Items relating to media ownership

Comcast/TWC/Charter — Looking Good But Too Early To Pop The Champagne.

We’ve seen a bunch of news reports recently that the Department of Justice Anti-Trust Division (DOJ) staff and the staff at the Federal Communications Commission (FCC) appear ready to recommend that the proposed Comcast acquisition of Time Warner Cable does not pass statutory muster and their respective agencies should take appropriate action. You can review what that means in these two lengthier blog posts I wrote about how DoJ merger review works and how FCC merger review works.

 

Critically, however, as this CNN piece notes, we only have rumors and speculation. Obviously, as an opponent of the deal, I would not be surprised of staff at DoJ and the FCC, after reviewing the record, concluded that this deal caused serious anti-competitive harm and offered no offsetting benefits. But, as someone who has played regulatory poker with Comcast for 15 years now, I can say from personal experience that no one counts Comcast out until the game is well and truly over. Even if the rumors are true (and I have no way of knowing), these would only be staff recommendations. Comcast still has plenty of opportunities to plead, cajole and bully DoJ and FCC into submission.

 

Which is why it’s important to remember my advice from last February with regard to Title II reclassification: DON’T BE THE SEA HAWKS! We need to continue to keep the pressure on to get this over the goal line. You can start at my employer, Public Knowledge, which has this action page up over here.

 

At the same time, while not getting ahead of ourselves, it is important to understand how this deal went from “sure thing, no antitrust issues, these aren’t the drioids you’re looking for, move along, move along” to “on the ropes and sinking fast.” While I’m not going to fall into the trap of thinking we have already won, we have a lot of good reasons to believe that this fight is winnable. I elaborate a bit below . . . .

 

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The Comcast Witness Protection Program and Misplaced Rage.

There is a style of article I find online occasionally that takes a classic work of film or literature and tries to flip your idea about who are the good guys and who are the bad guys, or vice versa. For example, this piece explaining why Glinda the Good Witch is really the villain of the Wizard of Oz and the Wicked Witch of the West is just an innocent woman wronged.

 

I thought of that when I saw recent pieces by Randolph May and Geoffrey Manne explaining how the Federal Communications Commission (FCC), by complying with its rules and doing its job soliciting input on the Comcast/Time Warner Cable from stakeholders scared to come forward for fear of reprisals, makes the FCC the bad guy and Comcast the innocent victim. Some of this concern seems to flow from a misunderstanding of the law. The FCC can’t act on anything outside the public record, so the concern that Comcast won’t get to make its case because of some body of secret evidence is groundless.

 

In addition – and this is why I’m particularly bitter here – Comcast set the precedent more than ten years ago for having the FCC look at stuff outside the public record as part of a merger review, and the D.C. Circuit affirmed it when I challenged it as a due process violation. So even if it did make a practical difference, the D.C. Circuit says it’s totally OK (at least when exclusion of evidence from the record favors Comcast).

 

Nor is this process so unusual as my Opposite Numbers (as I call my colleagues on the Libertarian side) believe. True, this is the first time the FCC actually listened to me (and others) and publicized the relevant FCC rules (although, as I explain below, I don’t think I actually had much to do with this). But this is also a rather exceptional merger. As for use of the relevant procedures, my experience is rather contrary to that of Randy May. I’ve not only urged the FCC to use (and publicize) the relevant procedures, I’ve invoked them.  Nor is it unusual for the FCC to solicit input from stakeholders.

 

Below, I offer an alternate perspective and deal with the various objections my Opposite Numbers raise for why they think the FCC shouldn’t be telling stakeholders afraid of retaliation to come in and speak off the record.

 

More below . . .

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Is Comcast’s Awful Service Grounds For Blocking The TWC Deal? Yes, Actually.

The last few months have brought us a spate of Comcast horror stories and Comcast-hate. As captured by this totally not safe for work “Comcast — We Don’t Give a F—“ video from Funny or Die, the announcement that Comcast would acquire Time Warner Cable (TWC) has brought to boil a great deal of simmering resentment. Most recently, a recording of a subscriber spending 20 minutes trying to disconnect his Comcast service has prompted some investigating into Comcast’s service and employment practices. In particular, Adrianne Jefferies at  The Verge has been running an excellent series called “Comcast Confessions” based on hundreds of interviews with current and former Comcast employees showing that these long-standing customer service problems are not a blip but the result of systemic problems and deliberate business and strategy decisions pursued by the company (first three articles published so far herehere and here). I want to highlight this article in particular that puts together the pieces and shows how the TWC acquisition makes things worse.

 

From an academic standpoint, the wealth of data coming to light provides a great study on how conflicting economic incentives and difficulties in melding together a giant company by merger create awful customer service despite the persistent efforts of Comcast top management to improve customer service. But this blog isn’t about industrial organization and business practices for the fun of it. For me at the moment, the hot question is: does Comcast’s awful customer actually provide legal grounds for the FCC to block the Comcast/TWC merger?

