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Comcast Prepares to Launch All-Out Attack on C Spire’s Irritating Competition in Mississippi

comcast crushThe sleepy deep south isn’t often a battleground for an all-out broadband competition war, but Ridgeland, Miss.-based C Spire, a regional cell phone company with fiber broadband aspirations, has gotten too big for its britches and Comcast is preparing to demonstrate its size and resources can run even a home state provider into the ground.

C Spire is building a statewide fiber-to-the-home network, city by city, on its pre-existing fiber backbone which extends to C Spire’s cell towers across the Magnolia State. As the fiber network expands, talk of doing something in a “Mississippi Minute” will be a thing of the past as C Spire prepares to deliver gigabit broadband speeds far in excess of what competitors like Comcast, AT&T and Cable One are prepared to offer.

Communities already on the construction list include: Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville.

But C Spire’s network caught the attention of Comcast earlier this month when it announced Jackson, the state capital, was going to get fiber service.

C Spire is following Google Fiber’s model, attempting to get enough residents in a neighborhood to pre-register with a refundable $10 deposit. Online pre-registration for the service began in Jackson last month, and several hundred residents applied even before the fiber network expansion was announced, ready to tell Comcast to take a hike.

Jackson neighborhoods that reach sign-up levels set by C Spire will be the first to get the new generation of fiber services, the company says.

“Gigabit infrastructure can create a new economic reality for the city of Jackson,” Duane O’Neill, president & CEO of the 2,100-member Greater Jackson Chamber Partnership, told the Mississippi Business Journal. “In the handful of U.S. cities where this infrastructure is deployed and widely available, it has generated thousands of jobs, millions of dollars of new investment, boosted home values and improved the overall quality of life.”

c spire fiberC Spire’s plans could cost Comcast a significant number of cable customers across Mississippi, and it isn’t taking that lightly.

Departing from its usual tradition of focusing new technology on large northeastern cities, Comcast will begin saturating Jackson with its Wi-Fi hotspot service, starting with 200 public hotspots slated for launch before the end of this year. The company only had a handful of Wi-Fi hotspots in Jackson before. Jackson will also get significant cable service upgrades, including the introduction of a new “smart home” service, a cloud-based service integrating Comcast’s cable, Internet, and home-security.

Comcast says it has plans to turn Jackson into a “truly connected city,” and if that means competitively disconnecting C Spire from its nascent fiber customer base, all the better.“This is the kind of threat that would frighten competitors,” said industry observer Jeff Kagan. “Comcast can be a heavy-duty competitor when they want to be. So why is Jackson and other Mississippi cities getting this kind of attention from Comcast and C Spire? I think it’s a matter of competition and C Spire’s aggressive move in the state of Mississippi played a role in the Comcast decision to turn up the heat.”

Kagan also expects Comcast will cut prices to undercut C Spire. That would be consistent with Comcast’s customer retention policies that dramatically lower rates for customers threatening to leave. Rate-cutting will benefit consumers, but if Comcast engages in below-cost predatory pricing, those savings will be short-lived.

“It’s starting to look like that old nursery rhyme, Jack and the Beanstalk,” said Kagan. “Watch out Jack, the Giant is waking up.”

If that battle becomes cut-throat, C Spire’s fiber aspirations may end up nothing more than pipe dreams if the company retreats, deciding it cannot survive in a battle with Comcast, the Giant of all cable companies.

Rogers Snaps Up Another Independent Cable Company; Hamilton-based Source Cable

source-cableRogers Communications will acquire Hamilton, Ont.-area independent Source Cable in a quiet $160-million deal.

The transaction was first noticed in Rogers’ quarterly financial report to shareholders, noting that Source Cable provides cable, broadband, and phone service to only a part of the city of Hamilton. Rogers already provides service next to Source Cable’s service area so a transition to Rogers should pose few issues for eastern Canada’s biggest cable operator. The rest of greater Hamilton will continue to be served by Cogeco and Rogers in their respective service areas.

“We’re really excited about purchasing Source Cable,” said Kevin Spafford, Rogers Communications spokesperson. “We view this acquisition as a growth opportunity because the company is well run; the footprint is adjacent to our existing cable systems; they have really good penetration of cable TV and Internet services, and there is potential for new customers as the unbuilt part of the area develops.”

Subscribers are less enthusiastic.

