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Charter takeover of Time Warner Cable gains state approval

Western New Yorkers could be getting faster Internet service – as fast as New York City’s – if the takeover of Time Warner Cable by Charter Communications goes through.

That faster service was among requirements the New York Public Service Commission insisted on Friday when granting its approval of the $78 billion deal. Charter must also make high-speed broadband available to more low-income consumers.

But the deal is far from done. The state PSC’s unanimous approval of the merger clears just one of several regulatory hurdles remaining for the deal, including approvals from the Federal Communications Commission and other state regulators, including California.

Still, the approval from New York regulators is potentially the most important step for consumers in the Buffalo Niagara region, since the terms of the deal with the PSC will have the greatest direct impact on their bills and service, assuming other regulators ultimately approve the merger.

Those conditions would expand the availability of high-speed Internet service across Time Warner’s upstate service territory and also require that maximum Internet speeds upstate double by 2018 and increase six-fold from their current levels by 2019.

“Access to high-speed Internet in New York shouldn’t be limited by your ZIP code,” said Gov. Andrew M. Cuomo in a statement. “Broadband is crucial to driving growth, improving our education system, and connecting New Yorkers to the 21st century global economy – so ensuring that every household has access to high-speed Internet has never been more important.”

Under the conditions the PSC set for approving the merger, Charter will be required to upgrade Time Warner’s network so it can provide Internet service with a minimum speed of 60 megabits per second to all New Yorkers by 2019, along with speeds of as much as 300 Mbps. Speeds would be required to reach 100 Mbps by 2018.

Time Warner currently offers 300 Mbps service only in the New York City market, but not upstate, where top speeds now are 50 Mbps, PSC officials said.

PSC officials said the requirement will give Time Warner subscribers access to faster Internet speeds at lower prices, although the savings are expected to be “modest” for consumers who subscribe to Time Warner’s standard broadband service, with a speed of 15 Mbps. Charter is expected to charge $59.99 per month for its 60 Mbps service.

Upstate consumers who currently purchase faster broadband service from Time Warner, with speeds of 30 Mbps and 50 Mbps, are expected to receive bigger savings.

The savings will be harder to calculate for many Time Warner customers, who currently purchase phone, TV and Internet service as part of a bundled package at a discounted price. The deal with New York regulators also requires Charter to allow existing Time Warner customers to keep their current bundled or standalone service “without material changes” aimed at discouraging consumers from renewing them for three years from the time that the merger is completed.

Charter also will be required to offer standalone broadband service and to offer high-speed Internet service to low-income customers at a price of no more than $14.99 per month, with download speeds of at least 30 Mbps. Time Warner currently offers a standalone Everyday Low Price Internet service with a speed of 2 Mbps for $14.99 a month and a basic service at 6 Mbps for $29.99 a month.

Charter also has agreed to offer broadband service with download speeds of 30 Mbps and upload speeds of 4 Mbps for $14.99 a month, including installation fees and a cable modem. That program would be open to families who qualify for reduced-price school lunches as well as senior citizens receiving supplemental Social Security benefits.

Only 36 percent of low-income New Yorkers have access to broadband Internet service, compared with 59 percent of households with incomes between $20,000 and $35,000, the PSC said.

Charter also pledged to spend $305 million to build out its network within four years of the merger’s closing to reach 145,000 residential and commercial consumers within its service territory who currently lack cable service.

The commission also required that Charter maintain the current level of employees who deal with customers, such as at call centers and walk-in locations, for at least four years following the merger’s close.

In all, the PSC estimated that New York consumers will save about $435 million over a 10-year period because of the conditions imposed on the sale.

Tom Rutledge, Charter’s president, called the PSC approval a “significant step forward” for the merger.

Time Warner has about 365,000 residential and commercial customers in Western New York for its cable television, phone and Internet services.

The deal will make Charter the nation’s No. 3 video provider, with 17 percent of the market, trailing Comcast’s 22 percent and AT&T/Direct TV’s 20 percent share.