Comcast-TWC Deal Seen Raising Net Neutrality Concerns

In a memo titled “Day One Undertakings,” Comcast Executive Vice President David Cohen said the FCC’s “Open Internet protections” would automatically “be extended to millions of additional broadband customers, irrespective of whether the FCC re-establishes such protections for other industry participants” (http://bit.ly/1hgdHWV) if the takeover goes ahead. “Thus, unlike all other broadband subscribers in the country, the new company’s broadband customers will enjoy the enforceable protections of the no blocking and non-discrimination rules that were put in place by the FCC, notwithstanding the action by the DC Circuit Court of Appeals vacating those rules."

That assurance doesn’t quite satisfy public interest officials we spoke to. “Obviously Comcast knows what they're doing to get mergers through and try to appeal to certain folks, but we're not really buying it,” said Free Press Policy Director Matt Wood. While the net neutrality conditions of the Comcast/NBCUniversal merger would apply to a TWC purchase, “we want to see the FCC protect all users,” and not just the customers of one provider, Wood said. Plus, the net neutrality rules struck down by the court had “weaknesses,” and so even if they were fully applicable to all the new customers, Free Press would still have concerns, he said.

Ultimately, even if the net neutrality protections were extended to Comcast’s new customers, it wouldn’t be enough to “offset the harms of giving so much control over programming and the online video market and the broadband ISP business to one company,” Wood said. “We think there are ways that ISPs can harm their competitors’ video offerings without necessarily doing any throttling or prioritization in the last mile.” That speaks to a need to a comprehensive approach to broadband telecommunications rather than a “piecemeal approach” backed by conditions that can be hard to enforce, he said.

To Public Knowledge, using merger conditions to get a “light version” of the net neutrality rules consumers really need is “not very satisfying,” said senior staff attorney John Bergmayer. Net neutrality rules should be industry-wide and “shouldn’t expire after a few years,” he said. Bergmayer also questioned how effective those merger conditions have been so far. Although Comcast agreed to several conditions, such as channel placement, it “fought tooth and nail to prevent them from being enforced,” he said.

Public Knowledge has concerns that often go beyond the “classic” kinds of net neutrality concerns, Bergmayer said. The public interest group has complained to the FCC that Comcast, by exempting some of its own broadband video products from data caps, is violating the rules. Large cable companies have “a lot of potential for anticompetitive conduct,” both on the video side -- in restricting access to programming to rivals, including online rivals -- and on the Internet side, such as “by not providing sufficient interconnection facilities for other networks,” Bergmayer said. “I think even saying that these conditions would be ‘better than nothing’ significantly oversells the case."

Free State Foundation President Randolph May has never liked what he calls “regulation by condition.” He thinks it’s an example of FCC “abuse” of the transaction review process, with the Comcast/NBCUniversal net neutrality condition a prime example, he said. “Be that as it may, the reality is that the condition that presently applies to Comcast will be extended to Time Warner Cable, so from the perspective of the consumer groups, they should be pleased,” he said. That’s especially true in light of the FCC’s “problematic authority to impose net neutrality regulation” after the January court decision, he said.

"I'm concerned that the FCC will again inappropriately use the transaction review process, say, to extend or expand the net neutrality condition,” May said. “I wish Chairman [Tom] Wheeler and his fellow commissioners would think long and hard before succumbing to the temptation of ‘regulation by condition’ in the context of mergers. If he wants to do anything other than watchful waiting, which is the preferred course, I think Wheeler has been on the right track when he’s talked about dealing with net neutrality in the context of individual complaints where the issue of the existence or not of market power and consumer harm can be examined in particular markets."

The proposed merger “actually expands net neutrality” because of the extension of the NBC Universal conditions, said Tech Freedom President Berin Szoka. And the FCC still has “broad power under Section 706 to address any potential concerns, and of course can also deal with concerns about video programming via existing rules,” Szoka told us. “To the extent that Comcast does indeed gain greater leverage over linear cable programmers, over-the-top video distributors, or other edge providers by virtue of its increased size, that also makes it easier to establish an antitrust case against them, should they abuse that market power."

"That Comcast agrees its NBCU net neutrality merger conditions would automatically extend to Time Warner Cable’s consumers underscores the fact that the broadband industry does not have a problem with freedom-defined net neutrality where users are free to access the legal content and apps of their choice,” said Scott Cleland, chairman of NetCompetition, a pro-competition group supported by broadband interests. “The controversy over net neutrality is confined to Title II common-carrier defined net neutrality, which would force unnecessary and destructive regulation of rates, terms and conditions on a competitive industry that has an excellent track record of operating a free and open Internet.”