 

Actually, yes. And I don’t just mean in the political “so many people hate Comcast the FCC can designate for hearing and survive Comcast’s political pushback.” I mean in the legal “the FCC has jurisdiction over this and should designate, as an issue for hearing, whether Comcast’s proposed acquisition of Time Warner Cable is contrary to the public interest and in violation of various provisions of the Communications Act” sense. And yes, I get that customers are pretty much equally dissatisfied with TWC, which would prompt one to think this should be a wash as “not merger specific” (i.e., service is crappy before merger and crappy after merger, so who cares — other than customers?)  However, as I shall elaborate below, the unique nature of Comcast’s pervasive problems — combined with several other factors — makes this a rare (but not unprecedented) case where the nature of the problems is both merger specific and subject to FCC review.

 

And while I would not normally suggest that such problems alone could block a merger, it becomes one more factor in a deal that already has a lot of problems. At a minimum, it becomes one more set of potentially pervasive behavioral conditions that would prompt Comcast to walk away whether or not the FCC actually designates for hearing, especially if lots of consumers write to the FCC about it (hint, hint).

 

More below . . .

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My Insanely Long Field Guide To Understanding FCC Chairman Tom Wheeler Statement On Peering.

At the press conference following the Federal Communication Commission (FCC) March 31 Open Meeting, Chairman Tom Wheeler made the following observation:

 

“Interconnection is part of the Network Compact.” Peering “is just a $3.50 word for interconnection.”

 

Wheeler followed up this statement by explaining that there was a difference between “network neutrality” and the “open internet” on one hand and “interconnection” as the ‘path to the Internet’ on the other hand. While government has a critical role in monitoring peering/interconnection to protect the values of the Network Compact, it isn’t a network neutrality issue. You can see Wheeler’s full statement here (Start at 144:45 – 147:23 has unrelated stuff in middle) (transcript here).

 

After the meeting, the FCC released a separate statement that they really mean it when they say that they aren’t going to do peering as part of the Net Neutrality rules. While Brendan Sasso at National Journal gets points for noticing that “the FCC could decide to enact separate regulations on the issue or force Comcast to accept new rules in order to receive permission to buy Time Warner Cable,” most folks I’ve read in the press have broadly interpreted this as indicating the FCC will not look into the Comcast/Netflix dispute or complaints by Cogent and Level 3 about large edge-providers squeezing them for higher interconnection fees.

 

Personally, I think most people are totally misreading this. Wheeler’s statements make it look more likely to me that the FCC will start looking closely at the Internet peering market, not less likely, especially as part of the Comcast/TWC deal. Indeed, Comcast’s Chief Lobbyist David Cohen, who ranks in my book as one of the absolutely smartest and most effective telecom lobbyists ever, has already started backing away from earlier statements that regulators would ignore peering issues and that he expects them to look at the Comcast/Netflix deal. (Unsurprisingly, Cohen also said he expects regulators to find no problems with the deal and called Netflix CEO Reed Hasting’s arguments that this eviscerated net neutrality “hogwash.”)

 

Below, I will rant at considerable length that (a) Wheeler is right, this is not a “network neutrality” issue, but the same goddam interconnection issue that we have struggled with for more than a hundred years in every networked industry from railroads to electricity to broadband; (b) The FCC needs to actually look at this and study it and understand how the market works before it makes any decisions on what to do; and, (c) While Wheeler is not saying in any way, shape or form he actually plans to do anything before he has real information on which to base a decision, he is signaling — for anyone actually paying attention — that he is, in fact, going to actually look at this as part of his overall transition of the agency around his “Fourth Network Revolution” and “Network Compact” ideas.

 

 

While this last would seem pretty basic and obvious, it represents a significant change in policy from the previous insistence that IP magic pixie dust obscures all things Internet and makes them invisible to the FCC. Whether I agree with what Wheeler ultimately does or not — and I have no idea what he might ultimately do here, he could decide the market is competitive and working just fine — I don’t believe Wheeler is going to go around with his eyes and ears covered blathering about the magic nature of the Internet. I think Wheeler is actually going to check under the hood and see what actually makes the damn thing tick — and Comcast is just the company to help him do it.

 

Much ranting below . . .

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Also posted in Life In The Sausage Factory, Series of Tubes, Tales of the Sausage Factory | Tagged , , , , , , , , , , , , , | 1 Comment (Comments closed)

A Guide To The Mechanics of the Comcast/TWC Deal. Part IV: Congress, The White House And The Public.

If you read most of the reporting on the Comcast/TWC deal, you would think that Congress and the White House play a huge role. In reality, as I alluded to in the Part I intro, not so much. The political stuff tends to get over-reported in part because it’s easier (it took me about 3000 words just to explain how the antitrust and the FCC review work never mind any actual reporting), and in part because everyone assumes that Washington is a corrupt cesspit where politics invariably determine outcomes.

