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Charter Spectrum Asks FCC for Freedom to Usage Cap Its Internet Customers

Charter Communications is petitioning the Federal Communications Commission for permission to usage cap its internet customers two years before the FCC’s ban on the company imposing data caps runs out.

Charter, which does business as Spectrum, is seeking an early exit from some FCC-imposed deal conditions Charter agreed to as part of an approval of its 2016 merger with Time Warner Cable and Bright House Networks. Out of concern that Charter’s merger could harm emerging online video streaming competition, the FCC required the company to not charge fees to streaming services like Netflix and Hulu to carry video traffic to its customers and not impose data caps and usage based billing schemes that would limit online video consumption for seven years.

“New Charter’s increased broadband footprint and desire to protect its video profits will increase incentives to impose data caps and usage-based prices in order to make watching online video more expensive, and in particular more expensive than subscribing to a traditional pay-TV bundle,” the FCC concluded in its 2016 order approving the merger, with conditions. “For seven years, we prohibit New Charter from imposing data caps or charging usage-based pricing for its residential broadband service. This condition ensures that New Charter will continue Charter’s past pricing practices and protects subscribers from paying fees designed to make online video consumption more expensive leading subscribers to stick with a traditional pay-TV bundle.”

Charter last week argued that with cord-cutting at an all-time high and video streaming alternative cable and video packages flourishing, there is no reason to continue the seven-year ban on data caps, noting that many other large providers including AT&T, Cox, Altice, and Comcast are free to impose data caps of their own.

“They are able to do so because, unlike Charter, they are not subject to a condition that artificially and unilaterally restricts the packages available to their customers,” Charter argues in its filing. “The online video distribution marketplace is almost unrecognizable compared to what existed in 2016. […] Consumers have never had more online video choices.”

Charter said a sunset of the prohibition of data caps was now overdue.

“As data usage skyrockets, the [ban on data caps and usage-based billing] artificially hamstrings Charter’s ability to allocate the costs of maintaining its network in a way that is efficient and fair for all of its customers—above-average, average, and light users alike,” the company argued. “Charter should be afforded the same flexibility as other broadband providers to respond to developments in the market. In short, tremendous changes in the marketplace have rendered the [ban on data caps and usage-based billing] no longer necessary, and thus ending it in 2021 would be in the public interest.”

The FCC’s 2016 order approving the merger between Charter Communications, Time Warner Cable, and Bright House Networks, with a 7-year prohibition on data caps, was not unanimous. Separate statements from Republican Commissioners Ajit Pai and Michael O’Rielly were highly critical of most of the deal conditions the then-Democratic majority favored. Four years later, Pai now presides as chairman over a Republican-majority FCC that could take a favorable view of Charter’s request to end deal conditions early.

In 2016, Pai’s spokesperson complained about the imposition of deal conditions in the Charter-Time Warner Cable-Bright House merger, telling The Hill, “The FCC’s merger review process is badly broken. [Then FCC] Chairman Wheeler’s order isn’t about competition, competition, competition; it’s about regulation, regulation, regulation. It’s about imposing conditions that have nothing to do with the merits of this transaction. It’s about the government micromanaging the internet economy.”

Charter’s June 2020 filing focuses almost exclusively on streaming video competition to argue there is no longer any need to ban the company from imposing data caps. The FCC in 2016 concluded that data caps were a powerful anti-competitive weapon that could be used to keep streaming video competition from harming cable television packages. Charter argues that consumers now have many choices for streaming video, including cable-TV alternatives, which proves they have not engaged in anti-competitive behavior.

But Charter ignored the FCC’s other chief concern about data caps and usage billing (UBP): the lack of choice of broadband competitors.

“[…] Subscribers will continue to have no (or limited) alternative cable or fiber […] options when faced with data caps and UBP designed to deter online video consumption,” the FCC concluded.

The FCC hoped that by 2023, consumers would have more options for home broadband service, likely driving usage caps out of the marketplace.