The cable company has always been responsive to its customers and willing to pioneer new technology before larger providers like Rogers.

Source Cable customers may win some extra ethnic language programming now seen on Rogers, but will likely experience a major downgrade in how they deal with their cable provider. Source customers will eventually be exposed to Rogers’ much lower-rated customer service. Broadband customers are also likely to lose their unlimited Internet service, forced to select from Rogers’ usage-capped plans.

Source Cable was started by former city alderman Jim Campbell in 1974. Campbell died two years ago.

Source Cable's service coverage area is limited to a number of blocks in parts of Hamilton, Ont.

Source Cable’s service coverage area is limited to a number of blocks in parts of Hamilton, Ont.

 

Tesco Grocery Chain Offers 16Mbps Broadband to UK Residents Free for a Year (After Line Rental)

Phillip Dampier October 27, 2014 Broadband Speed, Competition, Consumer News, Tesco (UK) No Comments

tesco broadbandOne of the largest grocery chains in the United Kingdom is giving away free unlimited 16Mbps broadband for a year, including a free wireless router, as long as customers cover the usual monthly line rental fees.

The service is offered without a voice dialing plan, which means customers will pay for any voice minutes they use, except when those calls are to or from Tesco Homephone customers. Internet customers also receive a free year of Tesco Internet Security and UK-based phone support. The optional phone service also includes Caller ID, Caller ID blocking, and Directory Inquiries.

In fact, Tesco’s offer will actually be a money-maker for customers who already have home phone service because Tesco also includes Clubcard points on every bill, which can be redeemed on purchases made at the chain.

After 12 months, the price reverts to Tesco’s current standard offering: 16Mbps for $9.68 a month.

Tesco’s line rental charge, required on all landlines and DSL service costs $24.83 a month.

In comparison, CenturyLink charges $39.95 a month for 10Mbps service for a year before the price increases. But customers will pay considerably more than that, as that price does not include taxes, fees, and surcharges, including a Carrier Universal Service charge, National Access Fee surcharge, a one-time, High-Speed Internet activation fee, and state and local fees that vary by area and certain in-state surcharges. A monthly modem rental fee also applies.

 

Sprint Realizes Not Everyone Wants a $200 Cell Phone Bill: Announces $20, 1GB Family Data Plan

budgetIf your family budget cannot handle a $200 monthly cell phone bill from AT&T or Verizon and you can keep your data usage to around 1GB, Sprint has a deal for you.

On Wednesday, Sprint unveiled a low-end family data plan offering 1GB of data for $20 a month, an improvement over the 600MB data option Sprint used to offer. It’s also a better deal than the 500MB $20 buys you on Verizon’s network or the piddling 300MB AT&T delivers on its budget plan.

“This entry-level sharable data allowance reinforces Sprint’s commitment to offering customers the best value in wireless,” said Marcelo Claure, Sprint CEO. “We’re offering customers a choice – whether they need a small amount of data or are a high-end data user.”

Customers can build their own plan in three steps. First, choose the shared data allowance. For 1GB, it’s $20 per month for up to 10 lines. Second, add data access for phones with unlimited talk and text while on the Sprint network. The data access charge for non-discounted phones is $25 per month per line for 1GB through 16GB. Third, add your tablet devices for $10 per month per line and mobile broadband devices for $20 per month per line. There is no early termination fee and no annual service contract with non-discounted phones.

In addition, when customers switch their number to Sprint, a family with up to 10 lines can get 20GB of shared data and unlimited talk and text for only $100 a month through 2015.

This chart reflects a 2GB shared data plan for two lines that amounts to $75 a month before taxes, fees and surcharges.

This chart reflects a 2GB shared data plan for two lines that amounts to $75 a month before taxes, fees and surcharges.

Since wireless carriers discovered reports of a spectrum crisis were vastly exaggerated, they have fallen all over each other with “double your data” promotions and other allowance boosters. Sprint’s family plans allow customers to divide up an inexpensive data plan across all phones on the account. If you spend most of your time on Wi-Fi or share an account with parents or grandparents not accustomed to using much data, Sprint’s plan may deliver enough data to satisfy.

