& 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   >   >>
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
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.
Between the CEOs
CEO Chat: UXP Systems' Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
WiCipedia: Should Men Be Included? & Olympians Face Discrimination
Eryn Leavens, Special Features & Copy Editor, 8/26/2016
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
Google Fiber Downsizing Not Confirmed
Mari Silbey, Senior Editor, Cable/Video, 8/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.