& cplSiteName &

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        ADD A COMMENT
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   >   >>
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


The Citrix NetScaler mobile gateway is an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, NetScaler can be deployed on any hypervisor, on a ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
LRTV Custom TV
Mastercard: 2 Billion Adults 'Trapped' in Cash Economy

3|21|17   |   03:51   |   (0) comments


Despite advances made in the last several years, two billion adults around the world are trapped in a cash economy and lack what we take for granted -- a safe way to receive, save and use money. Shamina Singh, executive vice president of sustainability and president of the Mastercard Center for Inclusive Growth, chats about how Mastercard is developing new ways to ...
LRTV Custom TV
Mastercard: Payment From Every Device

3|21|17   |   5:55   |   (0) comments


A world where everything and everyone is connected creates new points of interaction for commerce. These digital experiences cannot be developed in isolation and instead require an ecosystem to drive mass consumer and enterprise adoption and create better consumer engagement. Predicting when that growth will happen is difficult, but always keeping the end user in ...
LRTV Interviews
InterDigital's Role in the 5G, IoT Era

3|21|17   |   05:47   |   (0) comments


Alan Carlton, managing director and VP for Europe at InterDigital, talks about the company's role in 5G projects in Europe and the prospects for the company in the IoT market.
LRTV Interviews
Lessons Learned From Digital Transformation

3|21|17   |   05:51   |   (0) comments


Ravi Palepu, global head of Telco Solutions at Virtusa, talks about some key takeaways from telco digital transformation experiences during the past couple of years.
Women in Comms Introduction Videos
NetNumber's CMO Shares Her Diversity Do's

3|21|17   |   3:19   |   (2) comments


The telecom industry is transforming the world, and diversity plays a critical role in driving the innovation behind it. NetNumber CMO Kim Gibbons shares why diversity and being authentic is a do amidst all the don'ts women in comms often hear.
LRTV Custom TV
Software-Driven Architecture for 5G & IOT

3|20|17   |   1:56   |   (0) comments


We present Heavy Reading's Jim Hodges's report from Mobile World Congress -- where operators and vendors are working to bring a variety of technologies together to make virtualization a reality in the era of 5G and IoT.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: Italy First Pasta the Post for 5G
Paul Rainford, Assistant Editor, Europe, 3/17/2017
5G Faces a Marathon, Not a Sprint
Iain Morris, News Editor, 3/17/2017
WiCipedia: Eradicating Pay Gaps & Squashing Bro Culture
Eryn Leavens, Special Features & Copy Editor, 3/17/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.