Could this be Comcast’s next target?

As Wall Street continues contemplating mom and dad at the FCC and Department of Justice calling off Comcast’s elopement with Time Warner Cable, some analysts believe Comcast will have to spend the money now burning a hole in its pocket on something.

“Given the strength of Comcast’s balance sheet and an insatiable appetite for acquisitions, we do not believe Comcast would be content with its existing portfolio (no different than after they failed in their 2004 attempt to buy Disney),” wrote Richard Greenfield from BTIG Research.

Greenfield has grown increasingly pessimistic about the Comcast-Time Warner Cable deal since realizing regulators were not going to follow the usual procedure of rubber-stamping approval with mild, short-term conditions to appease politicians. As President Barack Obama highlights telecommunications public policy in his second term, the cable industry (and broadband in particular) has come under unprecedented scrutiny and visibility in the press.

This winter, the FCC redefined broadband speed to mean a connection offering at least 25Mbps. That virtually eliminates DSL as a meaningful competitor, and would hand a combined Comcast/Time Warner Cable over 55% of broadband homes in the United States. The FCC’s approval of Net Neutrality and regulating broadband as a public utility led the audience in attendance to give a standing ovation to Chairman Thomas Wheeler and the two Democratic commissioners voting in favor of the policy change. The public sentiment is clearly against industry deregulation and unfettered deal-making, particularly when it involves Comcast, one of the most-loathed corporations in America.

Greenfield

Greenfield notes momentum is on the side of consumer groups fighting for Net Neutrality, oversight, and an end to cable industry consolidation.

Assuming Comcast’s deal with Time Warner Cable fails, what can Comcast spend its money on without running into a regulator buzzsaw?

Comcast could easily continue a mergers and acquisitions strategy if it avoids attempting to dramatically increase its cable footprint. For instance, Comcast could still choose to sell some of its less important cable systems to Charter Communications — already part of the proposed Time Warner Cable transaction — and make up that subscriber loss by acquiring Cablevision, which provides service in the important suburban New York City market. Of course, the Dolan family is notorious for not selling to anyone, and a considerable number of extended family members are employed as executives in the company.

Cable operators have returned to a strategy of hedging their content costs by spending billions to acquire content producers and sports teams in hopes of moderating their price demands. In the 1980s and early 1990s, large cable operators insisted on owning a piece of nearly every cable network shown on their systems. Today, having an ownership stake in the cable networks one negotiates with at contract renewal time is a helpful advantage.

Comcast has several attractive acquisition targets Greenfield believes it can consider:

• Time Warner (Entertainment): Not affiliated with Time Warner Cable, owning Time Warner (Entertainment) would gain Comcast important cable networks like TNT, HBO, and the Warner Bros. studio.
• Netflix: Acquiring one of the best assets cord cutters have might prove difficult with regulators in Washington, but buying the ultimate TV Everywhere experience could deliver a digital platform that puts Comcast’s own online content portal to shame. The deal would also come with the talent that made Netflix an international success. If Comcast were to acquire Netflix, it would combine a superior streaming platform with an enormous content library.
• Acquire online video content sites and producers: Linear live television continues to be challenged by an array of on-demand content and video clips from various websites like Vice — videos that could be further monetized by matching Comcast’s advertising sales team with online media.
• Next generation online video set-top box manufacturers: The traditional cable box is dead to a lot of subscribers who prefer the simplicity (and price) of Roku and other similar alternatives. Current cable boxes are huge, expensive, and simply lack the creative imagination of the competition. If Comcast can’t beat Roku, it could buy it.
• Buy Sprint or T-Mobile: Greenfield believes Comcast lacks a wireless component in its product lineup as consumers increasingly move towards portable devices. Comcast would be financially foolish to build a network from the ground up, so acquiring an existing one makes more sense. AT&T and Verizon Wireless are likely out of reach, but Sprint and T-Mobile are not. Both carriers’ parent companies seem ready to sell, if the price is right. Of the two, Sprint might be willing to sell first. Sprint’s owner — Japan’s Softbank — has discovered the United States is a huge country that can swallow up endless amounts of investment and still leave it saddled with a second-rate network.

