Mar 14 2014, 10:34am CDT | by Forbes
Lawyers seem confident that Comcast’s $45 billion acquisition of Time Warner Cable will pass muster with antitrust regulators, perhaps as early as the end of the year or as late as 1Q15. Since Comcast agreed to divest 3 million subscribers upon announcement of the merger in February, and the combined entity’s market share will only be about 40%, remedies to assuage concerns about monopsony and other matters will likely take the form of new consent decrees and alterations to existing ones, two antitrust lawyers said. One of them pointed out that historically, mergers in which market influence and pricing are the matters of antitrust concerns tend to proceed with concessions.
“Comcast’s going to have 19 of the top 25 MSAs (metropolitan statistical areas) in the country where there’s one broadband provider or a limited number,” said Dave Schaeffer, CEO of broadband provider Cogent Communications, among Comcast competitors opposed to the deal. He’s less convinced that the merging cable companies will receive antitrust clearances.
Schaeffer believes opposition is mounting against a Comcast-Time Warner Cable deal and has a better than 50% chance of being quashed, but if it should receive antitrust approval, he listed possible remedies that might satisfy competitors and regulators.
One is additional language to broaden penalties if Comcast should violate consent decrees, said Schaeffer. Comcast has already broken “the spirit” of the NBC Universal consent decree, the open Internet/net neutrality order in which the Philadelphia-based cable company agreed not to manipulate network traffic to its own advantage, in other words, to treat all network traffic alike, Schaeffer said. “Comcast doesn’t manipulate traffic in the network but before it gets to the network by refusing to increase connectivity to all major global Internet backbone providers.”
He would like to see the addition of transparency tests to ensure that Comcast is honoring the open Internet order. The idea of transparency was part of the original open Internet order created by the Federal Communications Commission in 2010, and revised in the NBC Universal consent decree. It required that Internet service providers disclose network management practices to prohibit discriminating or blocking traffic. Schaeffer would like to ways to “objectively test” Comcast’s disclosures on network transparency and meaningful penalties for failure to comply.
Schaeffer believes consumers ought to have the right to sue broadband providers when they are in breach of contracts and codes. At present, consumers waive these rights when they sign contracts with their network operators and can only arbitrate disputes, ultimately too costly for consumers, said Schaeffer.
Lastly, since the Internet is evolving and it’s possible that Comcast could launch a nationwide competitor to Netflix that would extend beyond its networks, there’s a danger that the cable company will treat its own programming differently from that of competitors, and Comcast should be barred from out-of-territory service, said Schaeffer.
Regulators have considered Comcast to be in compliance with the NBC Universal consent decree and open Internet order since the order’s inception three years ago, noted Sena Fitzmaurice, a spokesperson for Comcast. The company has promised to extend its consent decree to include Time Warner Cable. Comcast’s network practices are already transparent, and the proposed merger with Time Warner Cable will not reduce competition because the two companies have no geographies of overlap. The FCC and National Telecommunications and Information Administration have determined that 87% of households have a choice of two wired broadband providers, she added.
Time Warner Cable declined comment.
Source: Forbes Business
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