Charter: We won’t impose data caps after buying Time Warner Cable

Charter yesterday promised that it won't impose any data caps or overage charges on customers for at least three years if the Federal Communications Commission allows it to buy Time Warner Cable.

Charter also said it will offer service to one million homes that are in the combined companies' franchise areas but haven't been served yet.

Charter's filing with the FCC seeks to convince the commission that consumers will benefit from the proposed transaction. The FCC previously forced Comcast to give up a plan to buy Time Warner Cable, the nation's second largest cable company. Charter is the fourth largest.

Today, Charter imposes no data caps. Time Warner Cable doesn't force customers onto capped plans, but it does offer a small discount for limited plans, which the vast majority of customers have rejected.

There won't be any of that in the combined company's territory, Charter says. This is part of a promise to go beyond the FCC's net neutrality rules by promising not to implement a "zero-rating" system in which Web services could pay ISPs to not count against customers' data caps.

"We commit to go farther than the FCC's Order, agreeing not to engage in specific practices such as usage-based billing, which thereby precludes zero-rating," Charter wrote. Charter also "will not charge consumers additional fees to use specific third-party Internet applications."

The bigger company "will not block or throttle Internet traffic or engage in paid prioritization, whether or not the FCC's Open Internet Order is upheld in court," Charter wrote. Charter agreed to let the FCC judge interconnection disputes it's involved in, even if the net neutrality order is overturned in court.

Charter used to place data caps ranging from 100GB to 500GB a month on its Internet service tiers, but stopped. The company's current policy has no specific caps but allows it to limit "Excessive use of bandwidth that in Charter’s sole opinion, places an unusually large burden on the network or goes above normal usage."

Charter claims it will also expand its network to serve new customers if the merger is approved. "Within 4 years of close, we will build out one million line extensions of our networks to homes in our franchise areas," the company wrote. "These new facilities will either provide service to currently unserved areas or will increase competition with existing providers." Charter will also expand the territory in which it offers service to businesses, it said.

The commitments would extend to the territory of Bright House Networks, a smaller cable company that Charter is trying to buy in a related deal. With the two deals, Charter would nearly quadruple in size from 6.2 million customers to 23.9 million, becoming the second biggest cable company after Comcast.

(Bright House is owned by the Advance/Newhouse Partnership, which is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica. Advance/Newhouse would own 13 percent of Charter after these transactions.)

Charter is proposing to make these commitments official for three years. But the FCC could require a longer commitment. For example, net neutrality provisions in Comcast's purchase of NBCUniversal were set at seven years.

Charter hired net neutrality advocate Marvin Ammori to advise the company on merger commitments.

"Charter hired me—which, to be honest, took some humility on its part since I have helped lead public campaigns against cable companies like Charter—to advise it in crafting its commitment to network neutrality," Ammori wrote in Wired. "After our negotiation, I can say Charter is offering the strongest network neutrality commitments ever offered—in any merger or, to my knowledge, in any nation. In fact, in the end, I personally wrote the commitments."

When Charter announced the proposed merger last month, FCC Chairman Tom Wheeler issued a statement saying, "The FCC reviews every merger on its merits and determines whether it would be in the public interest. In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved.”

The FCC and Justice Department decided to oppose a Comcast/Time Warner Cable union, saying the increased subscriber base combined with Comcast's ownership of NBC and other programmers would increase its incentive to discriminate against online video services that rely on its broadband network. Charter doesn't own any programming networks, but Time Warner Cable does.

"The merged entity will have no incentive to disadvantage online or traditional programmers to protect revenues from its own programming interests, as Charter and Bright House Networks do not own any broadcast or cable TV interests outside of local news, sports, and public affairs programs, and Time Warner Cable owns only local channels plus a few regional sports networks," Charter argued.