Critics Seek Specifics of Public Benefits, as Comcast/TWC Begins to Face PUC Scrutiny

New Jersey Board of Public Utilities (BPU) staff May 15 asked Comcast in discovery to explain the “contradiction” of arguing state customers would benefit from Time Warner Cable being acquired, when TWC ranked equal or ahead of Comcast in cable, Internet and phone service customer satisfaction ratings. New York Democratic Gov. Andrew Cuomo on Monday promised (http://bit.ly/1pgr35w) a “thorough and detailed investigation” into the deal, under a new state law (CD March 21 p15) that shifts the burden on applicants to show an acquisition would benefit the public.

Dish Network also sought delays May 14 from the Colorado (http://bit.ly/1jaCmXI) and Texas (http://bit.ly/1vMRdRS) PUCs, saying in both cases it has “an interest that may be adversely impacted” if the deal goes through. Dish petition said the public needs more time to understand the impacts of the deal. CenturyLink filed to be a party of the Colorado proceeding May 15. The move was made “to preserve any rights we may have as the merger approval process moves forward,” a CenturyLink spokeswoman told us. “We're interested in protecting the competitive landscape in what is already a highly competitive communications and video marketplace."

Filings in the nine states show Comcast is navigating state-by-state the array of laws around the country, asking for approval of the deal in some instances and requesting all regulatory requirements be waived by the Hawaii PUC. In California (http://bit.ly/1jyfB4G) and West Virginia (http://bit.ly/RXt8bj) Comcast asked for approval without a hearing. In all the proceedings, Comcast said, bringing the two companies’ capabilities together would improve services. It will let Comcast “integrate the best features of its voice offerings with the best features of Time Warner Cable’s offerings, creating best-in-class voice service offerings,” the California application said. The deal would increase competition by creating the enhanced service as a new choice for customers, Comcast said. It would permit Comcast and Time Warner Cable “to combine the best aspects of their robust and innovative voice services” and would encourage more network investment in California, Comcast’s application said. Comcast characterized the deal in the applications as one between holding companies that would be “seamless” for customers.

A Comcast spokeswoman would not say which states require approval of the deal, and interest groups did not have a complete list. According to public records, approvals are ongoing, at a minimum, in Arizona, California, Colorado, Georgia, Hawaii, New Jersey, New York, Texas and West Virginia. Spokespeople for commissions in Florida, Oregon, South Dakota, Washington and Wisconsin said approvals are not needed there. “Several states have very minimal requirements for non-dominant carriers, so their review of this deal could be minimal,” said Free Press Policy Director Matt Wood. “But some states have given up their authority over IP-based services too, and that’s unfortunate.”

Benefits Questioned

Legal observers said regulatory bodies usually judge potential ownership changes for the new entity’s financial viability and ability to provide service, but the deal’s critics say they're hopeful growing fears about consolidation will bring closer PUC scrutiny. AT&T agreeing Sunday to pay about $67 billion for DirecTV “changes the landscape,” said Paul Goodman, legal counsel for The Greenlining Institute, one of the California groups opposing Comcast/Time Warner Cable, in an interview. “Consolidation is going to be on the FCC’s mind and the PUC’s mind."

The California groups are trying legal maneuvers to convince the California CPUC to block the deal or order conditions. Greenlining (http://bit.ly/RXtJJX) and TURN (http://bit.ly/1pgrJb7) argue state law requires Comcast to show why the deal is not “adverse to the public interest,” that it “provides short and long-term economic benefits to ratepayers,” and that it would not “adversely affect competition.” Comcast said in its applications the last two standards apply only to utilities, but not to the acquisition because the deal is one between two holding companies, not utilities.

California’s Office of Ratepayer Advocates (ORA) (http://bit.ly/1vMROTz) said in its protest that the U.S. Court of Appeals for the D.C. Circuit’s Jan. 14 Verizon net neutrality decision gives states and the FCC authority under Communications Act Section 706 to promote broadband competition. “While the proposed merger would likely reduce competition and consumer choice in both the markets for consumer telephone and broadband services,” ORA’s protest said, its “most pronounced effect” would be on Internet content providers. “Amazon, Google, Facebook and all the other roughly 180 of the largest Internet content providers -- most of them based right here in California -- will [not only] have one less gatekeeper to deal with, but a gatekeeper that controls twice as many customers,” the protest said.

TURN is asking for an investigation to determine if the deal would be in the public interest. The New Jersey BPU asked Comcast in its discovery motion to give specifics about public benefits, including whether rates would go down and the dates when broadband expansion would happen. It asked why Time Warner Cable wouldn’t bring improved services absent a deal. Pointing to consumer satisfaction findings in Consumer Reports, BPU staff also challenged Comcast statements that it has “tremendous operational and managerial experience as a cable operator and communication services provider” and that “customer service is a vital part of Comcast’s culture, business plan and strategy.” If so, BPU wrote, “Please explain why Comcast shows such low overall satisfaction results in a reputable comprehensive national consumer survey?"

<>Improving customer experience “is our top priority, and we are not satisfied with the results,” a Comcast spokeswoman responded to us. The company is making improvements by investing in new technology and apps to give customers more self-service options and doubling training for call-center service workers, she said.