EarthLink Seeks Wholesale Broadband Access Conditions in Comcast Merger
The FCC should require Comcast to offer wholesale broadband access service on a nondiscriminatory basis to at least four independent ISPs as a condition of approving Comcast’s deal to buy control of NBC Universal, EarthLink said. The condition could be modeled on a similar one attached to the AOL-Time Warner merger approval, it said. Meanwhile, AOL said the agency should impose the network neutrality rules it proposed in the open Internet proceeding, regardless of how that proceeding plays out. But it did not propose the wholesale access conditions EarthLink laid out. Other critics of the deal focused on the harms the merger could pose to the pay-TV programming market (CD June 22 p5). Some said certain divestitures should be a condition of approval.
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The FCC should make Comcast sell broadband access services at a 40 percent or greater discount to its advertised rates, EarthLink said. It also wants Comcast to let customers include independent ISP services in their bundled billing and be barred from interfering with traffic handled by independent ISPs, it said.
Public Knowledge supported the wholesale access conditions. “Allowing unaffiliated ISPs to access the last mile networks of the newly merged entity and compete for Internet customers would impose a valuable check on any anticompetitive impulses,” it said.
AOL seemed more concerned about consumers’ access to online video content and cast itself as an independent online video programming distributor (OVPD). “Without last mile broadband access to the consumer, independent OVPDs such as AOL cannot compete,” it said. “Consumers must be able to access the lawful Internet content of their choice [and] run applications and use services of their choice … over the Comcast network,” it said.
Many other commenters raised concerns about access to programming after the merger. Among them was the owner of the Portland Trail Blazers NBA team, who complained that its deal that allows Comcast to carry games on its regional sports network has been frustrated by Comcast’s lack of distribution agreements for the network with competing DBS MVPDs.
Comcast should have to divest itself of Comcast Media Center, which aggregates and distributes content to smaller cable operators, the National Telecommunications Cooperative Association said. “Continued operation of Comcast Media Center by the merged company invites not only the abuse of competitors, but opens the door to the possibility of collaborative pricing arrangements,” it said. The company would have an incentive to grant “sweetheart” deals to affiliated companies at the expense of small rural MVPDs, it said. It also sought divestiture of the merged company’s stake in Hulu.
Affiliates of CBS, ABC and Fox proposed five conditions the FCC should attach to the deal. They want assurances Comcast won’t discriminate with respect to its retransmission consent negotiations with non-NBCU stations, that NBCU won’t be involved in Comcast’s retransmission consent talks with stations affiliated with competing networks, that Comcast won’t point to agreements with NBC-affiliated stations in its negotiations with other stations, that it will engage in arms-length, good faith retransmission-consent negotiations and that it won’t favor local NBC stations with channel placement, by degrading competing stations’ signal quality, or interrupting their programming with EAS messages from a Comcast or NBCU network.
Comcast’s equipment vendors came to its support. Cisco, Motorola and Arris all told the commission the deal would benefit consumers. The deal “will allow the companies to bring more content to consumers across a variety of distribution platforms, and hasten the arrival of the ‘anytime, anywhere’ future of video that U.S. consumers want,” Motorola said.
The DBS providers both said the deal could threaten the MVPD industry and, if approved, strict conditions would be necessary. The main concern of Dish Network and its sister company EchoStar lies in the implications for the availability of online video, the companies said in their joint comments. “The combination of Comcast and NBCU poses a direct threat to the DBS industry’s ability to offer a competitive products,” they said. Each “component of the online video experience is critical to maintaining Dish Network’s and EchoStar’s competitiveness, and is dependent on the subscriber’s ability to access from a third-party an open, non-discriminatory broadband connection to the Internet.” The combined Comcast-NBCU would have more incentive and ability to protect revenue streams by reducing “would-be providers of online video services,” they said. “The DBS industry must provide a seamless product combining the best of traditional, linear video with online video in order to remain competitive, drive innovation and investment, and impel its competitors to do likewise.” NBCU “downgrades the quality of the video experience on Dish’s online video platforms in comparison to NBCU’s proprietary online video platforms, such as Hulu.com and NBC.com,” they said.
Allowing Comcast and NBCU to integrate will allow the companies to withhold valuable programming from their rivals, said DirecTV in its comments. Comcast/NBCU could demand higher prices and more favorable terms, creating anticompetitive incentives over all programming platforms, the company said. The potential effect of higher retransmission consent rates in the future is far larger than the benefits to Comcast’s subscription revenue, which was the past focus of economic analysis, said the DBS company. The FCC should require a neutral third party to resolve disputes on fair market value of programming to make sure consumers aren’t denied the entertainment during negotiations, said DirecTV.
Online programming could also suffer at the hands of the Comcast-NBCU deal, said DirecTV. Comcast could potentially continue to deny competitors access to regional sports networks or other NBCU programming by moving the it to the Internet, mobile, or on-demand platforms, circumventing the FCC’s program access rules, it said. The FCC should make sure the deal wouldn’t allow Comcast to trade the “terrestrial loophole” for an “online loophole,” continuing to put rivals at a disadvantage, said the DBS provider.