Merger ‘Conditions’ Can’t Fail As Big Deals Are On The Line
Merger ‘Conditions’ Can’t Fail As Big Deals Are On The Line
Merger ‘Conditions’ Can’t Fail As Big Deals Are On The Line

    Get Involved Today

    On any given day, on any given cable or satellite system, subscribers
    will see a message telling them that a favorite channel which had been in one
    spot on the channel lineup has been shifted to another.  It happens all the time as channels are
    added, subtracted or moved around. 
    It’s not a big deal.

    Unless, of course, the cable channel in question is
    Bloomberg Television.  Since March
    2011, Bloomberg has been trying to hold the Comcast-NBCU media behemoth to the
    promises it made, and agreed to, in order to complete the takeover that
    resulted in one of the biggest media companies in history.  Comcast’s power and influence belies
    its rankings of #66 on the Fortune 500 and #101 on the Financial Times Global
    500.  The numbers don’t show the
    power of the largest cable provider, largest high-speed Internet provider, a TV
    network, a movie studio and numerous cable channels all rolled into one.

    But the sad story of this issue and other behavior,
    including that of the Federal Communications Commission (FCC) begs the
    questions of how far the FCC is willing to go now that it has an even bigger
    deal with Verizon, Comcast and major cable companies to reshape the
    telecommunications business in the U.S. 
    Under the deal, Verizon will buy for $3.6 billion spectrum the cable
    companies couldn’t or wouldn’t use to go into the wireless business.  Verizon wireless will, in turn, market
    cable’s landline high-speed Internet businesses.

    The answers are not encouraging.  The FCC in its wisdom grants a big deal with
    “conditions” to protect the public.  Those “conditions” are then used, abused and
    ignored by the big, powerful companies, which can force their will on the rest
    of an industry and on cowed regulators who take months, if not years, to reach
    their decisions. 

    Battling With Bloomberg

    Bloomberg’s request wasn’t all that complicated.  Bloomberg, which is already carried on
    Comcast cable systems, simply wants to be inserted into the channel lineups
    with the rest of the news channels, and particularly with CNBC, the business
    channel that’s owned by NBCU, which is owned by Comcast.  Bloomberg made the request after the
    Federal Communications Commission (FCC) approved the merger on Jan. 20, 2011.  In Washington, D.C., CNBC is channel 39, MSNBC is 38, CNN is
    36.  Bloomberg is 103.  In Philadelphia, CNBC is at channel 47,
    Bloomberg is 103.  Many other
    Comcast systems have similar channel lineups.

    Bloomberg’s complaint comes from the language the FCC order
    approving the takeover, which said: 
    “We require
    that if Comcast now or in the future carries news and/or business news channels
    in a neighborhood, defined as placing a significant number or percentage of
    news and/or business news channels substantially adjacent to one another in a
    system’s channel lineup, Comcast must carry all independent news and business
    news channels in that neighborhood.”

    the deal was done, Comcast could have easily granted Bloomberg’s request.  Instead, they are fighting it out to
    the bitter end at the FCC and, as likely, in court after.  That aggressive response to what is
    basically a nothingburger of an issue makes a joke of the “strong and
    fair” merger conditions that FCC Chairman Julius Genachowski praised when
    the deal was approved. 

    warned the FCC that this very situation would occur, and the FCC knew it ahead
    of time when it said in the order approving the creation of the
    conglomerate.  Bloomberg’s concerns
    that Comcast “will have the ability and incentive” to discriminate
    against independent programmers “are supported by the evidence” in
    the record that Comcast has done it before, the FCC said.

    aren’t many Bloombergs out there big enough and rich enough to challenge
    Comcast.  Most companies which give
    it a passing thought usually pass, because of the fear of retaliation — a
    practice officially banned by the merger order, but you know how far that will

    A Brave Streamer Brings A Challenge

    other group with the fearlessness to challenge Comcast is Project Concord, a
    small Boston company that wants to enter the streaming business and carry NBC
    programming, as it is theoretically allowed to do under the merger deal.  This hardy, if secretive, band has
    managed to crack open the business side of Comcast’s practices in dealing with
    independent programmers.  Under the
    merger agreement, there are supposedly tight terms for exchanging the highly
    sensitive information about programming agreements — who in which company gets
    to see what.  Comcast decided on
    its own that more of its people should see Project Concord’s data. 

    Concord objected.  So did CBS, Fox,
    Sony, Time Warner, Viacom and Disney. 
    They wrote, “Expansive disclosure of the type anticipated in the Request would
    have a chilling effect on future online distribution deals, and skew the
    competitive landscape by allowing one entity to possess detailed nonpublic
    information about its competitors’ business dealings – which would appear to be
    counter to relevant competition laws.”