Sprint has hemorrhaged its high-end customers for several quarters, mostly because its 3G data service is barely usable and its new 4G LTE network has rolled out at the typical speed of a glacier and its performance has not always impressed. Sprint has cut prices and is trying to find a stable niche among budget-conscious postpaid customers unwilling to pay AT&T and Verizon’s asking price but are willing to tolerate reduced coverage in favor of a better price. Sprint and T-Mobile are both competing for these customers. Verizon says it cannot be bothered being seen as a discount carrier, and AT&T is committed to keeping its average revenue per customer numbers growing.

Half of AT&T’s Customers Are Paying $100 for 10GB Data; Unlimited Customers Still Throttled After 3-5GB

Speed bump

Speed bump

More than half of AT&T’s wireless customers are paying at least $100 a month for 10GB or more of wireless data on AT&T’s Mobile Share Plans at the same time AT&T continues to throttle its legacy unlimited data customers who use more than 3GB of data on its 3G network or 5GB of data on its 4G LTE network.

AT&T claimed in 2012 it implemented its “fair usage policy” for unlimited customers to assure all could receive reasonable service during peak usage times when cell towers become congested.

AT&T also blames “a serious wireless spectrum crunch” for the speed throttling, implying access to more spectrum could help ease the problem. But there is a much faster way to overcome AT&T’s “spectrum crunch:” agree to pay them more money by ditching that $30 unlimited plan for a tiered plan.

John Stephens, AT&T’s chief financial officer, told investors Wednesday that nothing boosts revenue more than pushing customers into usage-cappped data plans that customers are regularly forced to upgrade.

“On the ARPU (average revenue per user/customer) story, I think the biggest issue with the improvement is people buying the bigger [data] buckets and buying – upping plans,” said Stephens. “We had over 50% of the customer base at the 10GB or bigger plans.”

Stephens added that AT&T benefited from customers upgrading to 4G LTE devices that are handled more efficiently by AT&T’s mobile data network.

Increased usage and upgraded data plans delivered a 20% increase in data billings over the last quarter.

Since 2012 AT&T has paid out more than $50 billion to shareholders through dividends and share buybacks. The company benefited from nearly $20 billion a year in free cash flow and asset sales over the last two years and is expected to repeat those numbers this year. Consolidated revenue at AT&T grew to $33 billion, up $800 million since the same time last year.

Miraculously, despite the “alarming spectrum crunch,” AT&T found more than enough spectrum to award its best customers with a “double data” promotion that turns a 15GB data plan into a 30GB plan, a 20GB plan to 40GB, a 30GB plan to 60GB, a 40GB plan to 80GB, or a 50GB plan to 100GB. Importantly, AT&T boasts its double data promotion won’t “explode” — their language for “expire” — on customers until their contract ends.

Lowering the bar on "unlimited use" customers.

Lowering the bar on “unlimited use” customers.

“Those exploding offers — customers hate those offers,” said AT&T Mobility CEO Ralph de la Vega at a recent investor conference. “Unless they change their mind, we won’t offer those kinds of promotions.”

But de la Vega doesn’t mind leaving the company’s most loyal legacy customers in the penalty box if they cling to their grandfathered unlimited data plans. The throttles stay and the allowances have remained unchanged since first announced, despite the bountiful spectrum obviously ready and available to serve AT&T’s deluxe customers. Unlimited customers are regularly reminded they can easily avoid the throttle — just abandon that unlimited data plan. According to Stephens, more than 80% of AT&T’s customers already have.

The excuses for wireless speed throttles and killing off unlimited data plans at AT&T and Verizon Wireless don’t seem to wash with FCC chairman Thomas Wheeler, who demanded Verizon offer the “rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors,” after it announced it was planning speed throttles for its remaining unlimited data plan customers. Verizon canceled the plan after Wheeler began scrutinizing it, but the throttles are still in place at AT&T.

AT&T’s 10GB Mobile Share Plan starts with a $100 data plan. Customers also pay:

  • $10 a month for each auto-based smart-locator;
  • $10 a month for each tablet, camera or game device;
  • $15 a month for each basic phone;
  • $20 a month for each wireless home phone replacement;
  • $20 a month for each connected Internet device;
  • $40 a month for each connected smartphone.

A family of four with four smartphones, a tablet, and AT&T’s wireless home phone replacement would be billed $290 a month before at least $39 in taxes, fees, and surcharges — well north of $300 a month for most.

T-Mobile: AT&T Gouges Us With Data Roaming Rates 150% Higher Than Average

bill shockT-Mobile has asked the Federal Communications Commission to investigate AT&T’s “artificially high roaming rates” charged when its customers travel outside of T-Mobile’s home service area.

