Light Reading

Amid Hearings, Comcast Ups Speeds/Hotspots

Mari Silbey
4/10/2014
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Comcast knows a thing or two about timing.

Even as executive vice president David L. Cohen testified before the US Senate Judiciary Committee on Wednesday regarding the proposed Time Warner Cable acquisition, the Comcast home team released news that the company has now activated more than 1 million WiFi hotspots and increased Internet speeds for customers in the Northeast.

The WiFi announcement covers outdoor, business, and neighborhood hotspots, the last of which refers to home routers that segment bandwidth to enable separate public and private WiFi access routes. (See Comcast's Home Hotspots Heat Up.)

The Internet speed announcement applies to 14 states between Maine and Virginia, as well as the District of Columbia. Comcast has boosted the Xfinity Blast tier from 50 Mbit/s to 105 Mbit/s in those regions, and the Xfinity Extreme tier from 105 Mbit/s to 150 Mbit/s.

These announcements support the company's argument that a merger with Time Warner will allow Comcast to deliver more benefits to consumers across a wider subscriber footprint. Cohen has said that if the Comcast acquisition is approved, more consumers will benefit from: faster broadband; greater network reliability and security; improved WiFi access; an advanced video platform in the form of X1; more on-demand video choices; the extension of Internet Essentials for low-income families; and the extension of diversity and community investment commitments.

When questioned by Senator Amy Klobuchar (D-MN) on whether or not these benefits would still be realized even without the merger, Cohen stated that the changes would happen faster and with more certainty as a result of the acquisition.

Despite assurances from Cohen, there was a mixed reaction from the senators present at the hearing, with many expressing skepticism that a merger between the two largest cable companies in the US would be in consumers' best interest.

Senator Al Franken (D-MN) flatly announced his misgivings stating, "I'm against this deal." Franken recalled for the audience that when hearings were held to discuss Comcast's acquisition of NBC Universal, the company argued that vertical integration shouldn't be a concern because there were still other "robust distributors" in the market including Time Warner Cable. That argument no longer holds up if Time Warner is folded into Comcast operations.

Franken said Comcast also declared at the time, "We are not getting any larger in cable distribution here." Four years later, the situation has changed.

One of the other major concerns expressed during the latest Judiciary hearing was the idea that a larger Comcast would jack up the price of programming for smaller operators. Cohen argued that programmers don't leave money on the table in any negotiation, so a better deal for Comcast wouldn't result in a higher price for other operators.

President of Public Knowledge Gene Kimmelman disputed that analysis, however, and reports from independent operators suggest that they have had to pay higher licensing fees as a matter of course in order to balance out the deals negotiated with larger cable companies. (See In Cable We (Anti)trust.)

Between Comcast's vertical integration through the purchase of NBCU and the expanded distribution it will gain if the merger with Time Warner is approved, perhaps the biggest fear among regulators is that the company will have the power to control pricing in its supplier market in the future. Cohen argued in the hearing that the Federal Communications Commission has already examined the limits of horizontal ownership and found little risk in a company owning 30% of a market.

Kimmelman countered that any earlier review of that theory had been based on generic rules, and that the specifics as they relate to Comcast are what are important today. He also cited statistics that Comcast could end up in control of as much as 50% of the broadband market.

The debate on the merger isn't over. Even as the Senate Judiciary Committee mulls its findings from this week's hearing, the House Judiciary Committee has said it will hold its own hearing on May 8.

— Mari Silbey, special to Light Reading

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danielcawrey
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danielcawrey,
User Rank: Light Sabre
4/12/2014 | 6:13:22 PM
Re: Will wireless be next for Comcast?
Activating wifi hotspots makes Comcast sound like a data provider that could compete with wireless companies like Verizon. 

Comcast is a conglomerate involved in many different areas at this point. Not only do they control infrastructure, they also own content. That's something wireless carriers don't have, and what's to stop Comcast from building out a nationwide wifi network?
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/12/2014 | 2:02:11 PM
Re: Monopsony
kq4ym - "You can bet Comcast has lots of "bonuses" hidden up their sleeves in preparation for getting approvals and support for the coming merges."

You bet. And I expect we'll see them roll out in pieces, at each interval when opposition to the merger seems to be building. 
kq4ym
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kq4ym,
User Rank: Light Sabre
4/12/2014 | 1:16:51 PM
Re: Monopsony
You can bet Comcast has lots of "bonuses" hidden up their sleeves in preparation for getting approvals and support for the coming merges. The danger of course is that the future benefits/disadvantages to the proposals are just not going to be very predictable. Whatever Comcast has to do to get it's way throught the regulatory mazes, will be done. There will be other suprises coming as well, I'm sure.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
4/10/2014 | 4:23:35 PM
Monopsony
The concern with the Comcast/TWC merger isn't so much monopoly, where a single supplier dominates a market. It's the lesser known threat of monopsony, where a single buyer controls the market. In this case, it would be the market for TV programming but possibly also networking equipment and services. 
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
4/10/2014 | 3:50:58 PM
Will wireless be next for Comcast?
Comcast seems to have partnered with Verizon to offer some cellular wireless bundles... but I gotta wonder when Comcast will try to get into the wireless market on its own. 

Cable providers and incumbent telcos seem to be dividing up the market and leaving each other alone for now.. but if there's no collusion, it seems like Comcast should want to be in the wireless space, too. Perhaps the barrier to entry is too great, even for Comcast? 
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