The proposed merger of Time Warner and Charter Communications is set for approval by government regulators, who want the combined company to follow restrictions designed to prevent it from stifling the growth of streaming video services.
The $55 billion deal would create the second-largest broadband provider in the United States (Comcast is the leader), as well as the third-largest cable television company after Comcast and AT&T.
For seven years after its merger, the Time Warner-Charter would have to abide by several conditions set by the Federal Communications Commission and the U.S. Justice Department to keep it from limiting the use of streaming video platforms, including Netflix, Hulu, and YouTube, by subscribers.
This requires Time Warner-Charter to refrain from charging prices based on data usage or impose data caps, or force tech companies that deliver large amounts of data (like that required for streaming video) to pay it interconnection fees. During that time period, Time Warner-Charter would also not be allowed to sign content agreements with media companies that prevent them from providing the same shows and movies to streaming video services.
“All three seven-year conditions will help consumers by benefitting [online video distributors],” said FCC chairman Tom Wheeler in a statement. “The cumulative impact of these conditions will be to provide additional protection for new forms of video programming services offered over the Internet.”
The WSJ reports that Charter will also be required to ensure that two million new households get access to broadband, even in markets where it has to compete against other cable companies.
Despite complaints from both regulators and consumers, companies like Time Warner and Comcast have tried to impose data restrictions or extra charges that make it difficult for subscribers to stream video on platforms like Netflix, Hulu, and YouTube. Internet service providers claim that this makes pricing more fair for people who don’t use as much data, but it also has the benefit of protecting their pay TV businesses as more viewers become cord-cutters and reject cable services.
The Time Warner-Charter deal, however, has been backed by Netflix, which previously opposed the proposed merger between Comcast and Time Warner that failed after the FCC and U.S. Justice Department raised anti-trust concerns last year. In a FCC filing last July, Netflix said a new policy adopted by Charter which prevents it from charging tech companies for faster Internet connections would “help foster continued innovation across the Internet ecosystem.”