The fate of the open Internet is at stake over one very important decision. And yet C-SPAN 3 did not receive Super Bowl-level viewership during its three-hour broadcast of the Comcast-TWC merger Senate hearing yesterday.
Fortunately for you, dear reader, we’ve assembled the highlights for you:
1. ‘Benefits’ offered by Comcast don’t require merger approval
As I wrote yesterday, Comcast made a decently convincing argument for why its merger with TWC should be approved, as long as you don’t skim beneath the surface. The company’s post-merger plans include an expanded low-income high-speed Internet service tier, the quick build-out of a national Wi-Fi network, no immediate change to the level of competition, and a superior set of consumer services.
But sub-committee chair Sen. Amy Klobuchar (D-Minn.) kind of derailed much of that argument with a simple question: “So will the benefits Comcast is offering happen even if the merger isn’t approved?”
Comcast EVP David Cohen then admitted that many of those “benefits” were initiatives that do not depend on the merger going through. This is at least true of the national Wi-Fi network, the low-income Internet Essentials service, and improvements to current TWC subscribers’ regular services (which were already in the works by TWC).
2. The Southern Senator’s ‘revelation’ about big cable
I don’t expect every member of the Senate to have a deep understanding of the broadband and television service industry. I do, however, expect them to at least read a Wikipedia article or two before sitting in on a judiciary hearing about the two largest cable providers merging.
“So, generally speaking, cable companies don’t compete with each other, is that what we’re saying?” said Sen. Lindsey Graham (R-S.C.) to a very delighted Cohen.
Graham then added that he’s a DirecTV customer who is unhappy with the service’s reliability during bad weather. It’s caused him to revisit switching to another provider. And instead of probing the cable execs with tough questions, he asked what options were available (DirecTV, Dish, TWC, and AT&T) and invited panelists to “sell” him on resubscribing. It’s not entirely self-serving because, you see, Graham is technically one of many South Carolina consumers who may encounter this problem.
“So in my case I wouldn’t be losing a choice. [And] the theory would be that I could have a new choice with [better] services through the merger, that correct?” he said.
“I should just let you take the witness seat, because that’s exactly what I’ve been saying,” Cohen replied.
DirecTV troubleshooting aside, Graham might be the only member of the committee who was swayed by Comcast’s argument — especially since he only inquired about the multichannel video business, not high-speed Internet competition.
But even that wasn’t enough to counteract one of the most vocal opponents.
3. Sen. Franken brings the heat to Comcast
Sen. Al Franken (D-Minn.), the most vocal opponent of the merger on the committee, didn’t hold back when it was his turn to address the panel.
“I understand there’s over a hundred lobbyists making the case for this deal to members of Congress,” Franken began. “I’ve also heard from over 100,000 consumers who oppose it. And I think their voices need to be heard, too.”
Franken, a former Saturday Night Live cast member and seasoned performer, has a long history of distaste when it comes to Comcast. He was also one of the biggest critics of Comcast’s acquisition of NBCUniversal back in 2012. Franken argued that giving one large company control over both the programming and the delivery of that programming would give Comcast enough power to hurt competition. His view’s on the TWC merger aren’t much more optimistic.
“My concern is, as Comcast continues to get bigger, it will have even more power to exercise its leverage and squeeze consumers,” Franken said. “I believe this deal will result in fewer choices, higher prices, and even worse service for my constituents.”
Should the merger pass, Comcast would operate in 19 of the country’s 20 largest markets, Franken pointed out. “That kind of expansion has a serious impact on competition.
Franken also pointed out that Comcast’s current stance on competition is contradictory to the stance it held when seeking approval to buy NBCUniversal. Back then there was concern that Comcast would jack up fees for NBC content for other cable providers, thus creating anti-competitive pricing. However, Comcast said this would never happen because of the presence of other “robust” cable providers, specifically naming TWC, who could file an anti-competitive claim with federal regulators.
And as previously pointed out by Senator Graham, Comcast’s current stance on competition is that there is no real competition between TWC and itself.
“So which is it Comcast. You can’t have both,” Franken said.
4. Debating TV service competition is a waste of time
The panel included a testimony by the CEO of Back9Network, an indie TV network focused on golf programming. His qualm with the Comcast-TWC merger was that Back9Network is already experiencing an inability to compete since Comcast has its own golf-focused network (Golf Channel) and doesn’t really want to pay for another. He explained that getting carriage from TV providers like Comcast is essential to his network’s business model due to TV ad revenues being much higher than revenue generated from Internet advertising.
It was a good discussion that had valid points, but it was a waste of time. Sure the big TV providers have a huge say in what channels get picked up and offered to consumers. That’s a big part of what’s driving innovation of video services on the Internet; it’s also likely why TV service subscriptions have been in steady decline for years while high-speed Internet subscriptions have risen.
The real power will be over how Internet traffic delivery is regulated, which, sadly, wasn’t mentioned nearly enough during the hearing.
5. Bashing Netflix is easier than discussing peering & net neutrality
Comcast’s Cohen told the Senate committee that paid peering, and other matters of traffic delivery, are unrelated to the principles of an open Internet and shouldn’t be included in any new set of net neutrality rules created by the FCC. This is why Comcast and other ISPs are permitted to charge companies like Netflix a fee to directly deliver traffic on their networks. Netflix’s service, in turn, is more reliable and offers higher quality video streams than if it paid another organization to deliver that traffic.
So why then is Netflix chief Reed Hastings calling peering fees harmful to an open Internet that fosters innovation, competition, and economic growth?, asked Sen. Klobuchar. After all, Netflix did forge such a traffic delivery agreement with Comcast last month.
“I hate to say it but this was Netflix’s idea. They came to us,” Cohen revealed.
Unfortunately, there wasn’t nearly enough discussion regarding traffic delivery fees or how to ensure ISPs’ traffic delivery practices aren’t anti-competitive.
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