Washington

Comcast’s Cohen: We Support Reinstating Net Neutrality Rules under 706 Authority

But in making case for TWC deal, points out they would apply to combined company regardless 2/13/2014 02:54:00 PM Eastern

Comcast executive VP David Cohen announced Thursday that the company supports an effort by the FCC to reinstate its network neutrality rules, so long as it does not use Title II authority to do so.

That came in a conference call with reporters about the proposed merger with Time Warner Cable, which Cohen said was not a threat to competition and would be a boon to consumers.

Although a D.C. federal appeals court threw out the anti-blocking and anti-discrimination portions of the FCC’s Open Internet order, Comcast has agreed to abide by those rules until 2018, one of a host of conditions Comcast offered/agreed to, to secure approval of its 2011 meld with NBCU.

One of the selling points of the TWC deal in Washington is that it would automatically extend those conditions to TWC.

When asked why Comcast did not offer to extend its adherence to the rules beyond 2018 to sweeten the deal, Cohen said: “It is hard enough negotiating with the government, I would rather not negotiate with the press as well.” He said he felt sure he would have a negotiation with the government “over this.”

He also made the point about supporting the FCC’s effort to use its authority to promote advanced telecommunications (sec. 706) to reinstate the vacated rules consistent with the FCC’s legal authority, and said he had no doubt that by 2018, when Comcast’s commitment runs out, “there will be an industry-wide open internet protection scheme that is in place that will apply to us and Time Warner Cable."

The deal has taken heat from Public Knowledge, Consumers Union and Free Press in particular.

Cohen said he expected to hear the “sky is falling” rhetoric from some groups who have historically opposed transactions, but said that was “honestly, not just an accurate view.”

As to the announcement by Senate Antitrust Subcommittee chair Amy Klobuchar (D-Minn.) that she would hold a hearing to scrutinize the deal, Cohen said that was to be expected and he welcomed the chance to make the case in Congress and before federal regulators. “I look forward to making the case. All we’re interested in is a full and fair hearing. I think if we get that opportunity we will be able to convince both the FCC and the relevant antitrust agency that this is an eminently approvable transaction.”

Cohen said Comcast had reached out to the FCC, Justice Department and FTC Thursday, and their reaction was:  “Thank you for calling.” But the company did not ask them to handicap the deal. He said they did not ask them : “So what do you think?,” adding that he didn’t think that was an appropriate question.

That case, which he also made to reporters, is that Comcast and Time Warner Cable do not overlap, so the deal would not reduce competition in any relevant market (Cohen is a former antitrust attorney). The deal “will not deprive a single consumer of a choice he or she has today,” Cohen said.

Asked about the company’s size and ability to foreclose programming, Cohen said that might have been an argument for 20 years ago, but that today given the number of distribution options, the balance of power has tipped toward programmers.

Cohen said that antitrust concerns about cable consolidation generally are antiquated and have been rejected by the courts—the D.C. Circuit twice rejected the FCC’s attempt to justify 30% on cable subs as the threshold above which one company could foreclose programming options. Even so, Comcast has agreed to divest 3 million subs in the deal to get below that 30% figure.

“We think we have threaded the needle here,” he said, with respect to foreclosure of programming. “We are proposing a transaction which comes under the third rail (30% cap) that was previously identified by the FCC, even though it was found to be unsupportable by the D.C.Circuit…. I really don’t think that anyone is going to be able to make a credible argument that with less than 30% of the market and the dynamism of the market today, and the high level of competition between satellite and telco’s and cable, that programmers are not going to continue to enjoy the leverage that they have enjoyed recently as a result of their ability to offer programming over multiple other multichannel programming distributor channels.”

Instead of the deal limiting consumer choice, he said, that choice would be increased, the business services market—where cable ops are the newer kids in town vs. incumbent telco’s—would be more competitive, and a host of benefits including lower cost, stand-alone broadband service, higher speeds, broadband adoption efforts, program diversity, kids programming, and more would now extend to TWC.

Cohen suggested the deal was eminently, if not imminently, approvable—the later process he puts in a 9-12-month time frame.

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