Commenters Clash Over Whether Comcast/TWC Will Affect Competition

The deal “would create an entity with the ability to control what millions of subscribers watch on TV and access on the Internet,” said Public Knowledge. Cisco (http://bit.ly/1p7ozUr), TechFreedom (http://bit.ly/1nzf7K2) and others disagreed. “Established principles of antitrust and communications law dictate that the merger is unlikely to harm consumers in either market,” said Christopher Yoo, director of the Center for Technology, Innovation and Competition at the University of Pennsylvania (http://bit.ly/1tGUxMH).

The concentration of “millions of broadband Internet subscribers in one firm” that would result from Comcast/TWC can’t be in the public interest, said Cogent Communications (http://bit.ly/1p7oG2v). Comcast’s dealings with Netflix and prices charged to residential customers are “warning signs” of the deal’s threat to the Internet, Cogent said. If the deal is approved, the new company would control 50 percent of the broadband pipes in the U.S. that have speeds appropriate for online video, Dish said in its petition to deny the deal (http://bit.ly/1vjPuVC). The deal could also lead to the spread of data usage caps, said Dish and anti-cap organization Stop the Cap. The deal would “subject nearly 12 million Time Warner Cable customers to Comcast’s usage limits” that Comcast has said would be in place for all Comcast customers within five years, Stop the Cap said. Such caps could also be used to discriminate against competing online video services, Dish said. “This could be done by exempting Comcast/TWC affiliated content from such data caps and then setting caps so low that consumers are incentivized to choose Comcast/TWC services over competing” services, said Dish.

A perceived threat to online video distribution was the focus of many of the comments on the deal’s effect on broadband. Because it’s vertically integrated, Comcast has “tremendous incentives to relegate streaming video to a niche complementary product market,” said Free Press’s petition to deny. “The video industry has come to depend on broadband, much more so today than the last time Comcast proposed an industry-changing merger,” said Dish. After Comcast/TWC, the new company will be big enough to “use the weapons available to it” to deny over-the-top video providers broad penetration with less risk of losing customers, since there will be fewer broadband alternatives, Dish said. “The chances of permanently damaging or destroying rivals such as Netflix’s and DISH’s online services would be greater."

Denying approval for a combined Comcast/TWC to protect online video would be limiting multichannel video programming distributors’ (MVPD) ability to compete, said TechFreedom. “Denying any cable operator the minimum scale needed to compete may deny consumers the benefits of seeing the MVPD model evolve.” Comcast/TWC’s large broadband customer base would put it in the best position to offer consumers superior broadband, said the Competitive Enterprise Institute. Netflix has “thrived” since Comcast/NBCUniversal combined, and not because of conditions protecting online video distributors, said Yoo: “Comcast’s conduct seems to be nothing more than ordinary licensing practices that are no different from any other industry actor."

The deal will also have widespread effects on programming costs, said the American Cable Association, Sinclair (http://bit.ly/1nzhegX) and many others. The post-transaction Comcast will have “increased bargaining power” over programmers, increasing “the disparity in programming fees paid by the largest cable operators compared to their small rivals,” ACA said. If Comcast discriminates against unaffiliated broadcasters, it could “result in loss of local programming valued by consumers,” said Sinclair. “Comcast would be so big [that] any broadcaster’s business could be existentially impaired as a result of Comcast’s sheer market power."

With Comcast in control of so many cable systems, networks that it doesn’t carry won’t be able to compete, said Spanish-language channel TVC United States, the Tennis Channel and the Independent Film and Television Alliance in separate comments. “Comcast has a history of leveraging its distribution assets to favor its affiliated programming entities in violation of commission requirements,” said Tennis Channel, which was part of an unsuccessful court challenge of Comcast’s carriage practices.

The deal’s approval will enhance Comcast’s ability to innovate, and spur other companies to do the same, said Cisco. The deal will cause “accelerated deployment of Wi-Fi” and drive the offering of new services using unlicensed spectrum, said Cisco. The deal should “benefit consumers that wish to use retail devices to access their pay-TV programming,” said TiVo (http://bit.ly/1tAIdyz), which recently reached a deal with Comcast over CableCARDs. “We believe the transaction should help the industry more quickly transition a post-CableCARD solution."

The California Public Utilities Commission (CPUC) and the New York Public Service Commission (PSC) didn’t urge the FCC to endorse or reject Comcast/TWC, but suggested factors the FCC should examine in its review. The CPUC (CD Aug 18 p1) and the New York PSC (CD Aug 14 p5) are still considering Comcast/TWC for state-level impacts, with observers saying both states are likely to subject the proposed merger to a thorough review.

CPUC said the FCC should require Comcast and TWC to demonstrate why they couldn’t provide the merger benefits they've cited “if they remain separate entities.” CPUC said the FCC should require Comcast to justify its claim that Comcast/TWC wouldn’t harm the public interest and to “closely” review Comcast’s administration and implementation of its Internet Essentials program (http://bit.ly/1pdOMXA).

The New York PSC urged the FCC to focus its review on “market power issues” that Comcast/TWC would pose. The FCC should examine the extent to which the Comcast/NBCUniversal conditions should extend into TWC service areas and how to improve enforcement of those conditions, access to affordable broadband and whether “robust” remedies would be put in place to thwart potential harms caused by possible loss of diversity in local programming, the New York PSC said (http://bit.ly/1zzKqdj).

NAB won’t opine on “the substance of the proposed merger” and is “monitoring the record,” it said. NAB said it “understands that Comcast is engaged in conversations with a number of broadcasters to hear their concerns relating to the transaction’s potential implications for broadcasters.”