Greenfield is only speculating and there are no indications Comcast is seriously considering a next move should the Time Warner Cable deal be killed in Washington. But it does signal Wall Street does expect Comcast to do something.

“Verizon’s treatment of the news is a testament to the need for strong Net Neutrality protections.”

Sugarstring’s logo is as twisty as its editorial policies.

Verizon Wireless’ launch of Sugarstring, a high-budget tech news website targeting millennial 20-somethings with tech and lifestyle news they can use seemed innocent enough until its editor revealed in a private e-mail Verizon considers reporting on electronic spying and Net Neutrality issues “verboten.”

Verizon is deeply embroiled in both issues and evidently has no interest spending money enlightening the masses, so it has told its staff (but not you) both topics are forbidden.

The Daily Dot reported the revelation straight from Cole Stryker, Sugarstring’s editor.

“I’ve been hired to edit SugarString.com,” writes Stryker in a recruiting email to Daily Dot’s Patrick Howell O’Neill. “Downside is there are two verboten topics (spying and net neutrality), but I’ve been given wide berth to cover pretty much all other topics that touch tech in some way.”

Verizon’s cavalier censorship policies say a lot about the company’s interest in controlling the messages that people see and read online. The news site is intended to be a high-profile destination for Verizon Wireless’ mobile customers and will logically get significant exposure from the company bankrolling it.

Verizon might argue that since it pays the bills, it has a right to decide what information should pass through its websites. It is hardly a big stretch for them to argue that if they own the wires over which you receive Internet service, they should have a say in what travels across those as well.

Censorship need not be crude and obvious as it often was on foreign propaganda broadcasts during the Cold War. Today’s “news management” is much more subtle and more insidious.

Take RT (formerly Russia Today), the Moscow-based 24/7 English-language news network. Although dropped by many major cable systems including Time Warner Cable after Russian troops invaded eastern Ukraine, the network is still growing and finding more places on the air around the world.

Radio Moscow during the Cold War represented a more overt form of propaganda. Corporations like Verizon have learned to be more subtle.

RT is nothing like what shortwave listeners used to endure from English-language Radio Moscow World Service during the Communist years. You couldn’t miss that station. Broadcasting on up to 47 frequencies simultaneously, 24 hours a day, it was easily the most commonly encountered signal on the shortwave dial. Plodding features like, “On the Occasion of the 45th Anniversary of the Stunning Achievements of World Socialism,” or “The Voices of Soviet Public Opinion Demand Peace and Progress for the Non-Aligned World” (Part 36) were everything you might expect and less.

Radio Moscow boldly told listeners in its series, “The History of the Soviet Union, the Socialist Revolution, and Its Aims and Results,” that elections in the USSR were superior to those in other countries because the government took the money out of politics. Only by putting national infrastructure entirely in the hands of the people, along with public ownership of the means of production, can a nation achieve true democracy. They didn’t bother to mention the USSR was a one-party state, which made elections pro-forma, or that the entire Soviet economy was a basket case since the days of Leonid Brezhnev. (10:01) You must remain on this page to hear the clip, or you can download the clip and listen later.

Radio Moscow has been replaced by RT Television, which in the post-Soviet era now exists primarily to boost all-things Putin. The propaganda has been sharpened up by employing U.S. reporters and moving to the far more subtle practice of “self-censorship.” A former RT reporter fed up with increasingly strident propaganda over the matter of Russia, Crimea and the Ukraine quit live on the air. In a later interview on CNN, Liz Wahl told Anderson Cooper that RT’s staff was made up mostly of impressionable young people eager to win favor from RT’s management. They quickly learned and accepted that certain points of view or story subjects were either frowned upon or outright verboten. Instead of being sent to a gulag for disobedience, those straying from Putin’s party line were taken off stories, reassigned to menial work, or shunned. Who wants that?

