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Justice Department Nearing Decision to Block Comcast-Time Warner Cable Merger

Phillip Dampier April 17, 2015 Competition, Consumer News, Public Policy & Gov't 4 Comments

comcast twcStaff attorneys that have reviewed details of the Time Warner Cable/Comcast merger proposal are prepared to make a recommendation as early as next week that the Department of Justice should block the deal because it is anti-competitive and anti-consumer.

The staff in the Justice Department’s antitrust division have spent more than a year reviewing documents submitted by both cable companies to determine what impact the merger would have on the cable television and broadband landscape.

Bloomberg News today reported the attorneys did not like what they saw and believe the merger would harm consumers. For the first time, a cable company merger deal was reviewed not so much for its impact on cable television programming, but on broadband.

When the Federal Communications Commission redefined broadband as an Internet connection of at least 25Mbps, Comcast suddenly found itself the largest broadband provider in the country. If the merger with Time Warner Cable is approved, Comcast will have a 56.8 percent market share of U.S. broadband customers, far exceeding any other provider.

In upstate New York, Comcast would have more than a 75% market share — nearly 9o% if you just consider non-Verizon FiOS areas. In California, Comcast would control more than 80% of the market, not only picking up Time Warner Cable customers, but Charter customers in Southern California as well. 

Comcast and Time Warner Cable have argued competition is not affected because the two companies never compete with each other. But a de facto broadband monopoly could allow Comcast to raise rates at will and bring a return to usage-related billing. It would also discourage new competitors from entering the market – particularly those relying on broadband to deliver video services, and hand Comcast more leverage to force compensation from online content companies like Netflix.

justiceUnder consideration by the Justice Department:

  • Whether the combined entity would have too much control over nationwide broadband Internet delivery;
  • whether Comcast could use its financial influence to strike exclusive cable deals that could keep programming off other platforms;
  • whether Comcast could limit how programming is delivered through video streaming services (usage caps, etc.);
  • if Comcast complied with terms under a previous merger deal with NBCUniversal.

Renata Hesse, a deputy assistant attorney general for antitrust, will take the analysis and ultimately decide, along with the division’s top officials, whether to file a federal lawsuit to block the deal. Bloomberg reports lawyers at the Justice Department have contacted outside parties to collect evidence to strengthen their potential case against the merger.

Another clear sign the merger is not being received well inside the Justice Department and the Federal Communications Commission is a complete lack of negotiations with Comcast over possible concessions to make the deal less anti-competitive. That also happened with the AT&T/T-Mobile merger where negotiations to ease anticompetitive concerns never seriously got off the ground before the Justice Department sued to block the deal. The FCC quickly announced its own opposition later that same day.

A lawsuit does not necessarily kill the merger deal. Comcast could take its case to federal court to win approval over the objections of the Justice Department. The company might also counter-propose new concessions to address concerns raised by the lawsuit. 

After learning of today’s Bloomberg News story, spokespeople at both Comcast and Time Warner Cable are either confident or in denial:

“There is no basis for a lawsuit to block the transaction,” said Sena Fitzmaurice, a Comcast spokeswoman. The merger “will result in significant consumer benefits — faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings.”

Time Warner Cable spokesman Bobby Amirshahi said “we have been working productively with both DOJ and FCC and believe that there is no basis for DOJ to block the deal.”

Singapore’s Internet Essentials (For the Poor): $4.37/Month for 100Mbps Fiber to the Home + Free Tablet

ida-logoWhile Comcast charges $9.95 a month for 5/1Mbps Internet access for the poor with school-age children, a Singapore ISP charges less than half that amount for 100/100Mbps fiber to the home broadband that includes a free tablet for the income-challenged.

Asia One reports the Home Access Programme was developed to fill a gap created by another program targeting homes with school children. While the NEU PC Bundle Programme provides poor homes with school age children a brand new computer, free software, and free Internet service for three years, the Home Access Programme provides affordable Internet access for childless households earning less than $1383US a month.

Qualifying customers will receive M1’s 100Mbps fiber broadband service, a free Internet router and a 7-inch Alcatel tablet for $4.37US/mo over a two-year contract.

“In Singapore, no one should be left behind by the march of technology,” said Jacqueline Poh, Managing Director of the Infocomm Development Authority of Singapore. “IT usage often begins at home, so the Home Access programme will help lower-income households without Internet access to get connected to high-speed fibre broadband. Whether it is for video conferencing, surfing the Internet or simply maintaining contact with family and friends on social media, these Digital Inclusion initiatives are designed to help all groups to live, learn, play and feel included in a digitally connected Smart Nation.”

Comcast Refused to Allow St. Paul Man to Cancel Cable Service After His Home Burned to the Ground

Phillip Dampier April 13, 2015 Comcast/Xfinity, Consumer News 4 Comments
Ware's home was destroyed, but his cable service lived on. (Image: Pioneer Press)

Ware’s home was destroyed, but his cable service lived on. (Image: Pioneer Press)

A St. Paul, Minn. man lost his home and everything in it after a wind-driven fire destroyed two North End homes on April 1.