    Making yet another joke of
    the regulatory process, the Media Bureau rolled over, and put out a notice
    asking if the confidential exchange of information under the takeover needs to
    be “clarified.”

    To put Comcast’s request
    for additional information into the larger context, this is the company that as
    part of its side deals with Verizon is steadfastly refusing to let anyone look
    at the particulars of how it will sell Verizon’s wireless service and how
    Verizon Wireless will sell Comcast (and other big cable companies) high-speed
    Internet service.

    Tennis Channel’s Challenge

    One person at the FCC who
    hasn’t rolled over for Comcast is the one person who has actually conducted a
    trial of their business practices. 
    Administrative Law Judge Richard Sippel found that Comcast had
    discriminated against the Tennis Channel in an issue of channel placement, when
    it discriminated in favor of the Golf Channel and Versus, which Comcast
    owns.  Those channels are on a
    basic tier, widely available to subscribers, while Tennis Channel was on a
    higher, extra-pay tier.  This case
    isn’t part of the conditions of the merger, but the issues are the same. 

    Sippel ruled last December that Comcast
    had “engaged in discrimination” against the Tennis Channel, with
    channel placement simply based on who owned it. Sippel even fined Comcast
    $375,000, which is lunch money for Comcast, but it’s the thought that counts.  Unusually, the usually compliant Media
    Bureau made the same call, as did the FCC’s Enforcement Bureau. Of course,
    Comcast is fighting back and the issue is far from a final legal resolution and
    that case, like the others, will continue to drag on as the FCC dithers.

    Broadband Conditions Met?

    Of course, Comcast is more
    than a huge entertainment company. 
    They are the largest supplier of high-speed Internet in the
    country.  With the Verizon deal
    done, they will be an absolute lock on the wired side of the equation.  Verizon will stick to its little FiOS
    enclaves around the country, while ceding the rest of their territory to
    Comcast and the rest of the cable industry for true high-speed data.

    There were conditions on
    the broadband side also, including that Comcast “make available to
    approximately 2.5 million low-income households: (i) high-speed Internet access
    service for less than $10 per month,” as well
    as higher priced services at higher speeds.

    Comcast got a fair bit of
    publicity last September when it announced its “Internet Essentials”
    program.  Genachowski even had some
    glowing words of praise for the program. 
    The reality is the program offered a $9.95 monthly fee for 1.5 mbps
    service but with terms and conditions that immediately limited its effectiveness.  In its original state, the program was
    to last three years, was limited to households which have at least one child
    receiving free, but not reduced-price, school lunches, under the National
    School Lunch Program.  They
    couldn’t have previously had Comcast services. There are other requirements for
    supplying documentation. 
    Applications are handled by mail.

    Of course, the program leaves
    childless couples, elderly or even single people. This is the program of
    which Genachowski said: “I want to take this opportunity to applaud
    Comcast for their work on Digital Essentials.”   As of February, there are 463 Philadelphia families
    signed up.  Local advocates noted
    that rate is 0.3 percent adoption.

    The condition is being followed in letter.  But the FCC praise for such a
    problematic program is again raising the question of what happens when the
    stakes get even larger.

    Comcast will do what it can to get by.  Its commitment to closing the digital
    divide is guided, as with all businesses, by the bottom line.  And yet, the company at times seems to
    go out of its way in the other direction. 
    Steve Pierce, founder of Wireless Ypsi in Ypsilanti, Mich., said in an
    interview that one change to a Terms of Service agreement could wipe out months
    of progress in bringing service to a vastly under-served population.  Before the merger, Comcast’s Business
    Class service allowed for sharing of the service.  Pierce used that provision to put Comcast connections in
    public housing and low-income neighborhoods, increasing Comcast’s business in
    places where it wouldn’t otherwise be. 
    After the merger, that sharing was severely restricted, so that Pierce
    couldn’t offer his service, which helped to wire up much of the downtown areas.
    Public Wi-Fi, coffee houses using Wi-Fi and other businesses that want to offer
    Wi-Fi to customers would be hamstrung by new conditions, including having each
    user have an individual sign in and password.  That type of activity won’t close the “broadband
    adoption gap” that Genachowski so dearly would like closed.

    Most of the smart money is on the FCC and Justice Department
    approving the Verizon-cable cartel. 
    There’s some battle fatigue after blocking the AT&T takeover of
    T-Mobile and this case, while as dangerous to the economy, isn’t to some as
    clear cut a call.  If it is
    approved, with conditions, those conditions have to be crystal clear in letter
    and intent and enforced swiftly to protect the public interest.