California Seen Planning ‘Very Thorough’ Review of Comcast/TWC

CPUC said the public interest portion of its review will focus on Comcast/TWC’s effect on competition, consumer protection, public safety, quality of service, reliability and state telecom markets, including its effect on special-access and backhaul services. The California commission’s review will also determine whether Comcast/TWC would result in more broadband buildout to unserved and underserved areas of California, along with libraries and schools in the state. CPUC said it will also determine whether the deals would benefit California consumers, including any outreach to low-income consumers to “close the digital divide.” CPUC said it is also investigating Comcast/TWC’s effect on broadband deployments in the state because the U.S. Court of Appeals for the D.C. Circuit decision in Verizon v. FCC “unambiguously” indicated that state commissions have a limited authority to do so under Telecom Act Section 706.

Comcast, Time Warner Cable and Bright House have disputed CPUC’s federal Section 706 authority. They have also disputed the commission’s authority under Section 854 of the state Public Utilities Code to apply a more stringent burden of proof on the deals’ public interest benefits and to analyze deals associated with the main Comcast/TWC. A Comcast spokeswoman said “we are confident the record will demonstrate the many public interest benefits the transaction will bring to residential and commercial customers across the State.”

CPUC said it will make data requests on at least 11 separate categories. Those categories will include the safety and reliability of the companies’ equipment, customer complaints, the companies’ consumer terms and conditions, customer privacy policies, public safety and 911 services, post-merger systems integration, the companies’ California subscriber data and the companies’ Lifeline and voice services intentions. The commission said it will also request data on the deal’s effects on the state’s backhaul, business services and wholesale services markets.

'Very Thorough’

The scoping memo indicates the CPUC is planning a “very thorough” review of Comcast/TWC, though it doesn’t appear to be as intensive as the review the commission did of the failed AT&T/T-Mobile, said Paul Goodman, legal counsel to The Greenlining Institute, one of the parties protesting Comcast/TWC. “It’s certainly a much closer look than Comcast and TWC would have liked,” he said, though he said the commission was “very careful” to say it would review the deals within the scope of its authority. CPUC is “very aware of the California State Legislature’s feelings about the commission’s jurisdiction, but they'll still take a very close look,” Goodman said.

The CPUC’s Comcast/TWC review will still be “less aggressive” than the New York Public Service Commission’s review, Goodman said. The New York PSC has been doing its review under new regulatory rules requiring merger applicants to prove a deal is in the public interest. That commission’s review is viewed as moving closer to a conclusion after the state Department of Public Service staff filed recommendations for public interest conditions that should be attached to New York’s approval of the transaction (CD Aug 14 p5).

The thoroughness of CPUC’s pending review would track with its deal review history, which has included a “stellar record” of focusing on the broadband implications of telecom transactions, said California Emerging Technology Fund (CETF) President Sunne McPeak. CPUC established CETF through $60 million donated as part of conditions it set in its approval of SBC/AT&T and Verizon/MCI. CPUC’s review is likely to “keep pace” with the focus the New York PSC has brought to its review, McPeak said.

CPUC’s first responsibility is to examine the state-level impact of Comcast/TWC, but the most impactful result of its review is likely to come in any comments it files as part of the FCC’ review, McPeak said. “We think the far-reaching impacts of this proceeding require voices from across the country.” CPUC may file comments on Comcast/TWC with the FCC, but its main role will be to focus on consumer impacts at the state level, said Free State Foundation President Randolph May. “They'll use the process to look at areas in which they might attach conditions to the merger, like service quality and commitments on network buildouts."

CPUC’s review could provide meaningful feedback for the FCC review, said California Association of Competitive Telecommunications Companies (Caltel) Executive Director Sarah DeYoung. She said CPUC’s AT&T/T-Mobile review yielded useful information to the FCC and the Department of Justice on “unique” conditions in the California telecom market then. In the Comcast/TWC review, CPUC can provide feedback on the effect Comcast’s related proposal to divest 3.9 million TWC subscribers to Charter Communications and a spin-off company (CD April 29 p4 ) would have in California, DeYoung said. “The focus here isn’t so much about recognizing merger conditions as it is talking about the impact [Comcast-TWC] is going to have in California.” Caltel, which represents Level 3 and smaller telcos, is pleased CPUC is examining Comcast/TWC’s effects on the competitiveness of the business services and wholesale services markets as part of its review, DeYoung said. The deal’s effects on the residential market will also “matter a lot, especially in California with the addition of the Charter deal,” she said.