Avoiding certain topics or points of view at the behest of corporate management (or the state) is just as insidious as directly slanting the news to one’s favor. Few real journalists would accept a job (or stay) at a news organization that was compromised by coverage limits or editorial interference that came from conflict with a corporate or political agenda.

That Verizon chooses to ban stories that embarrass Verizon, such as Edward Snowden’s revelations that Verizon voluntarily provided the National Security Agency (NSA) the phone records of all of its customers and is still actively engaged in tracking its customers’ web activities, does not mean it is going to block you from visiting CNN.com tomorrow. That Verizon doesn’t want to fuel the public consciousness of Net Neutrality is understanding considering the company has paid its lawyers plenty to fight the principle in court, openly admitting it favors paid fast lanes for traffic. But Verizon is clearly on a road that, if unchecked, eventually leads to content and traffic manipulation.

Verizon steps far over the line of jounalistic integrity informing editors to avoid both issues while saying nothing to readers and it isn’t the first time Verizon has crossed the line.

Tim Karr from Free Press reminds us Verizon has a very different view about the First Amendment that the rest of us:

In a 2012 legal brief to the U.S. Court of Appeals for the D.C. Circuit, Verizon mangled the intent of the First Amendment to claim that the Constitution gives the phone company the right to control everyone’s online information. In the brief, which was part of the company’s successful bid to overturn the FCC’s Open Internet Order — Verizon argued that the First Amendment gives it the right to serve as the Internet’s editor-in-chief. The company’s attorneys claimed that “broadband providers possess ‘editorial discretion.'” even when they are “transmitting the speech of others.”

Verizon continued in this vein, asserting that “Just as a newspaper is entitled to decide which content to publish and where, broadband providers may feature some content over others.” And that means that Verizon could privilege its SugarString version of the news over the content of real news sites, because the company believes it should be able to “give differential pricing or priority access” to its own content.

What Verizon cannot “manage,” it wants the right to censor:

In 2007, Verizon Wireless blocked NARAL Pro-Choice America efforts to use its mobile text-message program to communicate with NARAL members. Initially Verizon told NARAL that it had banned the messages for being “controversial and unsavory.” After the blocking was reported in the New York Times, the phone company backpedaled and lifted the ban. The text-message blocking was a simple glitch, a Verizon spokesman declared, and the company felt really, really bad about it.

When it comes to a question of customer freedom vs. profits, Verizon follows the money every time:

In 2011, Free Press and others caught Verizon Wireless blocking people from using tethering applications on their phones. Verizon had asked Google to remove 11 free tethering applications from the Android marketplace. These applications allowed users to circumvent Verizon’s $20 tethering fee and turn their smartphones into Wi-Fi hotspots on their own. By blocking those applications, Verizon violated a Net Neutrality pledge it made to the FCC as a condition of the 2008 airwaves auction.

All of these examples challenge Verizon’s ongoing assertion it has no incentive to censor, block, or interfere with online content, making Net Neutrality unnecessary. You have just seen another example of why Net Neutrality is urgently needed. Verizon has demonstrated repeatedly it puts its own interests above its customers, so regulators should respond with a clear, unambiguous, and robustly enforced policy of Net Neutrality that protects the interests of you and I.

Stop the Cap! completed and today filed a formal submission with the Federal Communications Commission opposing the merger of Time Warner Cable and Comcast.

We joined tens of thousands of filers — mostly consumers — strongly opposed to the merger on the grounds it is not in the public interest.

Earlier today, Consumers Union filed its petition with more than 20,000 signatures of ordinary Americans across the United States who want nothing to do with Comcast.

Back here in New York, Comcast this afternoon filed a response with the Public Service Commission regarding our (and other) submissions opposed to the merger. We will be analyzing and rebutting their response straight away. Comcast went all-out name-dropping people and groups (many with direct, usually undisclosed financial ties to Comcast) to sell New York regulators the theory ‘the groups and people who matter’ are in favor of their merger while those opposed are mostly out-of-state rabble or unsubstantial individuals of few words.

