Roku rails against Charter's push to end ban on data caps

Despite a surging OTT video market, Roku contends that data caps 'remain an avenue for anti-competitive conduct by broadband providers' while ISP competition remains insufficient.

Jeff Baumgartner, Senior Editor

August 10, 2020

5 Min Read
Roku rails against Charter's push to end ban on data caps

Streaming specialist Roku has urged the Federal Communications Commission (FCC) to squash Charter Communications' request to sunset the agency's ban on using data caps and usage-based billing and forging paid peering deals up to two years early.

In reply comments (PDF) filed on August 6, Roku refuted Charter's contention that the data cap and peering conditions imposed on its merger with Time Warner Cable and Bright House Networks are no longer necessary.

Roku's request to deny arrived roughly six weeks after Charter petitioned the FCC to drop those two key conditions up to two years early – the FCC's initial five-year conditions are scheduled to sunset on May 18, 2021, but the FCC has the option to extend them another two years to May 2023.

In its original petition, Charter acknowledged that the ban on usage-based pricing and data caps was put in place over concerns that the cable operator could use such policies to hinder the online video distributor (OVD) market from expanding and competing. But the MSO argued that the OVD market has since "flourished" and become hotly competitive despite the presence of caps and usage-based policies from other US telcos and cable operators.

Roku argued in part that the FCC should deny the petition not because of the state of online video competition, but because of what has become a cable-dominated US residential broadband market.

"The bases for the safeguards the Commission adopted to protect consumers following Charter's merger were Charter's incentives to act anti-competitively post-merger and the absence of viable competition to Charter in the broadband internet access services market to prevent Charter from acting on those incentives," Roku argued. "Charter's petition for relief mentions neither, and that omission alone is sufficient for the Commission to dismiss Charter's request."

The FCC, Roku added, "should remain vigilant against any efforts by internet service providers ("ISPs") to weaken constraints on their power to implement anti-competitive measures."

Roku also took issue with Charter's focus on a "flourishing" online video market as a reason for the FCC to put an early end to the temporary ban on paid peering and data caps, holding that the Commission did not use that measure to justify the original merger order.

"Data caps, along with a variety of other tools, remain an avenue for anti-competitive conduct by broadband providers while there is insufficient competition to constrain anti-competitive behavior," Roku told the Commission, concluding later: "Data caps should become a relic of the past."

Charter: Lifting the ban early will level the playing field
Charter filed reply comments (PDF) of its own last week, believing it had presented "compelling evidence" that the conditions attached to the 2016 merger are "no longer in the public interest" and that lifting the ban would help to level the playing field with other broadband providers.

Charter again focused on the state of a video streaming market that has "exploded" since the conditions were established, rendering them "outdated and counterproductive." It "makes no business sense" for Charter to harm online video services that drive demand for its broadband services, the operator added.

"In short, while video remains an important component of the business, Charter's future will be driven by the success of its broadband service," said Charter, which has developed a pay-TV app for Roku's streaming platform, but has a more formal agreement in place with Apple, including the sale of – and the integration with – Apple TV devices.

Charter's filing attached a declaration from Jeffrey A. Eisenach, managing director at NERA Economic Consulting, finding that "continued growth and new entry of OVD providers makes it economically implausible that Charter (or any MVPD) has the ability effectively to discriminate against OVDs."

Likewise, Charter believes it should be allowed to operate under the same rules and conditions as other broadband service providers by sunsetting the conditions after five years.

Those conditions, which Charter deems to now be "unnecessary," put the company at a "competitive disadvantage." Charter further claims that other ISPs have found usage-based pricing and negotiated interconnection deals to be "important tools for efficiently delivering traffic and allocating the costs of expanding and maintaining a provider's network in response to ever-increasing usage."

Tom Rutledge, Charter's chairman and CEO, reset the company's position on the matter on last week's earnings call. "I would just describe our goal there as housekeeping, because the market didn't require those conditions and, in my view, never did," he said. "We wanted to put ourselves from an opportunity perspective on the same even playing field as all of our competitors."

The cable operator also stressed that the outcome of the petition "will not change its business, marketing, or products strategies," and acknowledged that this has led some to wonder why Charter filed the petition at all.

"Charter's only two options were to file now or risk needing the flexibility to operate without the regulatory weight of the Conditions two years from now and not having it," Charter explained, adding that the cable operator "is in a highly competitive industry that changes quickly."

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— Jeff Baumgartner, Senior Editor, Light Reading

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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