Frontier used Time Warner Cable’s usage cap experiment against them in this ad to attract new customers in the spring of 2009.

Frontier Communications has filed a rare objection with the Federal Communications Commission opposing the merger of Comcast and Time Warner Cable, citing concerns the merger would further harm competition and prevent Frontier and other competitors from getting fair access to programming owned by the combined cable companies.

“Comcast’s appetite for market control threatens the competitiveness of the video market,” wrote Frontier. “Comcast is already the largest Internet provider and largest video provider in the United States. If approved, Comcast’s video subscriber base would be approximately 52-times the size of Frontier’s video subscriber base.”

As Stop the Cap! wrote in its own objections to the merger, would-be competitors can and will be deterred from competing for video subscribers if they cannot obtain reasonable wholesale rates for popular cable programming. Currently, the largest providers extend the best volume discounts to the country’s largest satellite and cable operators. They make up those discounts by charging smaller customers higher rates. Frontier, as we noted in our filing, has already experienced the impact of volume discounting in its adopted FiOS TV areas in Indiana and the Pacific Northwest. Losing volume discounts originally obtained by Verizon, Frontier faced substantially higher programming costs as an independent provider — costs so great the company began asking customers to drop its own fiber television product in favor of third-party partner DISH, a satellite provider.

“Small multichannel video programming distributors (MVPDs) like Frontier cannot achieve the scale necessary to drive down programming costs, which are based upon an MVPD’s subscriber totals, to the same levels that Comcast can with this transaction,” noted Frontier. “Further, Comcast would own an enormous share of the “must have” programming that customers demand and could exercise its market dominance to either outright deny such programming to its competitors or to functionally deny the programming by charging exorbitant rates for content.”

“While Frontier continues to grow its subscriber base organically by delivering a quality product in its markets and also by acquiring AT&T’s wireline assets in Connecticut, the cost of content for video programming remains staggering for new entrants that lack the scale and scope of cable companies like Comcast and Time Warner Cable individually, let alone that of the merged entity,” said Frontier. “It is no mere coincidence that AT&T announced its proposed acquisition of DirecTV shortly after Comcast announced its intention to purchase Time Warner Cable. AT&T recognized the need to improve its subscriber scale in order to compete with Comcast on video programming pricing.”

Frontier noted the Federal Communications Commission also expressed grave concerns over Comcast’s ability to affect video competition during its acquisition of NBCUniversal. That merger was approved only after Comcast agreed to several conditions to avoid anticompetitive abuse in the marketplace. But Frontier complained a further acquisition of Time Warner Cable would only exacerbate competition concerns, even as Comcast argues the FCC should not contemplate any further investigation of the subject during its current merger review.

McFadden

Rochester city councilman Adam McFadden wrote a gushing letter in support of the merger deal between Comcast and Time Warner Cable published today on the N.Y. Public Service Commission website that doesn’t come close to fully disclosing the financial ties between Comcast and a lobbying group he presides over, funded in part by Comcast.

I write to you today from one of our state’s and the country’s oldest centers for enterprise and industry, Rochester. I am proud to represent my lifelong home as City Councilman for the South District. The proposed transaction between Time Warner Cable and Comcast has attracted a lot of attention here in New York, and deserves to be fully considered. I write to you today to urge your approval of the transaction so that Rochester residents, and New Yorkers across the state, can be empowered by Comcast’s innovative and dedicated service.

My area is currently served by Time Warner Cable, but would receive Comcast coverage following the approval of the transaction. I am lucky to represent my community not just locally, but on the national stage. Through my experience with the National League of Cities, and as the vice president of the National Black Caucus of Local Elected Officials, I’ve heard about Comcast’s track record of serving the public good in communities like mine.

We don’t doubt for a moment McFadden has “heard” about Comcast. McFadden is listed as president of the National Black Caucus of Local Elected Officials’ Board of Directors, a group whose website is emblazoned with Comcast’s logo as a generous “capstone partner” of the NBC-LEO and National League of Cities. Capstone partners must give an “annual investment” of at least $50,000. In fact, Comcast isn’t just a passive member of the group McFadden helps to run. Ron Orlando, senior director of Comcast’s lobbying/government affairs department sits on the group’s “Corporate Partners Leadership Council Roster.”