 

As always, while the political matters, it plays a much more complicated role in the mix. Below, I will unpack how the political pieces (including public input) play into the actual legal and merits analysis. Again, keep in mind that I’m not talking about merits here. I’m just trying to explain how the process works so people can keep track over the course of the merger review (which will last a minimum of 6 months and may well run for more than a year).

 

Political details below . . . .

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Also posted in Cable, How Democracy Works, Or Doesn't, Life In The Sausage Factory, Series of Tubes, Tales of the Sausage Factory | Comments closed

A Guide To The Mechanics of the Comcast/TWC Deal. Part III: The Federal Communications Commission.

In Part II, I described how the Department of Justice will conduct its antitrust review of the Comcast/TWC. Here, I describe how the Federal Communications Commission will conduct its review under the Communications Act. While the FCC and the DoJ will coordinate their reviews and work together, the two agencies have very different procedures and operate under very different legal standards. (For those wondering why, you can see this article I wrote on the subject about 15 years ago.)

 

Details on FCC process below . . .

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A Guide to The Mechanics of the Comcast/TWC Deal. Part II: Antitrust Review

In Part I, I gave a general overview of the regulatory review process for the Comcast/TWC Deal. In Part II, I describe how the antitrust review works (which, in this case, will be conducted by the Department of Justice Antitrust Division). Keep in mind I am not discussing any of the arguments on the merits. I’m just trying to give people a sense of how the process will work and where they can weigh in if they feel so inclined.

Part III will address the review by the Federal Communications Commission (FCC) under the Communications Act.  Part IV will talk about Congress, the White House and the public.

 

Antitrust process described below . . .

 

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Also posted in Cable, Life In The Sausage Factory, Series of Tubes, Tales of the Sausage Factory | Comments closed

A Guide To The Mechanics of the Comcast/TWC Deal. Part I: Introduction

Those unfamiliar with how the merger review process works will want to know what happens next in the Comcast purchase of Time Warner Cable (TWC). In this 4 part series, I sketch out how the application will proceed and what role Congress plays in all this. I’m going to save for another time the arguments on the merits and what the likelihood is of blocking the deal (or getting stronger conditions than Comcast/TWC have already put on the table). I intend this simply as mechanical guide so that folks playing at home can follow the action, and weigh in as they see fit.

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Also posted in Cable, Life In The Sausage Factory, Series of Tubes, Tales of the Sausage Factory | Comments closed

Comcast/TWC Merger Explained By Taiwanese News Animation

I will, eventually, have more to say about the Comcast’s proposed acquisition of Time Warner Cable (TWC). My first reaction, I will admit, was pretty visceral. “My God! Aren’t you already freakin’ BIG ENOUGH Comcast?” But then, I realized that I needed to actually calm myself, and recall that bigness is not necessarily —

OH MY GOD!! YOU COMCAST PEOPLE HAVE NO LIMITS! YOU’RE LIKE SOME GIANT, COAX-TENTACLED CTHULHU-BEAST THAT KEEPS PROMISING TO DEVOUR US ALL BETWEEN 8 A.M. AND NOON BUT DOESN’T ACTUALLY GET AROUND TO DEVOURING US UNTIL AFTER 3 P.M. BECAUSE YOU GOT ‘STUCK IN TRAFFIC’ AND A PREVIOUS DEVOURING RAN LONGER THAN EXPECTED . . . .

Breathe, Harold, breathe. Think policy. [pause for calm] Several folks have posted excellent policy analysis, starting with my Public Knowledge colleague Jodie Griffin in this blog post here to this excellent piece by David Karr to this more general expression of antitrust concern by Paul Krugman

COMCAST IS ALREADY BUYING A POWER COMPANY! A FREAKING POWER COMPANY!!! YOU ALREADY ARE DOMINATING VIDEO, DATA AND VOICE AND YOU ARE BUYING A POWER COMPANY AND RUN ALARM SYSTEMS AND ARE PROBABLY GOING TO IMPLANT CHIPS IN OUR BRAINS SO WE CAN STREAM XFINITY DIRECT TO OUR EYEBALLS AND —

As you can see, I’m still having a bit of trouble getting over my visceral reaction to the shear size and scope of this deal. So while I am calming down and getting ready to write my Insanely Long Field Guide To the Comcast/TWC Merger, I will simply let the good people at Taiwan’s fine Tomo News capture the moment. Because nothing really says “Comcast/TWC” better than giant robots and tasers.

Stay tuned . . . .

Also posted in Cable, I Fear These Things, Series of Tubes, Tales of the Sausage Factory | Tagged , , , | Comments closed

CNET, CBS and the Newspaper/Broadcast Cross-Ownership Rules

I don’t do much by way of media ownership these days, but the recent mess of CBS meddling with CNET’s decision to award a ‘Best In Show’ to DISH’s new Hopper DVR constitutes another little reminder as to why we care about media cross-ownership in a consolidated world. Given that the FCC appeared at one point poised to significantly relax the rule, this reminder bears highlighting.

More below . . .

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Also posted in Censorship Public and Private, Tales of the Sausage Factory | Comments closed
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