This is a “white paper” outlining the position of Connect Your Community 2.0 partner organizations in Cleveland and Detroit on the proposed Comcast/Time Warner Cable/Charter Communications deal pending before the FCC.  The substance of the document was approved at a meeting of CYC 2.0 partners on May 19.

(Links and highlights have been added for readers of this post.)

Charter Communications’ proposed takeover of Time Warner and Comcast markets: Help us push for a meaningful investment in community digital literacy and access efforts.

Comcast, Time Warner Cable (TWC), and Charter Communications – currently the first, second, and fourth largest cable providers in the U.S. – have proposed a series of corporate transactions which would include:

• the merger of TWC into Comcast; followed by
• the sale or swap of 3 million customer households between Comcast/TWC and Charter Communications; and
• the creation of a new corporation (currently called “Spinco” for “spin-off company”), managed and partly owned by Charter, which would acquire another 2.5 million Comcast households.

(Comcast-Charter Investor Presentation)

If approved by the Justice Department and the Federal Communications Commission, these transactions will mean that, as soon as 2015 (and with no local government review)…

1) Charter Communications will take over all of TWC’s customers, franchises and assets throughout Ohio, as well as northern Kentucky and Milwaukee;

2) The new so-called “Spinco”’ (managed by Charter) will take over Comcast’s customers and assets in Detroit, as well as Indianapolis and Minneapolis-St. Paul.

(Map of Charter Communications and “Spinco” territory after the deal.)

Impact of the proposed deal on Internet access for lower-income residents

The FCC has made clear in recent cases that it expects major Internet Service Providers to take responsibility for helping disadvantaged residents to overcome barriers to Internet access and literacy in the communities they serve. Comcast has taken some modest but important steps to meet this expectation. Time Warner Cable and Charter Communications have not.

For the past three years, under an FCC order resulting from an earlier merger case, Comcast has operated a program called Internet Essentials, which provides $10 monthly Internet service and $150 computers to families whose children are eligible for free or reduced school lunches. Neither Time Warner nor Charter offers a similar program.

Before announcing its agreement with Charter on April 28, 2014, Comcast had assured the FCC and the media (in connection with its original Time Warner merger plan) that it intended to continue Internet Essentials indefinitely, to expand it to current Time Warner communities, and to consider offering it to other constituencies like senior citizens.

It’s unclear how Comcast’s assurances now apply, if at all, to those Time Warner cities, like Cleveland, Akron, Columbus, Cincinnati and Milwaukee, that Comcast has decided to hand off to Charter Communications.

It’s also unclear how they apply, if at all, to Detroit and other Comcast cities that currently have Internet Essentials, but are slated to be “spun off” to the new corporation managed by Charter. (In the worst case, low-income families who’ve just started using Comcast’s $10 service could find themselves no longer eligible because they are no longer Comcast customers!)

Either Comcast and Charter, or the FCC itself, must address these issues and arrive at a meaningful digital inclusion plan with leaders of the proposed Charter/Spinco “selloff and spinoff” communities, as a precondition to approval of the proposed merger deal.

The partner organizations of Connect Your Community 2.0 invite community leaders in greater Cleveland and Detroit – and any other community whose cable Internet service would be owned or managed by Charter Communications under its proposed deal with Comcast — to join us in a coalition with the following goals:

1) To make sure that our local communities are effectively represented in FCC proceedings on the Comcast /TWC/Charter merger-and-sale proposal, including any relevant settlement negotiations, in order to advocate significant investment and collaboration by Charter and “Spinco” in community-based efforts to help our disconnected residents gain Internet skills and affordable broadband access.

2) To engage Charter Communications management in direct discussions before and during FCC proceedings on their proposed deal with Comcast, in the hope of collaborating on a joint proposal for a Charter/”Spinco” digital inclusion investment program that can be incorporated into an eventual FCC order with broad support from the affected local communities.

3) To advocate to the FCC, the companies and any other parties to the FCC proceedings that the following elements must be part of a satisfactory digital inclusion package:

• Support for basic computer/Internet training.
• Support for affordable devices, with a preference for local sourcing of refurbished computer equipment where possible.
• A very affordable cable Internet service offering (like Internet Essentials) available to a broad range of low-income customers including adults without children.
• Ambitious participation goals in each community, supported by adequate investment, strategic partnerships to take advantage of each community’s unique resources, and strong data and accountability mechanisms.