Yesterday was the deadline for comments to the FCC regarding the proposed merger between Comcast and NBC Universal. Since one of the country’s biggest owners and operators of cable infrastructure is trying to integrate itself with one of the country’s biggest television content providers, there are a lot of potential issues that might arise. We at Public Knowledge, though, are leaving much of that for others to hash out; in our filing, we’re focused on the narrower issue of “over-the-top” Internet video–services that provide video content without owning the infrastructure that transmits the actual bits of the video.
Over-the-top video is a topic we’ve written about before, and even in the context of this merger. In our filing, we identify two distinct but symmetrical dangers to over-the-top video posed by the Comcast-NBCU merger: first, that the combined entity would use its control over its physical infrastructure to restrict its customers’ access to non-NBCU content; and, second, that the combined entity would use its control over NBCU intellectual property to restrict access by others to NBCU content. These dangers stem from the fact that the combined entity would be a double gatekeeper: it would control access both to Comcast’s subscriber base and to NBCU’s content base.
Both of these dangers come to a head with online video, and experience shows that our fears aren’t hypothetical. Comcast has already demonstrated a willingness to discriminate against Internet content it doesn’t want on its networks, both by obstructing the BitTorrent protocol and by refusing to offer its ‘TV Everywhere’ Internet video service except bundled with cable TV. And at the same time, NBCU has already repeatedly blocked competitor access to its Hulu joint venture, as well as blocking Netflix’s access to newly released movies. Add in some of the other troubles facing over-the-top providers and the situation looks even bleaker.
The FCC isn’t the only US governmental agency that weighs in on corporate mergers; the Federal Trade Commission and the Antitrust Division of the Department of Justice do it too. But unlike the FTC and the Antitrust Division, which primarily consider the effect of a merger on competition itself when deciding how to proceed, the FCC has a broader mandate. For example, in addition to assessing potential anticompetitive effects, the FCC is required to “assure that cable communications provide and are encouraged to provide the widest possible diversity of information sources and services to the public;” and to make sure that “the public interest, convenience, and necessity will be served” when a broadcast station changes ownership.
Comcast and NBCU already have plenty of incentives to exploit their respective market power in ways that will harm both competition and the public interest, both in general and in the online-video context. A merger would let the combined entity leverage its infrastructure and content strengths for potentially even more harm. That’s why, considering its broad responsibility for the public interest, the FCC should very carefully consider whether to let this merger go through. And if it does go through, the FCC should insist on strict conditions: forbid the combined entity from misusing its infrastructure by discriminating against non-affiliated content; require it to give other ISPs wholesale access to its infrastructure; and require it to make its content available at reasonable and non-discriminatory rates. That might keep the merger from killing off–or just plain seizing control of–the nascent Internet video market.