Washington, D.C. (February 26, 2015)—Speaking Tuesday at COMPTEL's Competition and Innovation Policy Summit, a panel of experts and industry leaders had few positive things to say about the proposed merger of Comcast and Time Warner Cable. "It's difficult from a consumer perspective to see any benefit of the merger," said Jill Canfield of NTCA-The Rural Broadband Association, "whereas when you look at the transaction there are certainly consumer harms and competitive harms."
The panel discussion took place Tuesday afternoon at the Newseum in Washington, D.C. Participants included: Jill Canfield, Vice President of Legal & Industry at NTCA–The Rural Broadband Association; Genevieve Morelli, President of ITTA (The Independent Telephone & Telecommunications Alliance); Matt Polka, President of the American Cable Association; and Gene Kimmelman, President of Public Knowledge. The panel was moderated by Markham Erickson, Partner at Steptoe & Johnson LLP.
While the panelists each brought a different perspective to the discussion, all agreed that the proposed merger poses a serious threat to the environment of competition, innovation and consumer choice that has driven our economy forward in the Internet-era. Kimmelman remarked that the proposed merger, currently under review by the Department of Justice and Federal Communications Commission, would stifle competition and choice across a "panoply of services," from cable to online content to streaming devices.
Other highlights from the discussion include:
On Programming Pricing and Diversity
Polka said that the proposed merger, by concentrating in Comcast the ownership of much of the programming Americans watch, will "give Comcast greater ability and incentive to extract higher prices" for programming from competitive cable operators. Experts have also observed that this proposed merger would give Comcast increased leverage to drive down its own programming costs which would, in turn, further increase costs for smaller competitors. Morelli echoed these concerns, saying that, if the merger is approved, smaller operators "will be left holding the bag. Prices for must-have programming will continue to rise and rise." Consumers, meanwhile, would enjoy fewer content options in a programming market that would be shaped and dominated by Comcast.
Online Video and Over-The-Top Content
"We're seeing [an] explosion in over-the-top distribution, a growth in broadband opportunities," said Kimmelman, commenting on the increased popularity of online video and other content distributors like Netflix, Amazon Instant Video and Dish's SlingTV. Citing examples such as the now-infamous "throttling" episode when Comcast degraded customers' online video streams, panelists warned that this merger would allow Comcast to restrict Americans' ability to access content online and potentially grind this cycle of innovation to a halt. "The danger to the consumer," continued Kimmelman, "is that this developing form of competition through broadband could be thwarted and undermined" if the proposed merger were approved. And all of the panelists agreed that the strong Open Internet rules that the FCC is expected to approve this week would not be sufficient to address all of the harms if the companies merge.
Set-Top Box and Device Innovation
Comcast has blocked programming to Roku, Amazon Fire and other devices, and the panel expressed concern that this merger, if approved, would allow Comcast to drive new and innovative devices from the market and impose its own X1 platform as a closed industry standard that competitive cable operators could have no choice but to accept. "Smaller companies don't have the ability to tell [set-top box] manufacturers, 'this is what I want,'" remarked Canfield. "They're stuck with what's available." Ultimately, Comcast could use its control of the X1 interface to further tilt the scales in favor of Comcast's own programming and content. The merger would allow Comcast to "set the standard for the interface of any consumer device, for how you get video," said Kimmelman.
Barriers to Entry for New Competitors
Canfield, Morelli and Polka specifically cautioned that increased programming costs, along with Comcast's substantial market concentration in major service areas around the country, would make it even more difficult for competitive providers to enter new markets or challenge Comcast's dominance in existing markets. "The higher the cost of programming," said Morelli, "the less money available [to smaller operators] for other deployment."
All of the panelists shared the sentiment that, when it comes to this proposed merger, "bigger is not better." They echoed the fears-already expressed by manifold cable/Internet operators, content providers and consumers-that this merger will allow Comcast to stifle future choice and competition in the same manner that it has done in its existing market footprint. Canfield summed this sentiment up aptly when she commented that, if the merger were approved, "you would have one company that determines the whole future of the industry."
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About "Don't Comcast the Internet": The Don't Comcast the Internet campaign is driven by COMPTEL, ITTA (The Independent Telephone & Telecommunications Alliance) and NTCA–The Rural Broadband Association, which together represent more than one thousand businesses providing competitive video, Internet, Internet content, and voice services. We are calling on federal regulators to deny the Comcast-Time Warner Cable merger and prevent the serious harms it poses to competition, innovation and consumer choice. For this purpose, we have formed a coalition called Networks for Competition and Choice.