“Seven years may also provide the high-speed […] provider market sufficient time to develop further with additional investments in fiber from established wireline […] providers, Wireless 5G technology, use of smartgrid fiber for broadband, additional overbuilding, and other potential competitors to traditional wired […] providers,” the FCC wrote. “It is our expectation that these developments will foster competition in the market to make the anticompetitive use of data caps less tenable in the future.”

Unfortunately, broadband competition remains fleeting in many parts of the United States, where only one provider offers broadband service that meets the FCC’s standard of 25 Mbps for downloads.

Ironically, Charter executives were against imposing data caps on their customers when the company was seeking approval to acquire Time Warner Cable and Bright House Networks.

FCC:

“Charter in particular emphasizes its aversion to data caps, stating that instead of enforcing usage limits it chooses to market the absence of data caps as a competitive advantage. Charter also argues there is a strong business case for not implementing caps. Specifically, Charter explains that it terminated its enforcement of the usage limits trial in the AUP in January 2012 because the benefits to customers of continuing the trial (minimizing bandwidth consumption to preserve a positive Internet experience) would not exceed the program’s costs. Charter also states that caps create marketing challenges because they complicate consumer purchasing decisions. Furthermore, Charter argues that data caps increase churn among subscribers. Finally, Charter states that it plans to distinguish itself from its competitors based largely on the quality and speed of its broadband offerings and that data caps undermine that marketing message.”

But the FCC remained unconvinced by Charter’s statements. In a review of confidential internal company documents, the FCC found multiple instances where Time Warner Cable had not completely abandoned the idea of data caps, despite multiple high-profile consumer backlashes against the idea.

“We also note that despite Time Warner Cable’s relative lack of success in implementing usage-based billing, its internal documents leave no doubt that it is also incentivized to use data caps to protect its [cable TV] business,” the FCC concluded.

Four years later, Charter is among many cable operators reporting staggering losses of video customers that have chosen to “cut the cord” on cable television and have switched to a streaming competitor. If an incentive to data cap customers to protect video revenue was there in 2016, it stands to be much stronger today in 2020.

The FCC is now seeking public comment on Charter’s proposal until July 22, 2020. Stop the Cap! plans to file extensive comments on the matter and will shortly publish a guide for readers offering sample letters that can be sent to the FCC on this issue.

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Berfunkle
Berfunkle
21 days ago

Glad I dropped them earlier this year for a regional fiber to the home Internet company that has no plans for caps and will probably use this fact in their ad campaigns to pry more subscribers from Spectrum.

Patrick Sullivan
Patrick Sullivan
21 days ago

How do we fight this? We never have had data caps with internet service were I lived. Charter bought out Time Warner Cable and now want to slap us with data caps. I guess I won’t be a Spectrum customer for much longer.

JOHN
JOHN
21 days ago

The FCC is now seeking public comment on Charter’s proposal until July 22, 2020. Stop the Cap! plans to file extensive comments on the matter and will shortly publish a guide for readers offering sample letters that can be sent to the FCC on this issue.

What a joke TRUMP’S FCC doesn’t care what the public has to say everyone knows charter is going to get what it wants!

Last edited 21 days ago by cdrt
JOHN
JOHN
21 days ago

You are correct about time warner cable! Once the New York sen. got involved that’s when TW backed down. The way I see it going the fcc route is worthless effort, Put pressure on sen. from friendly states to tell charter you agreed to these terms you will stick to them!

Crazyfrankie56
Crazyfrankie56
14 days ago

We all know that Ajit paihole is going to pull his BS tactics again to try to stop anti data cap comments from being public just like he did with Net Neutrality. This make me so sick and pissed that this money hogging pig can get away with this ugh!

Mark
Mark
19 hours ago
Reply to  JOHN
Raymond W
Raymond W
21 days ago

The only way Spectrum should be counted as being a streaming competitor is if they offered their streaming services to the entire country and not just their internet customers.

Dylan
Dylan
21 days ago

I will fight to make sure the cap does not come. If Trump loses the election, you can be assured data caps will not come. Hopefully he loses.

