Net Neutrality

Charter CEO Resigned to Title II

Unlike some of his counterparts at other major US broadband providers, Charter Communications President and CEO Tom Rutledge sounds like he may be willing to accept the imposition of a common carrier regulatory regime, albeit quite reluctantly.

Speaking on Charter Communications Inc. 's fourth-quarter earnings call Thursday morning, Rutledge said the Title II proposal outlined by Federal Communications Commission (FCC) Chairman Tom Wheeler yesterday may not be so terrible for his company, at least in the short run. Wheeler's proposal, while calling for a utility-style regulatory regime for broadband providers, would exempt them from rate regulations, tariffs, last-mile network unbundling and other types of restrictions they have feared.

"It doesn't look like it changes anything," said Rutledge, whose company has nearly 4.8 million broadband customers now after picking up 104,000 data subscribers in the fourth quarter. In any case, he noted, "it does look to be the law of the land."

Nevertheless, like leading executives at AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and Time Warner Cable Inc. (NYSE: TWC), Rutledge said he's worried about the marketplace uncertainty and confusion that a regulatory shift would introduce. Despite Wheeler's assurances, he's also worried about how the FCC might use its broadened broadband regulatory powers in the future. (See Fretting Over Title II .)

"It seems to me to be an excessive approach," he said, noting that Charter has never run into any net neutrality problems with Internet video providers. "I think we have a heavy-handed regulatory solution to a problem that doesn't exist. And while it doesn't change anything in any way, it's like someone having a bazooka pointed at you; that's uncomfortable."

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Bazooka imagery aside, Rutledge said he's not sure what impact, if any, the adoption of Title II rules will have on Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed $67 billion acquisition of Time Warner Cable Inc. (NYSE: TWC) and Charter's corresponding trade of cable systems with the beefed-up Comcast. Several industry pundits are now predicting that the switch to Title II could jeopardize, if not doom, the Comcast-TWC deal, which would also wreak havoc with Charter's immediate growth plans.

Rutledge said he's still firmly committed to gaining the local, state and federal regulatory approvals required for Charter's end of the deals. But he admitted that he'd still be interested in renewing Charter's pursuit of Time Warner Cable for the right price if the Comcast purchase ends up falling through.

Under the right conditions, "obviously we'd be interested," he said. "But there's a lot of 'ifs' there."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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mhhf1ve 2/8/2015 | 11:02:37 PM
Re: inconsistent? I think there is a priority issue here that may be missing. Sure, we need investment to make broadband better. However, if that new equipment is dedicated to make comcast's own content and services faster and better -- is that really a win for consumers in the end? I don't think so. First, we need to make sure the playing field is level -- and ensure that new services (not just streaming video but services that haven't even been developed yet) are able to make it without the help of gatekeeping ISPs. Once we have a level playing field, then we can address the issue of broadband not really meeting the new 25mbps threshold.
brooks7 2/8/2015 | 9:01:57 PM
Re: inconsistent? mhhf1ve,

No, I think Title II hurts consumers.  There is a presumption that by imposing Title II that it will mean that streaming video services will be maintained or improved.  They are the only ones that matter from a bandwidth standpoint.  Title II does not make good service.  It makes equal service.  If service is bad for everyone, then it is equal.

That is why this whole thing is a Red Herring.  Title II does not make anybody invest in new network equipment.  It just means that as long as buffers overflow for all services at the same rate that things are good.  What we want is more investment.



