Dec 23, 2014

FCC Comment Cycle Closes on Comcast-TWC Transaction

Today, the FCC’s formal comment cycle for the Comcast-TWC transaction concludes.  We look forward to the FCC continuing its thorough examination of the comprehensive record before it, and completing an expeditious review and approval early next year.

We’ve built a compelling record in favor of the transaction.  That record starts with the strong public interest benefits of the transaction, supported by nearly 600 thoughtful and positive comments from a wide range of supporters – including more than 100 Chambers of Commerce and business organizations, a substantial and diverse group of businesses ranging from start-ups to national technology equipment makers, more than 30 programmers, numerous antitrust experts, nearly 200 diversity groups and community partners, leading advertisers, private citizens, and more than 100 state and local leaders and elected officials.  These supporters have offered concrete and personal accounts of their positive experiences with Comcast and our commitment to the communities we serve; to the substantial investments and system upgrades we have made; to the innovations we have pioneered; and to the diversity, accessibility, broadband deployment, and community initiatives we have spearheaded.

We also have demonstrated the absence of serious competitive harms arising out of the transaction.  The record contains serious and compelling legal, factual, and economic analyses of the purported competitive and public interest harms of the transaction – and thoroughly and persuasively rebuts every argument that has been raised by opponents of the transaction.  Our final comments today include a comprehensive chart laying out every argument that has been raised by opponents to the transaction, and summarizes our response, with detailed citations to the record.

As in many prior transactions, it is no surprise that various parties have attempted to use this review process to try to advance agendas they may have on industry-wide issues and air pre-existing grievances that are not related to this transaction.  While these opponents have leveled various allegations, they do not meaningfully contest or contradict the substantial benefits we have demonstrated and supported with compelling evidence. 

Our comments filed today continue to address the key issues at stake in the FCC’s regulatory review, including the broadband market, interconnection and peering, programming related issues, and several other concerns raised by commenters.

With respect to the retail broadband market, while various critics continue to try to promote the notion that the transaction will give Comcast an overwhelming share of the "national broadband market," we continue to show that this argument is based on improper definitions and ignores market realities and established principles of economic analysis and prior FCC and DOJ precedent.  Consumers choose broadband providers at the local – not national – level, and the transaction will have no impact on local broadband shares and will in no way reduce the number of broadband choices available to consumers. 

Moreover, even if you ignore the record and prior FCC and DOJ precedent, Comcast’s share of any "national" broadband market is not dangerously high and does not increase materially as a result of the transaction.  Critics’ assessment of Comcast’s  broadband "share" ignores the realities of DSL and wireless competition, and the actual speeds that consumers can and do use today.  Even when applying the speed threshold of 25 Mbps that some parties have insisted is the only relevant broadband speed, the transaction has no material impact on competition: even at this high threshold, the combined company’s broadband share would increase by only one percent.

Some parties have tried another route, arguing instead that the real harm threatened by the transaction is the creation of undue market power in peering, which Comcast will use to disadvantage or degrade OVDs and other edge providers.  The most vocal proponents of this theory are Netflix and Cogent, whose arguments are flawed and fundamentally non-transaction-specific.  Their arguments and allegations all relate to pre-transaction conduct, and are also the same points these parties have raised in general rulemaking proceedings and in the AT&T-DirecTV transaction proceeding.  And declarations from economists and network engineers decisively refute the theory that Comcast will have any ability or incentive to restrict Internet edge provider or OVD access to its network, regardless of its retail ISP market share, which is an entirely distinct market. 

On programming related issues, we’ve noted that filers like Discovery, RFD-TV, The Blaze, and Back9 continue to attempt to use the review process to obtain higher fees – up to $5 billion in additional costs for consumers which would add about $4 a month to consumer bills.  These claims are decidedly not in the public interest, although they may be in the private interest of the objecting companies.

The monopsony and bargaining power claims related to programming are countered by specific facts that address any program carriage or program access concerns:


  • After divestitures, Comcast will add approximately seven million net customers and manage systems serving less than 30% of all residential MVPD subscribers – approximately the same share approved by the FCC in the AT&T Broadband and Adelphia transactions.
  • The D.C. Court of Appeals has previously concluded that a 30 percent "ownership cap" based on monopsony power concerns was too low – that an MVPD with a 30% market share simply did not possess monopsony power.  And these court decisions occurred when the MVPD market was considerably less competitive than it is today.  As we demonstrate, in today’s fiercely competitive video distribution marketplace, programmers enjoy significant bargaining leverage (as evidenced by programming costs that are rising significantly faster than cable prices).
  • Comcast has a stellar record of strong support for independent programmers.  Today, Comcast carries over 160 independent networks, including many small, diverse, and international ones, and six of every seven networks carried by Comcast are unaffiliated with the company.  Since 2011, Comcast has added 20 independent networks, and has substantially expanded carriage of 141 independent networks by over 217 million customers, collectively.  The vast majority of programmers – and independent programmers – who have weighed in on the transaction support it unequivocally.
  • The transaction will not increase Comcast’s incentive or ability to withhold or demand supra-competitive prices for affiliated programming from rival MVPDs or OVDs.  A withholding strategy doesn’t make economic sense and would only harm NBCUniversal’s bottom line. 


The other harms advanced by critics regarding advertising, set-top boxes, customer service, voice competition, PEG access, and sundry other claims are similarly fully refuted by evidence.  Marketplace facts and economic analyses demonstrate that the theorized harms are unsubstantiated and generally not transaction-related.

The media and communications industry of today is fundamentally different from the industry of 20, 10, or even just five years ago, and is one marked by constant technological evolution and change.  We have begun the process of transforming from a regional cable company into a leading media and technology company.  This transaction is part of the natural evolution of the industry – and of Comcast – in response to new competitive dynamics, and one that will bring about significant public interest benefits. 

For example, former NY Mayor Michael Bloomberg, now CEO of Bloomberg L.P., captured the competitive and technological dynamism of this industry well in a recent article he wrote where he, despite having had some concerns with the Comcast-NBCUniversal deal, supported approval of the TWC transaction.  He wrote, "… I think regulators, after doing their due diligence and negotiating conditions, will recognize that the Comcast- TWC merger is part of the natural evolution of an industry that will continue to be subject to major disruptions from technological advances."

This transaction will leave Comcast with roughly the same percentage of MVPD subscribers that it served after two prior cable transactions approved by the FCC.  Those prior transactions resulted in the availability of advanced video services and fast broadband across our footprint.  With this transaction, we want to extend those benefits to Time Warner Cable customers unleashing faster Internet speeds, next-generation TV, more robust WiFi, and low-cost Internet through our acclaimed Internet Essentials program.  We continue to believe that the transaction should be approved by the regulatory agencies, and look forward to continuing to work with them as the review process proceeds.

Tags : TWC, TWC Transaction


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