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Web TV Takes a Crack at Comcast-NBCU Union

Jeff Baumgartner
7/13/2010

Heat was once again applied to the proposed Comcast Corp. (Nasdaq: CMCSA, CMCSK)-NBC Universal merger today during Federal Communications Commission (FCC) hearings in Chicago that sought to address the deal's potential threat to the emerging online video distribution market. (See Policy Watch: Who's Afraid of Comcast-NBC? .)

The hearing gave detractors another venue to take a swing at the deal, or offer some conditions they think will keep Comcast's power over the pipe and the content in check.

Dish Network LLC (Nasdaq: DISH) deputy general counsel Jeffrey Blum disagreed with the notion that the deal would have a benign effect on the online video market, calling on the FCC to impose three conditions: apply "open Internet rules" that would prohibit Comcast from discriminating traffic on its broadband networks; make its network management practices transparent; and make Comcast offer a standalone broadband service and allow consumers to tap into third-party ISPs with wholesale access to the MSO's broadband pipe.

Dish can protect itself because it's increasingly using broadband connections to fuel a video-on-demand (VoD) service that complements its traditional, broadcast-driven satellite TV service. It's also tapping place-shifting tech from its corporate cousin, EchoStar Corp. LLC (Nasdaq: SATS), to "SlingLoad" a fancy new HD-DVR product. (See Dish Starts Selling 'Sling-Loaded' HD-DVR .)

Comcast's broadband connections "must be neutral and non-discriminatory," Blum said, using the old BitTorrent Inc. P2P case to show that the MSO has had "no qualms" about degrading its broadband service. He also feared that the deal might give Comcast an incentive not to count broadband content coming from NBCU against the MSO's monthly 250-gigabyte cap on excessive use.

Comcast has since changed to a "protocol agnostic" network management platform and presently doesn't discriminate against which kind of traffic counts against the cap. (See Comcast Goes 'Protocol Agnostic' Everywhere and Comcast Draws the Line at 250GB.)

Susan Crawford, a professor at the Cardozo Law School in New York, warned that the merger could raise the barriers of entry for emerging broadband video rivals because Comcast is bundling its "TV Everywhere" products with its traditional cable TV subscriptions.

That model, she said, "could make it uneconomical for online video distributors to emerge. Tying free TV Everywhere content effectively prices competing online video distribution services at zero."

Markham Erickson, the executive director for the NetCoalition , a firm that represents entities such as Google (Nasdaq: GOOG) and Yahoo Inc. (Nasdaq: YHOO), echoed that tying together traditional cable distribution with free TV Everywhere could force some programmers to decide for carriage with Comcast or take a shot at an Internet-only distribution model, or pressure independent channels to remove or limit the amount of content they offer via the Internet.

Sezmi Corp. senior director of business development Travis Parsons took a gentler stance on the deal, noting that his company, which uses a mix of broadcast and broadband technologies to deliver its video packages, has a "great relationship" with NBCU and is working on a deal with Comcast for access to its stable of networks. (See Sezmi Reaches 10 New Markets and Sezmi Founder: We'll Replace Cable & Satellite TV .)

Rather than asking for any specific conditions, he said the FCC, as it probes the deal, must ensure that companies such as Sezmi can get "fair and equal access to content and the broadband networks used to deliver it." Without that, he warned, "Sezmi will not thrive."

Free Press president and CEO Josh Silver wondered if imposing conditions on the deal would be enough to remedy the power Comcast could wield on the airwaves, on cable, and via the Internet. Applying conditions to keep that in check could expire in a few years, giving them "a shelf life... as helpful as putting a Band-Aid on a broken leg," he said.

Although some are fearful that Comcast, with NBCU in hand, could help nip the "cord-cutting" threat before it has a chance to blossom by applying strict controls on Web distribution, the evidence of that trend remains questionable.

The Nielsen Co. vice chair Susan Whiting said data shows that the TV is still the primary source of viewing, with the average American watching 35 hours a each week. However, according to Nielsen's first-quarter figures, Web TV viewing has grown 3 percent year-on-year, to include 135 million people, with the time spent viewing TV on the Web jumping from 6 percent to three hours and 10 minutes per month.

But those people are adding, rather than replacing, viewing platforms, she said. The cord-cutting threat, Whiting said, remains "slightly exaggerated."

Crawford countered that the younger generation does see online video as a pure substitute, but agreed that how quickly that will grow into a bona-fide trend remains the big question. "I've cut the cord," she said. "It can be done."

In other merger-related news, the FCC has officially restarted the 180-day review shot clock after stopping it to gather new requested data from both parties. With the clock restated, today (July 13) is day 45 of the Commission's merger review.

Although the Comcast-NBCU hearing took center stage today (a second panel is now underway), here's more recent policy happenings from the world of cable:

  • The long and winding road of the P2P-related lawsuit against Comcast has reached the end of the line, with $16 being awarded to MSO subs who used the Ares, BitTorrent, eDonkey, FastTrack, or Gnetella P2P networks and were customers during the period of April 1, 2006 and Dec. 31, 2008. Qualifying subs have until August 29 to file a claim.

    This all tracks back to original allegations that Comcast was fiddling with some P2P upstream traffic. The FCC eventually slapped Comcast for it, but a court recently overturned the Commission's order. Comcast, meanwhile, has already migrated to another, "protocol agnostic" network management system. Ars Technica, citing the judge order, notes that just six individuals had filed objections to the settlement. (See FCC Throttles Comcast and Net Neutrality Ruling: FCC Loses, Comcast Wins.)

  • Some might say that the FCC has demonstrated more transparency and general improvements since former chairman Kevin Martin left the building in early 2009. (See Kevin Martin's Greatest Hits .)

    Apparently, the cable guys aren't alone in that belief following word Monday that the Commission had been named the "most improved" federal agency in a survey of employee satisfaction released by the Office of Management and Budget. Improvements in the way the FCC operates have been in full gear since Julius Genachowski took the reigns, but he credited commissioner Michael J. Copps for helping the agency make "impressive strides" with its reform agenda.

  • The American Cable Association (ACA) has widened its ranks following a report that RCN Corp. , Knology Inc. (Nasdaq: KNOL), SureWest Communications (Nasdaq: SURW) and Hiawatha Broadband Communications have joined the cause now that their previous organization, The Broadband Service Providers Association (BSPA), is in the process of closing shop amid dwindling membership numbers.

    — Jeff Baumgartner, Site Editor, Light Reading Cable

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