Charter/TWC/BHN Not in Public Interest for California Residents as Is, Testimony Says
Charter Communications' planned buys of Bright House Networks and Time Warner Cable aren't in the public interest, based on the information Charter provided, the California Public Utilities Commission Office of Ratepayer Advocates (ORA) said in reply testimony. Groups representing minorities don’t believe approving the deals would be in the public interest because they would create one company with too much power over broadband opportunities. The CPUC received reply testimony Friday from interveners in the state-level proceeding. The next step is a public hearing Tuesday at 6 p.m. PST, presided over by an administrative law judge. No action is planned until all public comments are heard.
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Charter hasn't presented any plans to address existing voice service quality concerns, said the ORA in its reply testimony submitted Friday. Charter already has problems addressing its service quality and public safety issues within its current service territory, the testimony said, so the immediate acquisition of a larger service territory could make the service quality worse. Charter also hasn't made any specific commitment to invest resources in California, despite many issues being raised in protests of the deal, the ORA said. Charter has demonstrated failure to comply with existing Lifeline obligations and, in its joint application, didn't provide any plans to expand Lifeline beyond its current service requirements, the testimony said. Charter has "failed to provide concrete, measurable, performance-based commitments of sufficient scope and detail," the ORA said. "Therefore many of the Joint Applicant's purported benefits are currently unfounded or unlikely to occur."
In its opening testimony, Charter said the transaction would bring benefits to customers and to the state, with no "countervailing harms." New Charter will have the requisite financial, technical and managerial qualifications to provide reliable service throughout its increased footprint, it said. Benefits include providing improved voice and other nonjurisdictional services at a better value, offering more competition for enterprise customers, spurring the creation of new jobs and expanding other community benefits and initiatives, it said. Last week, the company made diversity pledges (see 1601150017).
The financial stability of New Charter seems tenuous, said Media Alliance Executive Director Tracy Rosenberg, in reply testimony also submitted Friday. The publicly released information about the financial base for the deals raises concerns about the viability of New Charter, she said. Rosenberg said it's at least worthy of further study whether the transaction “places significant broadband and cable system infrastructure at risk due to financial speculation and introduces uncertainty into the marketplace for consumers who need services they can rely upon.” The Media Alliance also is concerned that: Charter is the only cable provider subject to California's 2006 Digital Infrastructure and Video Competition Act that has refused to pay properly implemented public, educational and governmental access station fees; edge providers are vulnerable to New Charter’s increase of market concentration; home hot spots are a security risk for some populations; and three years of commitment isn't enough to protect the open Internet.
Charter/TWC/BHN isn't in the public interest because it would create a company with an “unacceptable concentration of power” over broadband connections through which Californians receive educational content, entertainment programming, government services and news and information, said Alex Nogales, on behalf of the National Hispanic Media Coalition. New Charter would control a network that passes 50 percent of all households in California, giving it broad power to choose or refuse content, he said. That market concentration likely would damage competition and lead to less choice and diversity in programming for residents, which could harm the economy, Nogales said. Charter also has a poor record of employment and contracting diversity, he said.
Approving the deals would likely cause broadband price increases, which could also lead to low-income consumers facing higher prices, Nogales said. He recommended the CPUC reject the deals completely because any potential conditions would be too challenging to track and enforce. “It is difficult to envision any conditions that could mitigate the serious and permanent harms that this concentration of market power could generate,” he said.
Charter doesn’t seem willing to submit to the CPUC’s jurisdiction, said Stephanie Chen, Greenlining Institute director-energy and telecommunications policy. If the commission approves the deal, there's a risk that -- even though TWC does appear to be willing to submit to CPUC jurisdiction -- New Charter will oppose that jurisdiction, she said. That opposition will delay and harm the commission’s ability to protect consumers, Chen said. The Greenlining Institute is a public policy, research and advocacy nonprofit organization that fights racial injustice. Charter’s testimony in the proceeding frequently doesn't address the transaction’s effect on communities of color, Chen said. And where it does, that testimony lacks a “sufficient level of detail to determine whether the proposed transaction would benefit communities of color,” she said.