said Charter deserves "some credit" for its data cap and interconnection commitments, but "a three-year commitment is clearly not enough. We need these other competitive concerns addressed as well." But Blum said "even the most well-intentioned conditions can be abused. Here, because the harms are so significant, if it is approved, there's no going back."

Stop Mega Cable's arguments aren't entirely new. Dish has repeatedly argued the $89.1 billion pair of deals could harm OTT (see 1601200043) and it could operate as a duopoly with Comcast (see 1511300049). Zoom has criticized its cable modem practices (see 1511240028).

While Charter/BHN/TWC has garnered some OTT support from Netflix, "over-the-top is more than just Netflix," Blum said. "I can't speak to their motivations or what they got in exchange." Even if the FCC's net neutrality rules withstand legal challenge, Blum said, "There are a lot of ways that New Charter can damage the over-the-top market."

Coalitions are becoming increasingly commonplace in FCC-related proceedings, one cable industry lawyer told us. "I've noticed more under [the tenure of FCC Chairman Tom] Wheeler than I could recall before. There must be a perception it helps," the lawyer said. How the banding together will play into Charter/BHN/TWC remains to be seen, the lawyer said: "It could help crystallize a problem for the Commission because it's not just one party saying, 'Hey, this sucks.' They don’t have to listen to six different parties coming in saying the exact same thing."