“The Council shares the perspectives of the corporate and not-for-profit sectors and makes recommendations for activities that promote the exchange of ideas between corporate and city leaders,” claims the website.

That is a nice way of saying corporate sponsors can use the group as a front to insert its corporate agenda into the public dialogue, while avoiding disclosure it is, in fact, pulling the strings. Capstone members get plenty of face time with the group… in private, through “exclusive access to the voluntary leadership and targeted member groups at NLC conferences and special VIP events.”

But our favorite is allowing corporate members access to discounted mailing lists maintained by the NLC that left companies directly target elected and career officials in all cities with a population greater than 10,000 to spread their talking points.

McFadden’s constituents might be wondering whether he represents their interests or Comcast when he pens a letter to New York regulators urging them to allow an unpopular merger between two colossal cable companies. McFadden didn’t write his letter under the name(s) of the two groups that have direct financial ties to Comcast. He wrote it in his role as a city councilman.

We consider it highly unethical that McFadden did not disclose the strong direct financial ties between Comcast and the organizations he represents and has not exactly trumpeted his full-throated support for the cable merger deal among his constituents, who probably like Time Warner Cable and Comcast a lot less than he does. But then, $50,000 a year can bring a lot of goodwill if your group is getting the check.

[Update 1:30pm 8/12: We are told Mr. McFadden has denied knowledge of the $50k and claims he wrote the letter because he “hates Time Warner Cable.” Nice try. Follow the links and get back to us about how we could find this information in about 10 minutes and you couldn’t. If you hated Time Warner, you will despise Comcast… but then there is that $50,000 annually to think about…. – PMD”]

(Ed. Note: Our formal written submission to the New York Public Service Commission is presented in this series of articles. Please note that any graphics included on Stopthecap.com were not included in the formal filing, but are presented here to make the material more reader-friendly. — PMD)

STATE OF NEW YORK

PUBLIC SERVICE COMMISSION

Joint Petition of Time Warner Cable Inc. and

Comcast Corporation For Approval of a                                       Case 14-M-0183

Holding Company Level Transfer of Control.

Statement of Opposition to Joint Petition
Phillip M. Dampier, Director and Founder: Stop the Cap!
Rochester, New York
August 1, 2014

Stop the Cap! is a not-for-profit group founded in Rochester in 2008 to fight against the introduction of artificial limits on broadband usage (usage caps, consumption billing, speed throttling) and for better broadband speeds and service for consumers. Our group does not solicit or accept funding from lobbyists, companies, or others affiliated with the telecommunications industry. We are entirely supported by individual donors who share our views.

Regulators cannot outsmart multi-billion dollar corporate giants with temporary merger mitigation strategies that end up not helping consumers for very long, if it all.

Introduction

Our opposition to the Joint Petition is based on our belief it does not meet the “public interest”  test established in Section 222 of the New York Public Service law, and must therefore be denied.

We are concerned the Commission may attempt a mitigation of Comcast’s failure to demonstrate a public interest benefit for New York residents in its application. The Commission may even attempt to negotiate a monetary public benefit adjustment to afford Comcast the opportunity to pay its way to approval of a merger the overwhelming majority of New Yorkers who have shared their views with the Commission ardently oppose. We submit that the recent change in New York law obligates the applicant alone to demonstrate its proposal is in the public interest. It is not the Commission’s responsibility to propose mitigation formulas that tip the balance in favor of an applicant.

Also lacking in the discussion is a careful analysis and comparison of Time Warner Cable’s existing products and services in contrast with Comcast and, more importantly, the impact of its own upgrade program now underway. It is our contention New York will be better served by retaining Time Warner Cable as the dominant cable provider and rejecting Comcast’s attempt to transfer Time Warner’s franchise agreements to itself. We are not opposed to Comcast independently entering New York and competing head-to-head with Time Warner Cable, although we believe it is unlikely.

Ultimately, we believe Comcast’s executive vice-president David Cohen made one of the strongest arguments why this merger simply does not make sense for New York:

“We are certainly not promising that customer bills will go down or increase less rapidly.”[1]

—

[1]https://arstechnica.com/tech-policy/2014/02/comcast-no-promise-that-prices-will-go-down-or-even-increase-less-rapidly/

Phillip “Comcast isn’t the answer to the problem, it is the problem” Dampier

Just a quick note to alert readers that we haven’t lost interest in keeping you informed about what is going on in the broadband industry. We are taking some time out to do more than just write about what we’re seeing around the country. We’re actually getting involved to try to change things.