T-Mobile is heavily reliant on AT&T for roaming service outside of major cities and the country’s smallest national wireless carrier complains AT&T is using their market power to put it at a major disadvantage, which could force new limits on roaming access in some areas.

T-Mobile provided examples of the damage already done by AT&T’s roaming rates:

“Limitless Mobile has severely restricted its customers’ access to AT&T’s network ‘for the sole reason that AT&T’s data roaming rates are too high and by continuing roaming access, Limitless could not maintain a commercially competitive retail wireless data offering to the general public,’” T-Mobile told the FCC.

The Rural Wireless Association noted that competing carriers “cannot sustain the provision of data roaming services if [they] must provide that service at a loss.”

The problem of data roaming rates is getting larger as carrier agreements are due for renewal at many mobile providers. Independent cellular companies are finding AT&T unwilling to renew at prices and terms comparable to their existing contracts. Instead, they face renewal rates that average a minimum of 10 and as much as 33 times higher than the national carriers’ retail rates.

For example, T-Mobile’s agreement with AT&T includes a data roaming rate that is now 150 percent higher than the average domestic rate that T-Mobile pays for data roaming.

This is one thousand percent higher than the data roaming rate negotiated between Leap Wireless and MetroPCS prior to their respective acquisitions, wrote T-Mobile.

With the stark price increases, carriers have begun imposing limits, including speed throttling and data caps, on customers when roaming on AT&T’s network.

t-mobile-set-recordBecause of AT&T’s artificially high roaming rates, T-Mobile wireless customers roaming in South Africa have a better user experience than customers roaming on AT&T’s network in South Dakota, argues T-Mobile. Their speed is twice as fast, and their data usage is unlimited.

T-Mobile is asking the FCC to intervene by establishing some type of standard about what constitutes “commercially reasonable” roaming rates as part of its 2011 Data Roaming Order, designed to protect competition.

This year, carriers dependent on Verizon Wireless or AT&T to help deliver “nationwide coverage” are negotiating roaming access to the companies’ 4G LTE networks for the first time. Most roaming agreements used to only cover 3G service, delivered at a slower speed.

If carriers like Sprint and T-Mobile are unable to negotiate fair terms, both companies will be at a major competitive disadvantage, relegated to providing only regional coverage or charging higher prices for roaming service.

AT&T vice president of regulatory affairs Joan Marsh said T-Mobile’s request bordered on being illegal, in direct violation of the Telecommunications Act. Marsh argued T-Mobile and other carriers should be incentivized to build their own networks instead of relying on cheap roaming access from companies like AT&T. Marsh added any move by the FCC to set rates or benchmarks would be beyond the FCC’s mandate. Wireless carrier rates are deregulated and not subject to common carrier regulation.

Time Warner Cable Unveils $26/Mo 6-Tuner, 1TB DVR in Los Angeles, New York Maxx Markets

Phillip Dampier October 21, 2014 Competition, Consumer News, Time Warner Cable 3 Comments
TWC enhanced DVR 400x300

Arris DCX 3600 enhanced DVR for Time Warner Cable Maxx customers

Time Warner Cable’s enhanced DVR is here, at an enhanced price starting at $26/month.

Time Warner customers have long waited for an upgraded DVR capable of storing and recording more shows, and the Arris DCX 3600 is the result.

Available soon in Los Angeles and New York (and later in other TWC Maxx-upgraded markets), the enhanced DVR includes six tuners and 1TB of storage, enough to keep around 150 hours of HD programming.

The DVR includes QAM/RF-capability and a DOCSIS 3 modem built into the box. Time Warner Cable has set the monthly price for the box at $15.99 for single room DVR service, $19.99 a month for whole-house DVR service. An additional equipment rental fee also applies: $10.25/mo for the box and remote control, $11.75/mo if you are subject to Time Warner’s “additional outlet service fee.” That means customers will pay up to $31.74 a month for the DVR alone. Customers who subscribe to a bundled service package will likely pay significantly lower rates for the enhanced DVR.

Time Warner arrives very late to the DVR competition wars. Its current boxes can usually record only up to two shows at once and storage space, usually enough for 80 hours, may require customers to clear out older shows to make room for new ones.

