ICLE Comments Cited by Competitive Enterprise Institute on Charter-Cox Merger
ICLE’s regulatory comments were cited by the Competitive Enterprise Institute (CEI) in a recent filing with the Federal Communications Commission (FCC) regarding the proposed merger between Charter Communications and Cox Communications. In its reply comments, CEI highlighted ICLE’s analysis that the transaction represents a geographic expansion rather than a horizontal consolidation. The filing also referenced ICLE’s assessment of the regulatory asymmetries in the video distribution market and the potential for the merger to generate significant cost savings and efficiency gains.
Still, as many noted in initial comments, Charter and Cox have little overlapping service area. The two companies serve the same homes in less than 0.1 percent of their combined geographic footprint. As the International Center for Law & Economics (ICLE) noted in their initial comments, “The proposed merger is primarily a geographic expansion, rather than a horizontal consolidation within overlapping markets—a distinction critical for antitrust analysis.” Thus, this merger does not raise the concerns often associated with horizontal mergers.
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Additionally, combining resources allows the substantial fixed costs of network deployment to be distributed across a broader customer base, reducing the effective cost per subscriber. As ICLE’s comment explains, Charter and Cox project approximately $500 million in annualized cost savings within three years of the deal. If realized, these savings could be invested in network upgrades (e.g., expanding gigabit and multi-gigabit capabilities, and accelerating deployment of the DOCSIS 4.0 internet-communications standard); product-offering innovations (such as converged mobile and broadband bundles, where a larger entity might secure better MVNO terms); and improved customer service.
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There are several regulatory asymmetries between traditional cable operators and these newer platforms, as explained in ICLE’s comments. Cable operators therefore must navigate local franchise authorities and other regulatory hurdles that competitors such as vMVPDs and other streaming services do not. Instead of increasing regulatory burdens on technology platforms, we should focus on enabling traditional cable providers to better challenge them. As Jeffrey Westling observes in his comments to this proceeding, “If the Commission is concerned about the relative power of large technology firms, allowing Charter and Cox to combine assets would promote more competition and limit the ability of Big tech platforms to extract monopoly rents.”