Comcast Sweats Title II Rules
Although firmly opposed to the course that the FCC soon plans to take, Comcast seems resigned to the fact that broadband service will soon be subjected to a common carrier regulatory regime.
Speaking on the company's fourth-quarter earnings call Tuesday morning, Comcast Corp. (Nasdaq: CMCSA, CMCSK) Chairman and CEO Brian Roberts said his company will have to "adjust to the specific details" of the Title II proposal outlined by Federal Communications Commission (FCC) Chairman Tom Wheeler if, as expected, the full Commission approves the idea at its regular Thursday meeting. While he called it "premature to speculate" on the proposed Title II rules, he said company executives are "heartened there's at least a desire to forbear" from rate regulations and other pricing restrictions.
Wheeler's proposal, while calling for a utility-style regulatory regime for broadband providers, would exempt them from rate regulations, tariffs, last-mile network unbundling and other types of restrictions they have feared. But most major broadband providers remain very uneasy at best about the idea because of the potential for price regulations and other restrictions down the line. (See The Sound of One Hand Clapping.)
As the largest broadband provider in the US with nearly 22 million high-speed data customers, Comcast potentially has the most to lose from the imposition of tighter regulations on Internet service. Comcast also has its proposed $45-billion acquisition of Time Warner Cable Inc. (NYSE: TWC), another one of the nation's biggest broadband providers, on the line.
On the earnings call, Roberts made it clear that Comcast fully supports the FCC's net neutrality goals of a free and open Internet while vehemently opposing Title II regulation as a way to achieve those goals. In his opening statement, he called Title II "antiquated" with "real downsides" and said the move would introduce "the unnecessary risks associated with 1930s-style regulations" to the Internet. "We don't believe Title II is the right answer," he said.
Michael Angelakis, Comcast's vice chairman and CFO, said the proposed switch to Title II regulation would also introduce "higher uncertainty" into the company's broadband investment strategy. He said Comcast officials will have to scrutinize the new rules closely before moving ahead with their plans.
When Comcast bought NBC Universal five years ago, it agreed to abide by FCC net neutrality rules that were ultimately struck down for the rest of the broadband industry by the federal courts. Asked whether Comcast would accept Title II regulation as part of the government's approval of the TWC deal, regardless of whether those rules were ultimately struck down, Roberts said his company would not. "We do not want to be different" from the rest of the industry, he said. Whatever rules are put in place should "affect all industry providers so we're on a level playing field."
As the US government's review of the Comcast-TWC deal drags on, there has been a rising tide of doubts on Wall Street and elsewhere about whether the feds will approve the transaction. In the latest complication for the deal, the National Association of African-American Owned Media filed a $20 billion lawsuit against the two large cable companies in a Los Angeles federal court Friday, charging them with racial bias.
Yet Comcast executives insisted that they remain confident that the deal will pass regulatory muster in the next few months. Roberts noted that the FCC's informal 180-day "shot clock" for carrying out its merger review is now slated to run out by the end of March. "Hopefully they'll [regulators] be able to turn their attention to the transaction right after" the Commission acts on Wheeler's Title II proposal, he said.
— Alan Breznick, Cable/Video Practice Leader, Light Reading