“Given these many concrete benefits, and the lack of any harm to competition or consumers, it should come as no surprise that the overwhelming majority of the substantive comments (approximately 110 out of a total of about 140 substantive comments) filed in this proceeding support Commission approval of the transaction,” writes Comcast.

Comcast did not share their subjective standard of what constitutes “substantive” but a quick review of the groups cited in Comcast’s response show some substantive was involved – a check from Comcast either recently or in the past. Our view is that it doesn’t take more than a sentence to express extreme displeasure about Comcast taking over Time Warner Cable, and those views should matter just as much as a virtual Hallmark card from a group or politician that used a Comcast-provided “template” with a detachable check at the bottom.

Our favorite was Comcast’s highly defensive ‘hey New York PSC, it’s none of your business that Comcast is testing usage caps and you cannot use it against us’:

The Writers Guild of America, West, Inc. (“WGAW”), Zephyr Teachout and Tim Wu, and Stop the Cap! argue that Comcast will extend data caps and usage-based pricing to New York to impose restraints on online content and drive up consumer costs.

This broadband-related claim is irrelevant to this proceeding and beyond the Commission’s jurisdiction. Indeed, the FCC expressly approved of usage-based billing in its 2010 Open Internet Order and is again examining the issue in the pending Open Internet rulemaking.

In other words, whether data caps are appropriate is a matter of federal regulatory concern, not one that relates to this proceeding or that is even transaction specific (since nothing precludes TWC from adopting caps at any time, as it has in the past).

So regardless of whether data caps are in the public interest or not, New York should not be allowed to weigh in because former FCC chairman Julius Genachowski said usage based billing could be an innovative way to bill for broadband.

In reality, New York can decide for itself what is in the best interests of its residents, and Time Warner Cable determined what was best after a two-week firestorm in 2009 that taught them compulsory usage caps were a really bad idea. But Comcast isn’t terribly interested in the views of the unsubstantive masses — which is comparable to their attitude toward customers, so no change there. It’s just a free preview weekend of what we all have in store if Comcast takes over.

Cable industry executives on hand at this year’s Cable Show in Los Angeles are debating whether Netflix has taught the cable industry some important lessons about how to treat its online video competition.

Phil Lind, executive vice president of regulatory affairs at Rogers Communications called Comcast’s peering deal with Netflix a groundbreaking breakthrough on how the Internet will be treated in the future.

Netflix has been forced to compensate the cable and telephone companies for its reliance on their broadband pipes to reach customers.

Mike Fries, president and CEO of Liberty Global said the issue of Net Neutrality relates primarily to online video and the discussion will inevitably come down to choosing between providing a broadband fast lane for content producers willing to pay or adopting usage-based billing that compensates the industry for the growth of streaming video.

Several on the panel disagreed with the contention that Netflix has outmaneuvered the cable industry with a superior on-screen interface and better on-demand content. But Fries said Netflix has achieved more success than the industry’s own TV Everywhere initiative, which unlocks online content for authenticated, paying cable TV subscribers. In addition to unwieldy authentication systems that pester subscribers with frequent log-in demands, content rights issues still dramatically limit the amount of streamed video available from TV Everywhere platforms.

Phillip “Follow the Money” Dampier

“In the 1990s, U.S. policymakers faced critical choices about who should build the Internet, how it should be governed, and to what extent it should be regulated and taxed. For the most part, they chose wisely to open a regulated telecommunications market to competition, stimulate private investment in broadband and digital technologies, and democratize access.” — Will Marshall, guest columnist

Is competition in Internet access robust enough for you? Has your provider been sufficiently stimulated to invest in the latest broadband technologies to keep America at the top of broadband speed and availability rankings? Is Net Neutrality the law of the land or the latest victim of a Verizon lawsuit to overturn the concept of democratizing access to online content?

I’m not certain what country Will Marshall lives in, but for most Americans, Internet access is provided by a duopoly of providers that must be dragged kicking and screaming to upgrade their networks without jacking up prices and limiting usage.