The Comcast Time Warner Cable merger proposal is before New York regulators and this week is the deadline for the first round of comments on the proposal. More than 2,700 New York residents have added their two cents, most strongly opposed to the merger. We’re also seeing out-of-state Comcast-backed non-profit groups sending in comments praising Comcast (chapters of the Boys and Girls Club are by far the biggest offenders — something to remember when they ask you for money).

It is also highly unethical for public officials to lobby out-of-state regulators for a private, for-profit business deal, yet that is exactly what North Beach, Md. Mayor Mark Frazer did. So did Barbara A. Miller on the Board of Selectmen for the town of Peterborough, N.H.  And you thought they represented you and your interests and not those of a giant multi-billion dollar cable company. Your vote can make all the difference, especially with Mayor Frazer who is up for re-election.

We will publish our full submission on Stop the Cap! when finished and appreciate your patience as we spend time documenting our arguments in opposition to this merger deal.

If your non-profit or civil rights group feels that part of its core mission is writing letters in favor of a giant cable company’s plans to upsize, we’d like to welcome you to Stop the Cap’s new Alert Your Donor Base program, a free public service from a group that does not accept contributions from corporate donors, big or small. All too often, your love letters have gone unnoticed by your contributors who believed their money was being used to help the needy and downtrodden, not rich corporate executives, shareholders and Wall Street investment banks.

No worries, those days are over. We’re thrilled to share your all-too-often unpublicized excitement for all-things-Comcast with your donors and supporters on your group’s social media pages, discussion forums, and even with the local media in your area.

As we see it, non-profits and civil rights groups serve important functions in society and we encourage all to redouble those efforts and get out of the corporate shill business. Comcast really doesn’t need your help to consummate their $45 billion dollar deal. But if you insist, we think it’s only fair the public understands where their contributions are going.

Dear Boys and Girls Club of Cape Cod,

We’re excited to learn that the challenges faced by the youth of Cape Cod have evidently been entirely resolved, freeing up your organization’s valuable time and resources to promote a $45 billion dollar merger between Comcast and Time Warner Cable on your group’s letterhead.

Your Massachusetts donors must share my excitement, knowing your organization now has an enormous surplus of resources in the bank. Why else would the Boys and Girls Club spend valuable time and money churning out letters for a multi-billion dollar corporation that customers across Massachusetts know and loathe.

We were especially impressed with how far your group was willing to reach beyond its core service area — sending letters gushing about Comcast to state regulators (excerpt below) like the New York State Public Service Commission:

Again and again over the past 17 years, Comcast has proven itself to be a good ¿corporate citizen¿ by providing numerous services to the Boys & Girls Club free of charge and always with a friendly helping hand. 

I do know that Comcast has also partnered with our national organization, Boys & Girls Clubs of America, since 2000, providing more than $68 million in cash and in-kind contributions and that they sponsor of Club Tech, a digital literacy initiative dedicated to providing youth with computer skills needed to success in the 21st century. 

The Boys & Girls Club of Cape Cod serves 823 children on an annual basis providing individualized supplementary education at the elementary, middle and high school levels.  It is no exaggeration to say we would not be where we are today without the assistance of good neighbors like Comcast and I have every reason to believe that a stronger Comcast will only strengthen their ability to serve the community.

The Boys & Girls Club of Cape Cod is grateful to Comcast for their support of our kids and families and fully expect that the same kind of “good neighbor attitude” will continue in support nonprofit organizations in NY and elsewhere.

68 million dollars. We let that dollar amount sit with us for a moment. $68,000,000. That sure is a lot of incentive to spread good cheer on behalf of a company that ordinary consumers voted (again), The Worst Company in America. And look at you — you want them to grow even larger!

We have no doubt that the Boys and Girls Club is indeed grateful to Comcast for numerous checks handed out to your organization. Unfortunately, this only convinces us of two things:

1. The Boys and Girls Club has too much free time on its hands, becoming intimately involved in giant corporate business deals that help executives and shareholders, and not too many boys and girls who face Comcast’s notoriously high rates and bad service when they get a little older;
2. Your organization really doesn’t need contributions because Comcast is available to cut you checks at every opportunity.

Yours very truly,

Stop the Cap!