mhhf1ve 2/8/2015 | 6:00:20 PM
Re: inconsistent? If consumers want to get to an "ideal" solution, that would be nice. However, given the current political environment, that seems impossible. I'd agree with you if I didn't think that upturning the industry entirely with totally new regulations wouldn't end up stuck in the courts for decades. Title II regulations are familiar to everyone BECAUSE these regulations are old. There may be some litigation, but it shouldn't require all new case law to get decisions made. The incumbents have worked under Title II for years, so it's a bit disingenuous for them to complain too loudly against it. Wheeler himself explains away most of their protests with his experience in the industry. So Title II may not be perfect, but it'll do for the next few years until we can figure out something better. I'm not even aware if Apple has taken a position on net neutrality, btw. So I'm not siding with Apple and google. I'm agreeing with Obama and wheeler.
mhhf1ve 2/8/2015 | 5:48:44 PM
Re: inconsistent? I don't think I ever said google or apple are not greedy for-profit ventures. I didn't even bring them up. I'll concede that all corporations exist to generate and maximize their profits. However, the telco industry is NOT competitive in the same way other industries are. There are certainly plenty of telcos/cablecos and hybrid operations -- but the market overall is dominated by a few operators. And the evidence of lower prices for better broadband service in other countries shows that there's something fishy going on in the US market.
brooks7 2/8/2015 | 5:17:37 PM
Re: inconsistent? mhhf1ve,

You are the one that created the strawman for your argument.  Your point was that the big ISPs are greedy and lack competition.

I took the primary companies on the other side of the debate and factually showed you that they are in the exact same position.  In fact, the telcos and cablecos have a lot more competition.  In the US there are over 1000 ILECs, over 200 MSOs, a couple of hundred WISPs+CLECs+Business Carriers+OTT providers etc.  Any/all of whom can invest and compete at least for a portion of the business.  

The reason I do this is not to declare the large ISPs good.  It is to shock you (hopefully) that Apple and Google are NOT on your side either.  You need to put every word that they say in the same category as that from AT&T or Comcast.  They are all there to make a profit from you.  If they don't make a profit, they will stop making their service.  And it seems that they are all making multi-billions of profit in a quarter so none of them are hurting.  Even that poor company that is being destroyed by these ISPs - Netflix - made $60M in profit in 3Q14.  

So, stop fighting for any of them.  We, as consumers, want the ISPs to invest.  We should be thinking about what will make them invest to our benefit.  When we do so we will come up with a paradigm for regulation.  For me, that means we are either going to make Broadband a Universal Service (which none of this does) OR we go to structural separation.


mhhf1ve 2/7/2015 | 6:57:22 PM
Re: inconsistent? Marketshare isn't everything either. Not too long ago Android and iOS were either nonexistent or nearly so. Blackberry fell drastically, and there's nothing that says iOS or Android couldn't suffer the same fate. But there really isn't a realistic probability that AT&T or Verizon are hokum to be replaced by sprint or tmobile anytime soon. Google fiber isn't even a real threat to Incumbent ISPs.
mhhf1ve 2/7/2015 | 6:39:38 PM
Re: inconsistent? Are you seriously arguing that similar profits mean that industries must be similar in other ways, too? Google and Verizon could not be more different in their business models and approach to doing business. Perhaps you could draw some similarities -- but I think you'd really be reaching. Besides that, are you saying that Incumbent ISPs have the same market competition as any other big business? Hmmm.
brooks7 2/7/2015 | 5:31:28 PM
Re: inconsistent? Actually, mhhf1ve - they don't.

Google actually makes most of its money on search where it is a much bigger player than anyone else.  The same with Apple and iTunes.  But if you want to go just to smartphones Android and iOS have what an 80%+ market share?

Just to make it clear (all data from Q3 last year since not everyone has reported Q4)

Google - $2B in Profit

Apple - $8B in Profit

AT&T - $3B in Profit

Verizon - $3.6B in Profit

Comcast - $2.5B in Profit

They all seem comparable to me.  Of course, I need to point out that Apple made $18B in profit in Q4.  On the Google front, so study the whole eco system built up around bidding for Ads to try to maximize every penny you spend on Google Adwords (AND STOP USING Ad Words Express for goodness sake).


mhhf1ve 2/7/2015 | 4:30:24 PM
Re: inconsistent? The difference, though, is that Apple and Google have plenty of competition in their industry. If you want to sell a smartphone or laptop or create a search engine, there's almost nothing stopping anyone from doing so (sure, you won't have any marketshare, but nothing is stopping you nonetheless). The barriers for selling an internet service are far more daunting.
brooks7 2/7/2015 | 2:28:21 PM
Re: inconsistent?  

So, take the words ISP out of your statements and put in Apple and Google.  I think you might see much more unconstrained profits.


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