As Jimmy Ware (66) tried to put his life back together, his daughter argued with Comcast to turn off cable service at her father’s address.

It took more than ten days and many phone calls to get the cable company to finally turn Ware’s service off, but not until it had managed to irritate his daughter, who wanted to spend her time helping her father find a new home and get back on his feet without the benefit of fire insurance, which Ware lacked.

Jessica Schmidt ran into a Comcast bureaucratic roadblock with the first phone call. Comcast insisted on getting Ware’s account number, which disappeared along with everything else in the fire. Because Schmidt was not listed as an authorized point of contact in Comcast’s records, she made a three-way call with her father to bring him into the conversation. The Comcast representative asked for the last four digits of his Social Security number, but even that didn’t satisfy, and Comcast refused to stop billing Ware for service.

“I’ve said to Comcast, ‘Here’s your choice, disconnect the service or send someone out to fix the cable, because it’s not working,’ ” Schmidt said in a story reported by the Pioneer Press. “The (Comcast) guy said, ‘That doesn’t make sense, because the house burned down.’ I said, ‘Exactly, shut the service off.’ ”

comcastNo.

Four or five calls later, Schmidt heard back from Comcast’s corporate office who finally agreed to cancel service, backdated to April 1st. They also promised Ware would not be bothered a second time from collection efforts to pay for the cable equipment burned in the fire that would normally cost hundreds.

Comcast explained it initially refused to cancel Ware’s cable service for his protection.

“We understand that this is a difficult time for Mr. Ware and apologize for the inconvenience,” wrote Comcast spokeswoman Mary Beth Schubert in a statement. “Comcast has safeguards in place to protect the privacy of our customers, including not allowing unauthorized users to make changes to a customer’s account. We do provide the option for customers to designate others, such as family members, to make authorized account changes and verifying an account can normally be done either over the phone or in person with a driver’s license.”

Ware’s neighbors had a better experience skipping Comcast’s customer service hotline and visiting a local Comcast cable store instead. With a family member present, the Comcast representative was able to locate the customer’s account details and canceled service without issue.

Philadelphia Mayor’s Office Hiding Likely-Embarrassing Comcast Performance Survey Results to Protect Company

surveyPhiladelphia Mayor Michael Nutter has gone all out for Comcast, headquartered in the city he oversees. Not only has Nutter organized 51 mayors to sign a joint letter supporting Comcast’s $45 billion bid to take control of Time Warner Cable, he is also helping protect the cable company from embarrassing revelations about its performance in the city.

Philadelphia media and public interest groups are now increasing pressure on the mayor’s office to publicly release the results of an important survey the city conducted as part of its franchise renewal process. Almost two years ago, a random sample of 800 area Comcast customers and non-customers were surveyed by the city to get feedback about Comcast’s performance.

Suspiciously, the full results of the taxpayer-funded survey have been withheld from the public, although the city handed a complete copy of their findings to Comcast so the company can prepare to defend itself.

Once every 15 years Comcast must ask city officials for permission to continue providing cable television service. If the majority of residents surveyed excoriate the cable company and beg the city to grant the franchise to someone else, that could prove a serious embarrassment to Mayor Nutter’s campaign to promote Comcast’s merger with Time Warner Cable.

“We cannot be on hold any longer,” said councilman Bobby Henon, a Northeast Philadelphia Democrat. “We’re cutting short the time to publicly talk about the needs” before the franchises expire later this year, reports the Inquirer.

While the mayor’s office has had no trouble sharing everything they can with Comcast, other groups entitled to the information have only gotten scraps of it or denied access altogether.

The Consumerist found, for example, Philadelphia Community Access Media, responsible for public access programming in the city, has only been shown survey responses directly related to its operations.

Other groups, including West Philadelphia’s Media Mobilizing Project, have been shut out completely and refused access to the survey results or the franchise needs assessment.

Michael_NutterThe mayor’s office has remained elusive explaining why a survey conducted using taxpayer dollars has been kept away from taxpayers.

“All I can say is that it’s still in process. We hope to get it out shortly, though I can’t put a specific date on it,” Mark McDonald, the mayor’s spokesman, told the Inquirer.

Releasing the survey results, which most expect will severely criticize Comcast, could embarrass the mayor who organized a letter writing campaign for Comcast that included language like, “Comcast has established itself as an industry leader and exemplary community partner who invests in its local communities and works hand in hand with local governments on critical social challenges like the digital divide.”

More importantly, it could embarrass Comcast in its renewed effort to push for approval of its merger deal with Time Warner Cable. If the company’s hometown residents rate Comcast lower than a snake pit, that could reverberate with regulators on the state and federal level considering Comcast’s merger request.

Nutter’s office has never exactly held Comcast’s feet to the fire.

This winter Comcast went unopposed seeking total deregulation for its service in Philadelphia. The city filed no comments with the Federal Communications Commission expressing concern over Comcast’s efforts to claim Philadelphia had effective competition, a designation that removes all regulatory oversight over pricing and services. Comcast will now be able to boost television and equipment prices even higher, and they did this past January.

