Netflix supports Charter's Time Warner Cable merger after Charter pledges not to charge peering fees for content providers through 2018
Alex Sherman / Bloomberg Business :
Context & Ripple Effects
Charter's push to swallow Time Warner Cable began with a $195-a-share buyout plan that would also fold in Bright House Networks, followed weeks later by a net neutrality pledge promising no data caps or usage-based billing for three years. Netflix's endorsement adds a second concession layer: no peering fees charged to content providers through 2018.
The timing matters because FCC Chairman Tom Wheeler was preparing a draft approval order with clauses ensuring growth of online video, so Netflix's public backing hands the regulator a marquee argument that the merged cable giant will not strangle streaming competitors.
First-order effects
- Netflix secures a written guarantee that the largest US cable operator cannot bill it for network interconnection until 2018 — protection for the company whose traffic dominates residential bandwidth.
- Charter gains a high-profile content-industry endorsement for its merger case at the exact moment the FCC is drafting its approval conditions.
Second-order effects
- Other ISPs pursuing consolidation deals come under pressure to match Charter's concessions, turning no-fees-for-peering and no-data-caps pledges into de facto merger-currency rather than voluntary policy.
- Streaming providers gain leverage in their own interconnection negotiations, since regulators now treat paid peering as a competitive issue worth conditioning approvals on.
Third-order effects
- The protections prove time-limited: after the pledge expires, an appellate ruling lets Charter charge Netflix and other streamers for interconnection despite the merger conditions, showing that deal-time promises do not permanently bind post-merger conduct.
- State-level enforcement emerges as a backstop — New York's later revocation of the merger approval and forced broadband-expansion settlement signals that merger conditions live or die by ongoing regulatory scrutiny.
The trend: Broadband mega-mergers are increasingly approved in exchange for streaming-friendly network pledges, but those commitments expire on schedule unless regulators keep enforcing them afterward.