Time Warner’s competitors are still able to beat Time Warner’s new DVR:

  • AT&T U-verse comes closest to Time Warner, offering a four tuner DVR that can store up to 422 hours of SD programming, 155 hours in HD;
  • Comcast is testing its new X1 video platform that can record 15 programs at the same time by linking together multiple HD-DVRs;
  • Dish Network’s Hopper HD-DVR can record eight shows at once, and DirecTV’s Genie can manage five recordings at the same time;
  • Verizon FiOS Quantum TV customers can record a maximum of 12 shows at once and its DVR package offers 2TB of storage.

The new equipment should be available in New York and Los Angeles by the end of this month and will gradually be introduced in other TWC Maxx cities planned for upgrades: Charlotte, N.C., Dallas, Tex., Hawaii, Raleigh, N.C., San Antonio, Tex., and San Diego. No word on when the new boxes will be available in Austin, Tex., where upgrades are already underway.

Customers in other Time Warner Cable cities will have to make do with older DVRs until either Time Warner schedules Maxx upgrades or Comcast succeeds in buying Time Warner.

New Zealand Getting 200/200Mbps Uncapped Fiber Broadband

Snap-Logo-2-300x300New Zealanders want faster broadband and they want it without a usage cap, and Snap is ready to offer both.

Snap’s nationwide 200/200Mbps Ultra-Fast Broadband commenced this week providing the fastest broadband on offer throughout New Zealand, priced at $111.50 a month with an unlimited use add-on available for an extra $8 a month. To date, the service had only been available in Auckland.

Kiwis can sign up for Snap on the Chorus network for the fastest 200/200Mbps speeds. Those served by Enable or UltraFast Fibre will see upload speeds reduced to 20Mbps for now, but will also be compensated with a lower monthly price: $87.71.

A wireless gateway to support the faster speeds will be provided at no extra cost to customers signing up for 200Mbps service.

no limitsSnap’s new service comes as a result of New Zealand’s deployment of fiber networks and an end to usage caps, consumption billing, and/or bandwidth throttling. Snap has been well received in New Zealand because it guarantees no traffic shaping, traffic management schemes, or mandatory usage caps. This comes at a time when North American providers are trying to force customers into usage-capped broadband plans and wireless carriers insist on using traffic shaping and caps.

“There is no faster commercially available service across the whole country today,” said James Koers, general manager, Snap Retail. “We’ve built our own network to ensure customers receive the fastest, most reliable service possible. We don’t cache or proxy or shape traffic in any way, giving customers peace of mind that they’re getting the service they expected and paid for.”

Koers adds there is a clear demand for fiber optic broadband across the country.

“Today, two out of every three of our sign-ups are for a fibre service which shows New Zealanders’ appetite is increasing for UltraFast Broadband as it becomes available,” said Koers. “200Mbps is just the beginning though as we’re now trialling Chorus’ new 1Gbps residential service.”

PC Magazine has rated Snap the fastest broadband provider in the country.

Rural America: Welcome to Verizon LTE Broadband – $120/Mo for 5-12Mbps With 30GB Cap

They are coming.

With both AT&T and Verizon petitioning various state regulators for permission to switch off rural landline phone and broadband customers and force customers to use wireless alternatives, getting affordable broadband in the countryside is becoming increasingly difficult.

Last week, Millenicom — a reseller of wireless broadband service specializing in serving rural, long-haul truckers, and recreational vehicle users notified customers it was transferring their accounts directly to Verizon Wireless and will no longer have any role selling discounted Verizon Wireless broadband service.

Reports indicate that Millenicom’s contract renewal negotiations with Verizon did not go as expected and as a result customers are facing potential price increases and long-term contracts to continue their wireless broadband service.

Both AT&T and Verizon have told regulators they can satisfactorily serve rural customers with wireless LTE broadband service as an alternative to maintaining rural landline infrastructure. Neither company likes to talk about the price rural customers will pay if they want to keep broadband in their homes or businesses.

Some Millenicom customers have been invited to preview Verizon Wireless’ Home LTE Installed Internet plans (formerly known as HomeFusion) and many are not too pleased with their options:

lte1

lte2

Verizon’s overlimit fee is $10/GB for those that exceed their plan limit. According to several Amazon.com reviews of the service (it received 1.5 stars), customers are quickly introduced to “Verizon’s shady usage meter” that consistently measures phantom usage. Bills of $400-500 a month are not uncommon. One customer was billed for 18GB ($180) in extra usage despite following Verizon’s suggestion to stop using the service when it reported he reached 29GB of usage.

verizon bill

This bill includes more than $3,000 in data overlimit fees.