Crazyfrankie56
Crazyfrankie56
14 days ago
Reply to  Dylan

I don’t know about that because there was some speculation that Comcast sent money to Biden’s campaign last year before the start of the Presidental primaries which I am really pissed about that.

sid
sid
21 days ago

Believe me Charter desperately wants this revenue and will fight tooth and nail to get it. The last time this happened with TW it got fought back but make no mistakes it will take effort since they will be sweet talking every legislator they can find.
Take this seriously, CHARTER IS

sid
sid
21 days ago

Charter using the argument of “cord cutters”… uh guys they’re still using Charter I guess we are all that stupid to buy that argument.

JAC
JAC
20 days ago

They want the FCC to eliminate caps because they don’t realize they (Spectrum) is the reason they lost the video revenue and now want to punish the consumer for it. Philip, please post the letter we need to send and I will make sure Mine, and all of my contacts get those sent

reed
20 days ago

we will have a free and open internet we have the right to use the internet and we will shut the spectrum down if they start slowing down sites witch is aligal and we are going to make sure the we expose spectrum and make sure that specturm gets alot of hate and maybe they can leave it alone we well keep the internet as it is

sid
sid
19 days ago
Reply to  reed

Sadly you’re wrong on all points. You have no right to use the web..period.. you don’t,,,doesn’t exist. (sorry) Your rights extend to buying service from someone and that someone is in our areas Charter/Spectrum…or crummy DSL (bad) or satellite (worse)

Read some of the other comments please. the only way this gets stopped is a massive organized public backlash. Charter will fight since it’s a way to make more money. In most places Spectrum IS the monopoly/only choice.

REED
REED
16 days ago
Reply to  reed

SCREW YOU YOU DON’T NO WHAT YOU ARE TALKING ABOUT MINE YOUR OUN BUSSNESS WE WILL HAVE A FREE AND OPEN INTERNET WHAT EVER IT TAKES STAY THE OUT OF MY BUSSNESS F**K TRUMP HE IS GOING TO LOSE WHAT EVER IT TAKE DON’T TROLL ON ME I DON’T LIKE THAT I DON’T GIVE A CRAP F**K OFF im not wrong i no what im talking about dude we have the right to use the internet without slow downs and we have the right to watch netflix and disney plus and other video stream without being rerstrected ok f**k off… Read more »

Mike H
Mike H
20 days ago

The government prevents the monopoly of companies like Spectrum that is the only provider for a service in an area. The data caps will allow them to become even a larger monopoly of video streaming. That is only a piece of what they are asking for. They are also wanting to track your usage on the internet. More big brother watching

sid
sid
19 days ago
Reply to  Mike H

“prevents the monopoly”.. uh try again.. The government encourages a monopoly and then goes “la la la” and makes you try to think that it’s NOT. Most cable companies fight like crazy to keep out competitors and most governments “let them”.

Joshi
Joshi
18 days ago
Reply to  sid

Yeah and that’s all Trump’s fault! He wants all businesses to have a monopoly. So I’d stick with a regional local fiber in my town as they have no plans for data caps.

Crazyfrankie56
Crazyfrankie56
14 days ago

Data Caps need to be banned and illegal and its got to happen now. I have had it with Ajit paihole he is the most disgusting money hogging pig way more then Trump is we all know he is going to give Spectrum (which I have for ISP) what it wants and there is no hope for any of us to win back our rights on the internet. In reality unless Congress steps in (I have no hope in that) and put in permanent major regulations to include banning data caps, putting back net neutrality and making the internet a… Read more »

Mez
Mez
8 days ago

Ive been looking high and low to file a comment on FCC site. Where do I file a comment on that mess of a site. Any help would be appreciated.

Eddie
Eddie
2 days ago

I wonder what Spectrum’s response would be if the situation was reversed:
Hey Spectrum, remember that contract we had a while ago. Well, we’re about 2/3rds of the way through it and I’ve been a really good boy up to now. So how’s about you let me out of that deal without any penalty.
Yeah, that lead balloon will make quite a big hole when it lands.
C’mon, you signed it, you honour it.

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