The U.S. Federal Communications Commission has voted to reverse a requirement imposed under the Obama administration that Charter Communications extend broadband service to 1 million households already served by a competitor, a source briefed on the matter said.
The decision was a win for a group representing smaller cable companies that petitioned to overturn the “overbuild” requirement and marked the latest reversal of Obama-era requirements by the new Republican-led FCC under President Donald Trump.
As a condition of approval for its acquisition of two cable companies, Charter (CHTR) in May 2016 agreed to extend high-speed internet access to 2 million customers within five years, with 1 million served by a broadband competitor. Under the revised FCC order expected to be made public on Monday, Charter can opt to add all 2 million additional potential subscribers in places without existing service.
The American Cable Association petitioned the FCC to reverse the requirement and has met with FCC commissioners in recent weeks. The group previously called the requirement under then FCC chairman Tom Wheeler “stunningly bad and inexplicable government policy” and warned it would have “devastating effects on the smaller broadband providers Charter will overbuild” because they would face competition from an “uneconomic, government mandated entry” which could put some companies out of business.
Wheeler said last year the requirement as part of Charter’s acquisition of Time Warner Cable (TWC) and Bright House Networks would spur competition.
“At least one million of those connections will be in competition with another high speed broadband provider in the market served, bringing innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another,” Wheeler said in 2016.
An FCC spokesman and a Charter spokeswoman declined to comment. Charter is the second-largest U.S. cable company with 26 million residential and business customers in 41 states.