The DOJ must say no
Comcast and Time Warner Cable executives planned to visit the Department of Justice today to try to salvage their companies’ stalled merger. DOJ staff reportedly fear this tie-up would diminish competition. The Federal Communications Commission must also pass judgment on whether the deal serves the public interest. I believe the merger fails both the anti-trust and the public-interest metrics. Further, no set of conditions can ameliorate the harms that would result from allowing the nation’s largest cable company to swallow up its next-largest rival. At stake is more than just who controls the cable programming market; this is about who controls broadband, and how we connect and communicate in the 21st century.
First, some history: Four years ago, Comcast acquired NBCUniversal. As a commissioner at the FCC, I cast the lone vote against that combination. I said I found its marriage of broadcast and broadband, medium and message, content and carriage was “simply too much, too big, too powerful, too lacking in benefits for American consumers and citizens.” Nevertheless, the commission approved the merger with “conditions” designed to offset its defects.
Even as the ink was drying on the conditions, Comcast systematically set about ignoring, skirting, or undermining them. It set about assigning Bloomberg Television to the stratosphere of its channel lineup, thereby breaking promises to locate competing channels in the same “news neighborhood” so viewers could easily surf back and forth. Comcast-owned CNBC, of course, got a prime spot in the listings. When challenged, Comcast unleashed its army of attorneys to bicker over the meaning of “news” and “neighborhood.”
There’s more. Comcast committed to offering standalone broadband in its service territory at affordable rates. But because it prefers to sell more profitable service bundles, the company buried the standalone broadband product in its marketing. That stunt earned Comcast an $800,000 fine, a welcome gesture but a pittance for such a massive firm. A merged Mega Comcast could flaunt any rule it disliked.
At other times, Comcast complied with the letter of the law if not its spirit. Consider Internet Essentials, its low-cost, low-speed program for needy households. It sounds great, but in practice, Comcast has done a better job advertising the program to regulators than to actual users. Thanks to complex qualification requirements and Comcast’s half-hearted ad campaign, Internet Essentials only reaches a fraction of eligible households – a paltry 11% in California. Comcast even admitted that the program was about winning approval of the NBCU merger – not delivering quality, affordable service.
These and other examples should give regulators serious pause. They suggest Comcast is not negotiating in good faith. Rather than a set of conditions to abide, it sees loopholes to litigate.
Comcast’s recent behavior in California, where the state’s Public Utility Commission is reviewing the merger plan, eliminates any doubt. Earlier this year, the commission tentatively approved the deal with a bevy of conditions. Yet again, Comcast dismissed even the most reasonable requests. The firm deemed the requirement that it verifiably extend Internet Essentials to 45% of eligible California households within two years “simply unattainable.”
Comcast and Time Warner Cable are accustomed to getting their way. For years, their political action units have distributed mammoth campaign checks to make friends in high places and write their own rules, shutting out competition and consumer protection in the process. Friendly policymakers come in handy when you’re looking to book the next deal or cover for abysmal service. It’s no surprise that last year a University of Michigan consumer study rated Comcast and Time Warner Cable the two most unpopular ISPs in America.
The tide may be turning. Most of the roughly 800,000 citizens who have contacted the FCC are opposed to the merger – and the agency has never approved a merger over this much opposition. Comcast’s customers understand that nothing in this merger would improve shoddy cable broadband service. If anything, the merger would make matters much worse. Mega Comcast would wield more than enough market power to restrain rivals and jack up prices. Perhaps worst of all, the deal would foreclose countless innovations. Would-be creators and competitors may look at Comcast’s dominance, reckon that competing with an 800-pound gorilla is hopeless, and cancel plans to bring a new broadband choice, an interesting cable channel, or an exciting app to market.
This merger has monopoly written all over it, and regulators cannot trust Comcast to abide by conditions. With so much at stake, including who controls our small-d democratic discourse, the FCC and DOJ must say no.
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