FCC axes Obama-era rule forcing Charter to compete against Comcast, other cable firms

Erasing more Obama-era telecom policy, the Federal Communications Commission has voided a requirement that the nation's No. 2 cable company, Charter Communications Inc., compete in a small way with Comcast Corp. and other cable operators.

As part of its deal with regulators to acquire Time Warner Cable last year, Charter agreed to expand high-speed internet to two million additional customers across the country.

Of those, one million broadband customers would be "overbuilds," or Charter venturing into other cable areas for the first time to compete on price and speed packages. For the other one million customers, Charter would expand its network into places without any internet service, such as rural America.

But now, with his new powers at the Republican-controlled agency, FCC Chairman Ajit Pai says Charter does not have to do the "overbuilds" and needs only to expand its network to two million customers without broadband service — a big win for Charter.

The action, rumored over the weekend and announced Monday, shows how swiftly the Trump-appointed Pai is rolling back Obama-era regulations where he can strike quickly and legally. Among other moves, he has repealed the FCC's new rules on privacy protections for broadband providers such as Comcast and Charter.

In a statement Monday evening, Pai, a former Verizon Communications Inc. lawyer, said  it was more important to extend internet service to those who didn't have it than it was to force Charter to "overbuild" and compete.

"Since these one million overbuilt deployments would be credited against the total, it would substantially reduce buildout to unserved areas," Pai said, adding that "this is like telling two people you will buy them dinner, ordering two entrées, and then sending both to just one of your companions."

Industry observers say they believe that this is only the beginning of sweeping changes at the FCC under Pai, who is expected to be friendlier to big telecom and TV station-group mergers and reverse predecessor Tom Wheeler's "net neutrality" regulations. 

"Unlike a lot of the Trump appointees, [Pai] knows how the agency works," Kevin Werbach, associate professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania, said Monday. "On a number of things that seem petty, almost, in a way, he has taken action when he has the clear legal authority to do so."

Although some Republicans see no role for government in business, Pai doesn't seem to have such a radical viewpoint, Werbach said. He sees a role for government in promoting high-speed broadband availability but not "necessarily" promoting competition or consumer protections.