“The bill came with the bogus data charges, and it was twice as much as the meter detected,” the customer reported.

In fact, the phantom usage has become so pervasive, Verizon customers have dubbed the phenomenon “ghost data,” but the overlimit fees Verizon expects customers to pay are very real.

“[It] went out more than my DSL and my first bill from Verizon was $1300+,” reported Jill Kloberdanz. “I want this demon out of my house.”

“According to [Verizon], I used over 65GB in just one week,” reported Aron Fox. “And they want almost $800 for it. My wife and I are two 60-somethings that never game and rarely stream.”

“Definitely stay away [...] unless you like to see your data charges skyrocket (in my case more than doubling) when your use doesn’t,” reported Richard Thompson. “I’ve pulled the plug on it — literally.”

“We have the same problem – huge data overages, meter does not match our usage,” writes Heather Comer. “We turn the router off at night and when we check the next morning, it is still accumulating data.”

There are close to a dozen more complaints about Verizon’s usage meter, all stating they were charged for usage even when the equipment was switched off.

While both Verizon and AT&T stand to save millions disconnecting rural landline customers, they stand to earn even more switching rural customers to their more costly (and profitable) wireless alternatives.

The Capitol Forum’s Insightful Review of the Comcast-Time Warner Merger Deal: A Tough Sell

be mineWall Street is increasingly pessimistic about Comcast and Time Warner Cable pulling off their merger deal as regulators stop the clock to take a closer look at the transaction.

The Capitol Forum, an in-depth news and analysis service dedicated to informing policymakers, investors, and industry stakeholders on how policy affects market competition, specializes in examining marketplace mergers and their potential impact on American consumers and the general economy. The group has shared a copy of their assessment — “Comcast/Time Warner Cable: A Closer Look at FCC, DOJ Decision Processes; Merits and Politics May Drive Merger Challenge, Especially as Wheeler Unlikely to Embrace Title II Regulation for Net Neutrality” — with Stop the Cap! and we’re sharing a summary of the report with our readers.

The two most important government agencies reviewing the merger proposal are the Federal Communications Commission and the Department of Justice. The FCC is responsible for overseeing telecommunications in the United States and is also tasked with reviewing telecom industry mergers to verify if they are in the public interest. The Department of Justice becomes involved in big mergers as well, concerned with compliance with antitrust and other laws.

In many instances, the two agencies work separately and independently to review merger proposals, but not so with Comcast and Time Warner Cable.

Sources tell Capitol Forum there is a high level of coordination and information sharing between DOJ and the FCC, potentially positioning the two agencies in a stronger legal position if they jointly challenge the merger. Readers may recall AT&T’s attempt to buy T-Mobile was thwarted in 2011 when the FCC followed the DOJ’s lead in jointly challenging the merger on competition and antitrust grounds. With a united front against the deal in Washington, AT&T quickly capitulated.

comcast cartoonDespite a blizzard of Comcast talking points claiming the cable industry is fiercely competitive, Capitol Forum’s report indicates the DOJ staff level believes the cable industry suffers dearly from a lack of competition already, and allowing further marketplace concentration would exacerbate an already difficult problem.

Capitol Forum reports the DOJ’s staff is inclined to “take an aggressive posture with regards to [antitrust] enforcement.”

The DOJ would certainly not be walking the beltway plank to its political doom if it ultimately decides to oppose the merger.

Few on Capitol Hill are likely to fiercely advocate for a cable company generally despised by their constituents. The Capitol Forum report notes that Comcast faces powerful opposition and its political support is overstated. Comcast’s lobbying efforts and ties to President Obama and several high level Democrats have also been widely exposed in the media, which makes it more difficult for D.C.’s powerful to be seen carrying Comcast’s water.

In fact, the report indicates a regulatory challenge against Comcast and Time Warner Cable would face considerably less political opposition than what the FCC faces if it reclassifies broadband as a “telecommunications service,” protecting Net Neutrality and exposing the industry to stronger regulatory oversight.

The report suggests FCC Chairman Thomas Wheeler, who seems intent on opposing reclassification of broadband under Title II, may appease his critics by taking a stronger stance on the Comcast/Time Warner deal instead.