McDonald told the Inquirer a fight wasn’t worth it and Comcast would likely win regardless of the city’s involvement. Nutter’s office appears to be adopting a similar hands-off attitude on renewing Comcast’s franchise for another 15 years without asking for much or anything in return.

Most Philadelphia residents don’t feel Comcast is subject to effective competition, regardless of what the mayor’s office thinks. Verizon FiOS only covers a small part of greater Philadelphia, leaving most residents with just one choice for broadband: Comcast. Verizon DSL no longer meets the FCC’s minimum standards to qualify as broadband.

Stop the Cap! Calls on Comcast to End Its Usage Caps/Usage Billing Trials, Restore Unlimited Service

Phillip "Comcast lost its case for usage caps" Dampier

Phillip “Comcast lost its case for usage caps” Dampier

With today’s announcement Comcast intends to bring unlimited 2Gbps broadband to as many as 18 million homes across its service area, one thing is clear — if Comcast is not worried about the impact of that many potential customers consuming 2Gbps of bandwidth, there is absolutely no justification to impose usage caps and allowances on any Comcast customer.

A frequent justification for usage caps and usage billing is to guarantee fair access for all customers on a shared, congested network. Another is to help defray the cost of broadband expansion. But Comcast’s new super-speed tier will have no usage cap and customers are invited to use it as much as they like for a fixed price. Clearly, a customer maxing out a 2Gbps connection to upload and download enormous amounts of content, say on a peer-to-peer network, will have a far greater impact on Comcast’s infrastructure than a user with a basic 25Mbps Internet connection. Yet today in Atlanta, Comcast is asking its 25Mbps customers to stay within a 300GB usage allowance, if they want to avoid an overlimit penalty of $10 for each 50GB block of additional usage.

Comcast does not like Stop the Cap! calling Comcast’s “data usage trials” what we believe them to be: “usage caps.”

In response to our testimony before the New York Public Service Commission last year regarding its application to acquire Time Warner Cable, Comcast objected to our claim it was placing usage allowances or limits on its broadband customers.

“Comcast does not have ‘data caps’ today,” Comcast told the PSC in its filing. “Comcast announced almost two years ago that it was suspending enforcement of its prior 250GB excessive usage cap and that it would instead be trialing different pricing and packaging options to evaluate options for subscribers—options that reflect evolving Internet usage and that are based on the desire to provide flexible consumption plans, including a plan that enables customers who want to use more data the option to pay more to do so as well as a plan for those who use less data the option to save some money.”

Yet Comcast’s desire to offer “flexible” usage plans becomes very inflexible when customers ask for unlimited service. Comcast has refused to offer such an option in several trial markets where usage caps are once again being tested.

courtesy-notice-640x259Last May, Comcast vice president David Cohen emphatically stated usage caps and usage-based billing were all about “fairness,” telling investors: “People who use more should pay more, and people who use less should pay less.”

Those signing up for 2Gbps service will be in a position to use far more bandwidth and data than any other Comcast customer subscribing to a lower speed broadband tier, yet will not be asked to pay more for using more or pay less for using less. They will be signing up for a simple to understand unlimited usage plan most Comcast customers want that will carry no billing surprises. At the moment, that is the only unlimited tier residential plan a Comcast customer in Atlanta will be able to buy.

Also turned on its head is the idea that customers who use the most bandwidth or cost Comcast the most should be contributing more to help Comcast pay for network upgrades, but once again this will not be the case for 2Gbps customers in Atlanta. They will cost Comcast a fortune as the company rips out its existing HFC (coaxial cable) infrastructure and replaces it with fiber to the home service. Yet the 25Mbps customer still using decades-old coaxial cable is effectively being asked to limit their Internet usage to avoid additional charges while the 2Gbps modern fiber customer is not.

It clearly makes no sense, but will rake in dollars for Comcast as usage continues to grow.

If Comcast’s network can sustain up to 18 million 2Gbps users with no usage cap, it has more than enough capacity to take the limits off every Comcast broadband customer. Comcast must shelve its usage billing trials immediately and remove all usage allowances from residential broadband customers in various test markets where they have been in place for more than a year. Google, Verizon, Time Warner Cable, Cablevision, Charter, and many other broadband providers have found no defensible reason to slap usage limits on their broadband customers. If they can provide comparable speeds and service without a cap, so can Comcast.

Comcast should clearly state it is in the business of providing the best possible customer experience using 21st century infrastructure more than robust enough to sustain usage demands, and compulsory usage caps and consumption billing are incompatible with the company’s goal to provide top-quality, worry-free Internet access.

If Comcast wants to test voluntary discount programs for light users, we have no objection. But customers should always have access to an affordable unlimited option without having to watch usage meters or worry about bill shock.

Comcast needs to do the right thing today and end all compulsory data usage trials across the country and commit to providing unlimited, allowance-free broadband service.

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