Marshall is president and founder of the Progressive Policy Institute, a so-called “third way” group inspired by centrist Democrats led by President Bill Clinton in the 1990s. Unlike traditional liberals suspicious of corporate agendas, these Democrats were friendly to big business and welcomed the largess of corporate cash to keep them competitive in election races. It was under this atmosphere that Clinton signed the bought-and-paid-for 1996 Telecom Act, ghostwritten by lobbyists for big broadcasters, phone and cable companies, and other big media interests. Long on rhetoric about self-governing, free market competition but short on specifics, the ’96 law transformed the media landscape in ways that still impact us today.

Media ownership laws were relaxed, allowing massive buyouts of radio stations under a handful of giant corporations like Clear Channel, which promptly dispensed with large numbers of employees that provided locally produced programming. In their place, we now get cookie-cutter radio that sounds the same from Maine to Oregon. Television stations eagerly began lobbying for a similar framework for relaxing ownership limits in their business. Phone companies won their own freedoms from regulation, including largely toothless broadband regulations that allowed Internet providers to declare victory regardless of how good or bad broadband has gotten in the United States.

Marshall’s views appeared in a guest column this week in The Orlando Sentinel, which is open to publishing opinion pieces from writers hailing from Washington, D.C., without bothering to offer readers with some full disclosure.

Marshall

While Marshall’s opinions may be his own, readers should be aware that PPI would likely not exist without its corporate sponsors — among them AT&T, hardly a disinterested player in the telecommunications policy debate.

Marshall’s column suggests competition is doing a great job at keeping prices low and allows you – the consumer – to decide which technologies and services thrive. There must be another reason my Time Warner Cable bill keeps increasing and my choice for broadband technology — fiber optics — is nowhere in sight. I don’t have a choice of Verizon FiOS, in part because phone and cable companies maintain fiefdoms where other phone and cable companies don’t dare to tread. That leaves me with one other option: Frontier Communications, which is still encouraging me to sign up for their 3.1Mbps DSL.

“The broadband Internet also is a powerful magnet for private investment,” Marshall writes. “In 2013, telecom and tech companies topped PPI’s ranking of the companies investing the most in the U.S. economy. And America is moving at warp speed toward the ‘Internet of Everything,’ which promises to spread the productivity-raising potential of digital technology across the entire economy.”

Nothing about AT&T or the cable companies is about “warp speed.” In reality, AT&T and Verizon plan to pour their enormous profits into corporate set-asides to repurchase their own stock, pay dividends to shareholders, and continue to richly compensate their executives. It’s good to know that PPI offers rankings that place telecom companies on top. Unfortunately, those without a financial connection to AT&T are less optimistic. The U.S. continues its long slide away from broadband leadership as even developing countries in the former Eastern Bloc race ahead of us. Verizon’s biggest single investment of 2013 wasn’t in the U.S. economy — it was to spend $130 billion to buyout U.K.-based Vodafone’s 45% ownership interest in Verizon Wireless. Verizon’s customers get stalled FiOS expansion, Cadillac-priced wireless service, and a plan to ditch rural landlines and push those customers to cell service instead.

AT&T financially supports the Progressive Policy Institute

“A recent federal court decision regarding the FCC’s Open Internet Order has prompted pro-regulatory advocates from the ’90s to demand a rewrite of the legal framework that allowed today’s Internet to flourish,” Marshall writes in a section that also includes insidious NSA wiretapping and Internet censorship in Russia and China.

Marshall’s AT&T public policy agenda is showing.

Net Neutrality proponents don’t advocate an open Internet for no reason. It was AT&T’s former CEO Ed Whitacre that threw down the gauntlet declaring Google and other content providers would not be allowed to use AT&T’s pipes for free. AT&T has since patented technology that will allow it to discriminate in favor of preferred web traffic while artificially slowing down content it doesn’t like on its network.

“Pro-regulatory advocates” are not the ones advocating change — it is AT&T, Verizon, and Comcast, among others, that want to monetize Internet usage and web traffic for even higher profits. Net Neutrality as law protects the Internet experience Marshall celebrates. He just can’t see past AT&T’s money to realize that.