Home » FCC » Recent Articles:

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

Phillip Dampier April 17, 2015 Competition, Consumer News, Public Policy & Gov't 5 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.”

Net Neutrality Rule Changes At FCC May Open the Door to New Surcharge on Broadband Service

fccAs a consequence of reclassifying broadband as a utility service to protect Net Neutrality, the FCC may have unintentionally opened the door for a Universal Service Fund surcharge on broadband service.

Telephone customers have been accustomed to paying “USF” fees as part of their monthly phone bill since 1997. The average household pays just under $3 a month into the fund, which subsidizes four key programs:

  • Connect America Fund: Originally designed to subsidize telephone service in high cost rural areas, the program has increasingly shifted towards subsidizing broadband expansion in remote areas where private telephone companies won’t expand service without monetary assistance from the fund. In 2013, $4.17 billion was paid in the form of subsidies to mostly rural and independent telephone companies;
  • Lifeline: The Lifeline program pays up to $10 a month to a participating telephone or wireless company to subsidize basic telephone service for Americans living below 135% of the poverty line. More than 17 million households take part, most getting basic landline service for around $1 a month;
  • Rural Telemedicine: By subsidizing video conferencing and high-speed Internet access, rural doctors can consult with specialists in larger urban areas to help treat rural patients without the cost and risk of transporting the sick or injured to distant hospitals;
  • E-Rate: A needs-based subsidy program for schools and libraries seeking telecom services and Internet access. The subsidies help defray the cost of the services on a sliding scale, with rural and urban poor areas getting the largest subsidies.

feesThe fund has increasingly shifted towards Internet connectivity and service, but only telephone customers now pay a USF surcharge on their bill.

Net Neutrality critics warned that reclassifying broadband under Title II as a telecommunications service would open the door for new fees on broadband bills, some predicting as much as $11 billion a year in new fees. But because the FCC caps the amount of the fund each year, FCC chairman Thomas Wheeler predicted even if broadband customers are asked to contribute to the USF fund, the amount would be split between phone and broadband service, resulting in no additional out-of-pocket costs. Under that scenario, a phone customer currently paying $3 a month in USF charges would see that amount reduced to $1.50 a month on their phone bill, with a new $1.50 charge on broadband. The end amount is the same.

At least for now.

The FCC has been gradually increasing the size of the fund over the years, up 47% since 2004. Last year the FCC increased the fund by $1.5 billion to raise $8.8 billion from ratepayers nationwide. Most of the increase went to rural broadband deployment.

Industry-funded Net Neutrality critics are pushing a Los Angeles Times story about the potential for new fees, calling them ‘runaway government spending.’ But in perspective, the FCC’s $8.8 billion dollar effort to improve broadband accessibility is a fraction of the amount spent on highly controversial military projects. The F-35 Lightning II aircraft, for example, will cost taxpayers $1.5 trillion, and the Republican Congress approved $500 billion in extra funding this year for the project, funds above and beyond what the Pentagon requested. If that extra funding was spent on broadband improvements, every home in America could be wired for fiber optic Internet access. For $1.5 trillion, every home in the western hemisphere could be guaranteed broadband.

If USF fees are applied to broadband service, it is safe to expect your provider will pass along the fee as a new line item on your bill.

AT&T Fined $25 Million After Employees Sold Your Private Information to Shadowy “El Pelón” (The Bald Man)

El Pelon, sunburned but mighty happy AT&T call center workers were happy to oblige requests for private customer information.

“El Pelón”: Sunburned, running free, and mighty happy AT&T call center workers were happy to oblige requests for private customer information.

The Federal Communications Commission has fined AT&T $25 million after an investigation revealed AT&T customer service call center employees sold private, personal information regarding nearly 280,000 AT&T wireless customers to a shadowy figure or group known as “El Pelón,” which translates as a “bald man.”

During 2013 and 2014, employees in call centers in Mexico, Colombia and the Philippines sold customer information to third parties, presumably to help them reactivate stolen cell phones using the original owner’s contact information and at least the last four digits of the customer’s Social Security number.

When El Pelón called, more than a few AT&T employees listened and on request looked up the cell numbers given and provided customer information in return. A short time later, someone accessed AT&T’s website to submit unlock requests for the phone(s) associated with the account. Once unlocked, the phones could be sold almost anywhere around the world.

The investigation by the FCC’s Enforcement Bureau began in May 2014 after three call center employees in Mexico accessed the private information of more than 68,000 AT&T Wireless customers. That information soon led to 290,803 handset unlock requests submitted by third parties.

AT&T then learned around 40 other employees in its Colombia and Philippines call centers were also providing private customer information in return for compensation. Another 211,000 customer records were involved in those data breaches.

In return for its lax security, the FCC has handed AT&T a record-breaking fine of $25 million, and ordered AT&T to beef up security and give affected customers access to a credit monitoring service for a few years.

