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Senators: Comcast deal could mean higher broadband prices

Grant Gross | April 10, 2014
The proposed US$45.2 billion acquisition of Time Warner Cable by Comcast would give the company huge market power to determine broadband prices and Internet content, a group of U.S. senators said Wednesday.

The proposed US$45.2 billion acquisition of Time Warner Cable by Comcast would give the company huge market power to determine broadband prices and Internet content, a group of U.S. senators said Wednesday.

The deal, announced in February, raises serious questions about Comcast's ability to set prices in both the broadband and the cable television markets, several members of the Senate Judiciary Committee said during a hearing.

The proposed deal would combine Comcast, the largest broadband and cable TV provider in the U.S., with Time Warner Cable, the second largest cable TV provider and third largest broadband provider.

The combined company would control about 30 percent of the U.S. paid television market, and about 40 percent of the high-speed broadband market, said Senator Amy Klobachar, a Minnesota Democrat. "Its size and scope would give it the power to affect prices, services and content offerings throughout the industry, and the future of online video competition," she said. "What's in this merger for consumers?"

Executives from both companies defended the merger. Comcast Executive Vice President David Cohen noted that the two companies don't compete head-to-head in any U.S. market. "Objectively, this is not a challenging transaction from an antitrust perspective," he said. "We don't compete for customers anywhere."

The merger will give Comcast the scope to invest in better products and will give former Time Warner Cable customers faster broadband speeds, more on-demand cable TV choices and access to Comcast's $10-a-month broadband plan for low-income families, he said.

Most of Comcast's competitors are "national and global and larger than us," Cohen said. Competitors to Comcast, which had $64.7 billion in revenue in 2013, include telecom carriers, satellite providers, Netflix, Google and Apple, he said.

"The business reason for this transaction is to create the scale that will enable Comcast to invest more in innovation and infrastructure and enhance our ability to compete more effectively," Cohen added.

Klobachar was among several committee members who expressed skepticism about consumer benefits of the merger. Comcast's ownership of NBCUniversal, in a deal that closed in 2011, raises questions about its commitment to other programming, both on its cable TV systems and on its broadband networks, some senators said.

The U.S. Federal Communications Commission and the Department of Justice are both reviewing the deal. Senators don't have direct authority to approve or kill the deal.

On the same day as the hearing, the groups Common Cause, Consumers Union, Daily Kos, Demand Progress, Free Press and Working Families announced they will deliver petitions opposing the deal signed by more than 400,000 U.S. residents to the DOJ and FCC.

Comcast's ownership of NBCUniversal gives it an incentive to discriminate against other Web-based content, said Senator Al Franken, a Minnesota Democrat who opposes the deal. Comcast made a commitment to follow net neutrality rules as a condition of the NBC deal, but the condition expires in 2018.

 

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