Wheeler has already expressed concern about the state of competitiveness of American broadband. He considers providers capable of delivering at least 25Mbps part of broadband’s key market, which in many communities means a monopoly for the local cable operator.

Understanding “The Public Interest” and the Implications of a Combined Comcast/Time Warner Cable on Competition

comcastbuy_400_241The FCC will review the transaction pursuant to Sections 214 and 310(d) of the Communications Act of 1934, in order to ensure that “public interest, convenience, and necessity will be served thereby.”

The merger proposal must also demonstrate it does not violate antitrust laws.

It is here that merger opponents have a wealth of arguments to use against Comcast and Time Warner Cable.

Despite Comcast’s insistence the deal would have no competitive implications, the Capitol Forum reports the merger’s potential anticompetitive effects are “widely recognized and evidence from the investigation could provide DOJ and FCC with a solid foundation to challenge the merger.”

Although the two cable companies don’t directly compete with each other (itself a warning sign of an already noncompetitive marketplace), the report finds “a wide array of anti-competitive effects and several antitrust theories” that would implicate the cable company in a Clayton Act violation.

Comcast is betting heavily on its surface argument that by the very fact customers will not see any change in the number of competitors delivering service to their area, the merger should easily clear any antitrust hurdles. That argument makes it more difficult for the DOJ to fall back on the usual market concentration precedents that would prevent such a colossal merger deal. To argue excessive horizontal integration — the enlarging of Comcast’s territory — the DOJ would first have to prove Comcast’s size in comparison with other cable companies is a reason for the courts to shoot down the deal. Or it could bypass Comcast’s favorite argument and move to the issue of vertical integration — one company’s ability to control not just the pipes that deliver content, but also the content itself.

octopusHere the examples of potential abuse are plentiful:

  • Comcast would enjoy increased power to force cable programmers to favor Comcast in cable programming pricing and policies while allowing it to demand restrictions on competitive online video competitors or restrict access to popular cable programming;
  • Comcast could impose data caps and usage-based pricing to deter online viewing while exempting its own content by delivering it over a Wi-Fi enabled gateway, game console or set top box, claiming all are unrelated to Comcast’s broadband Internet service or network;
  • Force consumers to use Comcast set top boxes that would not support competing providers’ online video;
  • Use interconnection agreements as a clever way to bypass the paid prioritization Net Neutrality debate. Netflix and other content producers would be forced to compensate Comcast for reliable access to its broadband customers;
  • Noting AT&T has declared U-verse can not effectively succeed in the cable television business without combining its customer base with DirecTV to qualify for better volume discounts, there is clear evidence that a super-sized Comcast could command discounts new entrants like Google Fiber could never hope to get, putting them at a distinct price disadvantage.

The FCC’s scrutiny of Comcast’s merger deal has already uncovered evidence previously unavailable because of non-disclosure agreements which show Comcast’s heavy hand already at work.

The report notes Michael Mooney, a senior vice president and group general counsel at Level 3, told the Capitol Forum the dispute earlier this year between Netflix and Comcast could have been resolved in about five minutes had Comcast added a port to relieve congestion at an interconnection point. The cost? Just $5,000. Had Comcast been willing to spend the money, millions of Comcast customers would have never experienced problems using Netflix.

Whether Comcast is ultimately deemed too large to permit another consolidating merger or whether it is given conditional approval to absorb Time Warner Cable remains a close call, according to the Capitol Forum, despite the fact consumers have urged regulators for something slightly more concrete – a single sentence, total denial of its application.

http://www.phillipdampier.com/video/Capitol Forum The Consumer Welfare Test.mp4

The Capitol Forum broadly explores how the “consumer welfare standard” has become a part of the antitrust review process over the last 30 years. Sometimes, a strict antitrust test is not sufficient to protect “the public interest” of consumers, and allows the dominant player(s) to harm competition. In the digital economy, corporate mergers that empower companies to restrict innovation can prove far more damaging than classic monopoly abuse. (15:52)

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  • Kate: My 2 year contract expired in September and the bill jumped $50.00 for a bundle of voice, internet, and tv. I compared packages with competitors f...
  • AC: I have this distinct feeling that nothing will change since they pretty much never lift a finger and the revolving door bureaucracy will keep milking ...
  • Jim Livermore: I don't watch enough on YouTube to really notice, but the option to pay for an ad-free experience would be nice. I have noticed Hulu+ is lowering the ...

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