“The commission cannot — and will not —stand idly by when a carrier’s lax data security practices expose the personal information of hundreds of thousands of the most vulnerable Americans to identity theft and fraud,” FCC chairman Tom Wheeler said. “As today’s action demonstrates, the commission will exercise its full authority against companies that fail to safeguard the personal information of their customers.”

AT&T has 30 days to pay or contest the fine. The FCC admits it still has no clear idea from AT&T exactly how many customers were victims of the ongoing data breaches. But AT&T promised to do better in the future.

“We’ve changed our policies and strengthened our operations,” AT&T said in a statement. “And we have, or are, reaching out to affected customers to provide additional information.”

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.

“Free State Foundation” Sock Puppetry: Big Telecom Front Group Hosts Net Neutrality Bashing Session

Walden

Walden

When a group advocating broad-based deregulation and less government suddenly takes a laser-focused, almost obsessive interest in a subject like Internet Net Neutrality, it rarely happens for free.

Randolph May’s Free State Foundation claims to be a non-profit, nonpartisan think tank to promote the free market, limited government, and rule of law principles. But in fact it primarily promotes the corporate interests of some of the group’s biggest financial backers, which include the wireless and cable industry.

Rep. Greg Walden (R-Ore.), no stranger to big checks from cable companies himself, was in friendly territory at the group’s annual Telecom Policy Conference, a largely consumer-free affair, where he served as keynote speaker. Walden used the occasion to announce a solution to the Net Neutrality problem — defunding the FCC sufficiently to make sure it can never enforce the policy.

Walden, ignoring four million Americans who submitted comments almost entirely in favor of Net Neutrality, said the idea of the FCC overseeing an open and free Internet represented “regulatory overreach that will hurt consumers.”

Big Telecom Funded

Big Telecom Funded

Walden serves as chairman of the House Subcommittee on Communications and Technology. Walden told the audience he will be spending his time in Congress taking a hard look at the FCC, its budget request, and its policies after Net Neutrality became official FCC policy. Walden’s plans to punish the agency include a limit on FCC appropriations, making enforcement of Net Neutrality more difficult, if not impossible. Longer term, he hopes to bleed the agency dry by depriving it of resources to manage its regulatory mandate.

Walden’s third largest contributor is Comcast. He also receives significant financial support from the American Cable Association and Cox Cable. He spoke to a group that depends heavily on contributions from the same telecom industry Walden’s campaign coffer does.

According to tax filings by two cable and wireless lobbying groups, the Free State Foundation has cashed almost a half a million dollars in checks written by the groups in the last five years. The National Cable and Telecommunications Association (NCTA) paid FSF $280,000. The wireless lobby, represented by CTIA-The Wireless Association, managed $213,000 in contributions. These two groups are likely among FSF’s most substantial donors.

In 2012, Free State Foundation reported a total of $797,500 in contributions. After Stop the Cap! and other groups began reporting on the connection between the Free State Foundation’s agenda and its Big Telecom sponsors, the group began hiding its donor list. That earned FSF an “F” for donor transparency by PCWorld.

http://www.phillipdampier.com/video/Free State Foundation Seventh Annual Telecom Policy Conference March 2015.mp4

Rep. Greg Walden (R-Ore.) delivered the keynote address at the 7th Annual Telecom Policy Conference of the Free State Foundation. Despite receiving nearly a half million dollars in contributions from the cable and wireless lobbies, the group did not think to invest in a tripod to keep the camera steady. (38:42)

Search This Site:

Contributions:

Recent Comments:

  • Arnold: Not going to happen. I want Cox to make a deal on TWC. Google is in a different industry. That is going to ruin competition considering Google compete...
  • Mashfique Khan: Hi Phillip, Do you have the names of the street in Pasadena and Bellaire where the GigaPower is actually available. I've searching street by street b...
  • Kwame: You are obviously not a student of history, of the current state of African geopolitics. Stick to what you know - which seems to be telecommunications...
  • Milan In Austin: Phillip, what are your thoughts on petitioning Google to consider making an offer on TWC if the merger is blocked?...
  • speeds suck: That's still terrible speeds compared to fiber like Google or Verizon. 15mbps up! Lol my cell phone days speeds are faster than that....
  • MTA Victim #1210213: Great! Now we just need MTA to be abolished and Alaska will have good internet at last!...
  • ppppp: Verizon and Comcast, A match made in hell...
  • dancer: I'm against Verizon reducing their FiOS coverage by getting rid of highest FiOS based areas in Southern California where Verizon sells FiOS, Northern ...
  • Bonnie: I agree...
  • Bonnie: That's probably why the tennants at 1919 east Spruce st. #A Seattle Wa. 98122 are getting the cable service from this company for free. They just have...
  • Phillip Dampier: Zimbabwe is one of the fastest growing African countries with respect to Internet access. Approximately 40 percent (5.2 million) of Zimbabwe's populat...
  • Bernie B: Used the twitter method and was able to secure a reduction of $12.50 a month and got a speed up on internet from 5 up 50 down to 10 up 100 down. I li...

Your Account: