Light Reading
New antitrust concerns are emerging in the debate over the potential Comcast/Time Warner Cable merger, including fears of one entity controlling much of the TV viewed by Americans.

In Cable We (Anti)trust

Mari Silbey
4/8/2014
50%
50%

To paraphrase telecommunications analyst Craig Moffett of MoffettNathanson at last week's American Cable Association Summit, the past 10 years have been all about Washington figuring out that cable companies have developed the dominant network infrastructure in the US: The next 10 years will be all about Washington figuring out how to regulate it.

On the eve of the first public hearing to be held by the Senate Judiciary Committee on the proposed merger of Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), there are concerns emerging that suggest the deal could bring about a new kind of antitrust issue in the telecommunications market.

There has already been some discussion about the power that the merged cable company would be able to wield in negotiations with programmers. With roughly 30% of American TV households in its subscriber base, the new Comcast entity would have significant leverage with content providers seeking a national audience. (See Comcast's TWC Coup: 3 Things to Know.)

However, Moffett took that argument a step further at the ACA Summit by saying that a larger Comcast would, at least to some extent, be able to choose what content Americans can and can't see. Calling it a "real concern," Moffett talked about programmers who won't be able to afford to lose 30% of the viewing market when negotiating for distribution, and, by implication, that there are programmers who won't be able to come to terms with Comcast, and therefore won't have their content distributed to a significant percentage of the population.

Moffett also touched on how Comcast has vertically integrated in recent years, particularly through the acquisition of NBC Universal. The combination of being a content owner and a distributor gives Comcast a different kind of power because it places the company on both sides of the programmer negotiating table. Interestingly, several over-the-top entities are attempting to follow a similar path by combining a packaged service with original content. Amazon and Netflix already produce their own content, and reports suggest that Yahoo and Microsoft are working to do the same.

Meanwhile, Steve Weed, CEO of Wave Broadband, voiced another fear about how a Comcast/Time Warner merger could drive down competition further. Weed pointed out that programmers aren't willing to lose money just because Comcast has the leverage to dictate unfavorable terms. When content companies have to accept less money from Comcast, Weed said, they turn around and charge smaller providers more money to make up the difference. That trend, he continued, will push more of the smaller players out of the market.

Colleen Abdoulah, the ACA chairwoman and CEO of WOW!, agreed with the principle that cable consolidation will continue and that there will be fewer small operators in the future. "I think there's always going to be a niche," said Abdoulah. "Whether it's going to be as large a group as exists today, probably not. And that's sad. But it's a reality."

Regarding the specific acquisition deal between Comcast and Time Warner, Abdoulah was concerned, but pragmatic. "We're going to take the same position [as in the NBCU acquisition]," said Abdoulah, "which is to read the filing, be very thoughtful about it… and probably not go down the path of trying to fight the merger."

However, Abdoulah also cautioned and urged regulators that "if and when [the merger] does happen, please be thoughtful about it… and provide conditions that will give some level of protection and fairness in the marketplace that they're going to wield so much power."

Both the Wave Broadband and WOW! executives also talked about the importance of broadband in the Comcast deal. The two independent operators already have more broadband customers than traditional video customers, and they view that as a positive trend given the limits on profitable growth dictated by programming expenses. The executives expressed concern, however, that content companies will try to transfer the current cable TV model over to the Internet. In that case, small operators could end up in the same disadvantaged position as they find themselves in today. These companies don't want to pay for the right to deliver Internet video on a per-broadband-subscription basis. (See Rep. Rips Retrans 'Racket' .)

Robert Gessner, president of MCTV echoed the fear. "Make sure [the model] doesn't migrate to the Internet," he said.

While broadband is a major factor in the potential merger of Comcast and Time Warner, video is still the main application guiding the economics of the Internet service provider market. The industry is starting to sort out and articulate some of the related issues, but there are many potential consequences of the Comcast deal that are simply impossible to predict. Even as well-formed arguments on both sides of the merger are trotted out in the coming weeks, it will be difficult to determine a fair and reasonable path forward from an antitrust perspective.

This will not be an easy knot for lawmakers to untangle.

— Mari Silbey, special to Light Reading

(14)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
4/12/2014 | 11:10:13 AM
Re: Ch-ch-changes
@ msilbey, I can't agree more with you on this. This really is thought provoking what finally reaches the consumer screens. Together, with such huge presence in the market, they will be able to literally dictate what passes through their filters and what doesn't pass on to the televisions. This is an ominous sign for viewers as well and strikingly against the right to information.
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
4/10/2014 | 7:04:04 AM
Re: Re : In Cable We (Anti)trust
It is fearful and certainly going to be a nightmare for programmers. It's rightly put in the post that this deal will wield the company with such a power to be on both sides of the negotiating table. Smaller providers will be the biggest losers with little or no power against big players. 
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
4/10/2014 | 7:03:37 AM
Re : In Cable We (Anti)trust
Comcast and Time Warner, when merged, will make a giant of a company. It clearly seems to be monopolization and undermining of the competition in the market. The size will give them the power to dominate each and everything and control the proceedings. This is against the free market principles. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
4/9/2014 | 7:13:18 PM
Re: Ch-ch-changes
Or Amazon going into cloud services by extending its own server technology. 
kq4ym
100%
0%
kq4ym,
User Rank: Light Sabre
4/9/2014 | 12:30:09 PM
Re: Nice summary Mari!
The Comcast deal will certainly put legislators into an interesting position. Trying to determine if 30% of the market is just too much to give to one outfit and trying to forecast where the future may lead as far as any denigradation to consumer interests. It's all problematic and probably not going to lead to any quick answers. You can bet Comcast has well thought through any governmental objection and has the legal muscle to defend it's position to the end.
gconnery
100%
0%
gconnery,
User Rank: Light Sabre
4/9/2014 | 12:27:04 AM
Nice summary Mari!
Very nice article.  First suggestion I've seen that there will be even the slightest pushback by congress on this deal.  Personally I'd like to see them take a VERY hard line with Comcast, allowing the deal only with the right long-term conditions that Comcast probably won't agree to. 


I don't expect that though.  Money talks.
msilbey
50%
50%
msilbey,
User Rank: Blogger
4/8/2014 | 8:08:45 PM
Re: Ch-ch-changes
Or Amazon going into logistics because it sells a lot of books... oh wait. :)
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
4/8/2014 | 7:19:47 PM
Ch-ch-changes
Neither the telcos nor the content providers are primarily in their formerly mainstream businesses anymore. They're both primarily data providers now. That's like McDonald's going in the shipping business because it has a lot of trucks. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/8/2014 | 3:08:23 PM
Re: Cry me a river
There aren't many or maybe even any small content providers anymore in terms of conventional video services. This is all about big money.
KBode
100%
0%
KBode,
User Rank: Light Sabre
4/8/2014 | 3:07:05 PM
Re: Moffett
Moffett injected plenty of opinion. Like when he argued that cord cutters should be ignored because they're 40+, poor, and living in their parents basements (when all data suggests the exact opposite). He also fought tooth and nail against most network upgrades, even in cases where DOCSIS 3.0 generated huge rewards for very little investment money.

I'm not historically a fan of his, can you tell? ;)

I'm also not sure cable's facing any huge regulatory threat. I imagine Comcast will be allowed to acquire Time Warner Cable with some largely cosmetic conditions, and I've not seen a regulator yet who has seriously addressed consumer price or competition issues on the broadband or TV front, much less a Congress interested in passing any rules that would seriously restrict Comcast's ability to nickel and dime consumers.

Until the government becomes willing to stand up to huge campaign contributors, I doubt that's going to change. As AT&T and Verizon back away from DSL markets, Comcast's going to enter a golden age of profitability where they face even less competition than ever before!
Page 1 / 2   >   >>
Flash Poll
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Glimpsing the Self-Driving Car
Dan Jones, Mobile Editor, 9/12/2014
AT&T: We'll Bundle Fixed Wireless & DirecTV
Mari Silbey, Independent Technology Editor, 9/15/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
Like Us on Facebook
Twitter Feed