Comcast Pitches TWC Deal, Facing Stiffer N.Y. Regulatory Hurdle
Facing a recently raised regulatory hurdle in New York, Comcast last week made a pitch at three Public Service Commission hearings that approval of its Times Warner Cable acquisition would be in the public interest by bringing a host of improvements -- from faster Internet speeds to more shows on cable. Arguing against the combine were consumer groups like Consumers Union, which warned the deal would leave Comcast with “enormous power and unprecedented dominance” and higher rates for consumers. Consumers Union highlighted a poll by Consumer Reports saying most Americans oppose the merger and fear it would worsen service. Consumers Union is the advocacy arm of Consumer Reports.
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The hearings come two months after changes in the state’s cable franchise law shifted the burden to applicants to show an acquisition would be in the public interest. The PSC had previously been required to approve deals unless it could show harm to the public interest. A PSC spokesman on Friday pointed to a May news release (http://bit.ly/1pgr35w), in which New York’s Democratic Gov. Andrew Cuomo said factors in deciding whether the merger meets the standard include company commitments to strong service quality, affordability, and availability. Cuomo also ordered the commission to the review how the deal would affect state efforts to expand broadband in schools in underserved areas, as well as protections for low-income customers.
Some observers opposed to the deal said Friday the shift could have significant impact. New York’s standard of the burden of proof is now the same as the FCC’s, said Public Knowledge Senior Staff Attorney John Bergmayer. “One difference between a state applying the standard, and the FCC applying the same standard, is that a state would expect a benefit in that state.” New York would look for New York-specific benefits that “might require the companies to do more than just meet the FCC’s nationwide approach,” he said. “It is clear that TWC and Comcast have failed to meet the burden of proof of a public benefit, and if the PSC follows the law it has no choice but to stop the merger, at least within New York state,” said Tim Wu, former FTC senior adviser and Free Press chairman.
Comcast is dealing with a patchwork of regulations as it seeks approval from a number of states (CD May 23 p7). The portion of the deal affecting telephone service has been approved by utilities commissions in Georgia, Texas and West Virginia, a Comcast spokeswoman said.
"The acquisition will bring real benefits to the residents, businesses and institutions in the state of New York,” Mark Reilly, Comcast’s senior vice president-government affairs for the northeast division, said at June 16 hearing at the University at Buffalo’s Amherst, New York, campus, according to a video of the proceeding. He said Comcast, unlike TWC, has been moving to all-digital broadband, and has speeds of up to 500 Mbps, compared with TWC’s top speed of 100 Mbps, and intends to bring TWC’s network up to speed. Current TWC customers would benefit from Comcast’s increased programming choices, which are more than double those offered by TWC, he said. The deal would mean “better, more reliable service, said Reilly, who also pledged “Comcast will make significant investment in the state.” J.D. Power and Associates said Comcast had improved customer service more quickly than any other provider, Reilly said. He said at a hearing Thursday night in New York City that the deal would enhance existing services in the state.
The deal would not be in the public interest and would give “Comcast enormous power and unprecedented dominance in the marketplace,” said Consumers Union Policy Counsel Delara Derakhshani at Thursday night’s hearing, according to the video of the proceeding. She said the deal would result in “higher prices, fewer choices, and reduced customer service.” Comcast ranked 15th among 17 television service providers and Time Warner ranked 16th for television service in Consumer Reports’ last customer satisfaction survey, according to a news release (http://bit.ly/1psLXjq) Thursday by Consumers Union. Most believe the deal would make service worse, according to a poll by the Consumer Reports National Research Center that found only 11 percent surveyed support the deal, with 56 percent opposing it, the release said. The survey also found that 74 percent believe the deal would mean higher Internet and cable prices; 81 percent said Comcast would favor its own programming; and 16 percent said the deal would lead to efficiencies that would be passed on to consumers.
"The only suitable response to this merger is its outright rejection,” said Phillip Dampier, founder of the Rochester, New York-based organization Stop the Cap, at the June 16 hearing. Saying Comcast has higher rates than TWC for broadband service, he said the deal would lead to rate increases. Dampier was among a few at the hearings who attacked Comcast for a trial in which customers pay more for broadband service if their usage goes over a threshold. TWC had considered the cap idea in 2009, but dropped it after the group’s opposition, he said.