By David Shepardson
WASHINGTON (Reuters) - The U.S. Federal Communications Commission is reversing a requirement imposed under the Obama administration that Charter Communications Inc (CHTR.O) extend broadband service to 1 million households already served by a competitor, under an order to be made public on Monday.
The decision was a win for a group representing smaller cable companies that sought to overturn the "overbuild" requirement and marked the latest reversal of Obama-era requirements by the new Republican-led FCC under President Donald Trump.
As a condition of approval for its acquisition of two cable companies, Charter had agreed in May 2016 to extend high-speed internet access to 2 million customers within five years, with 1 million served by a broadband competitor.
Under the new order approved on Friday and disclosed Monday, Charter, the No. 2 U.S. cable company with 26 million residential and business customers in 41 states, must add service to 2 million additional potential subscribers in places without existing service, the FCC said.
"This is like telling two people you will buy them lunch, ordering two entrees, and then sending both to just one of your companions," FCC chairman Ajit Pai said in a statement. "It runs directly against the goal of promoting greater Internet access for all Americans."
The American Cable Association petitioned the FCC to reverse the requirement in 2016 and has met with FCC commissioners in recent weeks. The group had called the requirement under then FCC chairman Tom Wheeler "stunningly bad and inexplicable government policy."
The group warned it would have "devastating effects on the smaller broadband providers Charter will overbuild" because they would face competition from an "uneconomic, government mandated entry" that could put some companies out of business.
Gigi Sohn, a former top Wheeler aide, said the decision shows the Republican FCC is more focussed on putting "incumbents first" than on competition. She cited its putting broadband privacy rules on hold and withholding federal approval of new companies to offer government subsidized telecommunication services.
The requirement, as part of Charter's acquisition of Time Warner Cable and Bright House Networks, would bring "innovation and new choices for consumers, and demonstrate the viability of one broadband provider overbuilding another," Wheeler said last year.
On Monday Wheeler tweeted, "Nobody likes competition ... except consumers!"
Charter said the change "enables Charter to more fully devote our resources and attention to building out high-speed broadband to areas without it today."
Charter Chief Executive Officer Tom Rutledge met with Trump at the White House last month to tout the company's investment and hiring plans.
Charter (CHTR.O) stock closed up 0.3 percent to $328.27 in afternoon trading.
(Editing by Chizu Nomiyama, Meredith Mazzilli and Jeffrey Benkoe)