Charter Communications

Charter Communications is a new entrant into the cable television landscape in Michigan, serving about 621,000 customers throughout the state. With the pressure of a competitive market, Charter also aggressively upgrades its system to provide high-speed Internet access over cable system. And with the prevalence of demand for high-speed connection, Charter also has arrangements with several large ISP's to support multiple ISP access over their system. If Charter can succeed in promoting its network solution by accommodating their cable system into the Internet backbone, they can be served as a "network of networks".

But, before Charter can roll out new service to their customers, it has had to face different challenges either internal technical aspects or external policy regulation.

• The existing policy has led to substantial competitive market in broadband alternatives.

In Charter's comments, Charter tries to show how the existing policy has led to a substantial competitive market in broadband alternatives. Currently DSL, satellite, and wireless Internet providers have shown aggressive promotion in marketing their broadband services. Charter wants to prove that cable broadband is not as powerful monopoly as those of incumbent LECs, neither they nor the cable industry has any control over access or content to the Internet.

• Cable faces challenges of high risky investment, technical and operational difficulties in deploying services.

In the business model of broadband service to cable operators, cable has invested millions of capital in risky assets and less competitive advantages behind many DSL providers who are the leaders in broadband market share. In additional, cable providers like Charter has to cut prices and maintain better quality of service to lock-in their subscribers from switching to other competitors or alternative options. Only by doing this, can they survive the loss of capital investment and price competition.

Before open or forced access is mandatory, Charter has attempted to offer a multiple ISP access trial to its cable system and give their subscribers more options to choose from their favorite ISPs. Charter also demonstrates different technical and operational issues unsolved in premature cable system such as shared network architecture, routing traffic, billing and customer alienation. These all prove to be disadvantages against deployment of cable broadband access.

• Forced access regulatory scheme will undermine competition and harm consumers interest.

Like other MSOs (Multiple System Operators), Charter also strongly argues against a forced access obligation toward the development of cable Internet service. The intervention of government policy could not stimulate more new competitors, instead it thwarts the development of innovative solutions toward the high speed Internet market. Just as the government mandates non-discriminatory interconnection, unbundled networks, pricing, and OSS, they all prove to be undermined by the viability and benefits that are deprived from consumers. Based on the consumer demand, Charter tends to let the market segment decide the future of cable, instead of restricting the development of business models from all of the broadband providers. From the lack of evidence of any unlawful situations, this cable provider emphasizes that a government mandate would be administratively burdensome.

Charter points out the importance of capital investment to the cable operation. A forced access regulatory scheme would harm investment to the benefit of competitors, not consumers. Government inspires facilities competition in the local market, especially in the rural market. With the implementation of forced and open access, other wholesale and transport competitors would definitely build their artificial margin on the cable's risk capital and require high discount from cable's profit margin. Thus, the policy only assists competitors over cable and stifles the construction of cable networks further into the rural areas due to the high investment capital and net profit return from thestock market.

Despite the dispute of declaring cable as common carrier or cable as information provider, Charter considers that it is really inappropriate to regulate Internet access upon the cable industry. The market is designed to deliver precisely what customers want and value and is the most effective tool in the FCC's arsenal to deregulate the market as well.

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