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Small and mid-size video-and-broadband providers confront a range of unique challenges serving consumers in rural areas. Yet the task of delivering quality service is currently dwarfed by a much larger, more ominous threat – the proposed merger of Charter Communications, Time Warner Cable, and Bright House Networks.
If approved by the Federal Communications Commission and Department of Justice, this transaction would create a video-and-broadband colossus with control over more than one-in-three pay-TV homes and nearly one-third of the market for cable broadband.
If the merger goes through, 70 to 90 percent of American homes with broadband speeds of 25 Megabits per second or greater would be customers of just two companies – New Charter and Comcast. The power disparity between this duopoly and rival companies would devastate small and new companies trying to serve customers as a “multi-channel video programming distributor,” or MVPD. That would effectively eliminate choice in the video marketplace for thousands of rural Americans.
First, by merging with Time Warner Cable and Bright House Networks, Charter would dramatically increase its bargaining power over programming fees. With greater scale, Charter will have access to lucrative volume discounts for programming. Small, rural, or new-entrant video providers would have to pay higher fees for programming, decreasing their competitiveness. That, in turn, would damage their ability to deploy broadband to their customers, including those who live outside areas where New Charter would provide broadband service. Over time, in the absence of meaningful competition, consumer choice will dwindle and New Charter will feel no pressure to pass along any savings from programming discounts to its customers.
Compounding this issue, post-merger, New Charter’s largest shareholder would continue to own major stakes in various programmers, including Starz, Discovery Communications, and Lionsgate. Through its common ownership of these assets and other must-have content providers like regional sports networks, New Charter will have even greater incentive to control the prices, terms, conditions, and availability of its programming. That will hurt small and new video competitors.
As the FCC has focused on improving rural broadband access in recent years, it has become evident that small, new-entrant video-and-broadband providers play a vital role in supporting our nation’s telecommunications infrastructure. As proposed, the merger fails to deliver meaningful public-interest benefits and will frustrate the FCC’s efforts to improve rural broadband connectivity.
To spur investment in rural networks, protect consumers’ access to choice, and allow for a truly competitive video-and-broadband market, the FCC must address the harm the merger presents. The FCC must ensure that the public-policy commitment to deliver broadband to rural America is not compromised.
Genevieve Morelli is president of the Independent Telephone & Telecommunications Alliance (ITTA). ITTA represents nine mid-size communications companies that provide wireline and wireless voice, broadband, Internet, and video services to residential and business customers in predominately rural areas across 45 states. The organization is a member of the Stop Mega Cable Coalition.