Comcast's Cohen: No Justification for Exclusivity Ban

Says he doesn't see business model for national Google Fiber build-out
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Comcast executive VP David Cohen says that in the current
competitive marketplace, there is no remaining justification under statute for
the program exclusivity ban to remain in place.

"I don't think the chairman had a choice to circulate
the order that he circulated," said Cohen.  The FCC has proposed to
sunset the ban on exclusive contracts between distributor and co-owned program
networks, though anticompetitive deals would still be subject to unfair
practices rules that remain on the books.

Cohen was being interviewed for C-SPAN's Communicators
series, which airs later in the week.

"Life is long," he said, of the fact that Comcast
is under its own exclusivity ban, per the NBCU deal conditions, until 2018.
"But after that period of time, we should be treated like everyone else. "

Cohen said he does not think that on Oct. 5, when the
exclusivity ban is scheduled to sunset, there will suddenly be a flurry of
exclusive contracts. "My own suspicion, at least for existing mature
networks, is that you aren't going to see a lot of disruption or fundamental
changes in the business model."

Cohen said he did not view Google's new fiber
broadband/video service in Kansas City as a disruptive force. He pointed out
the NBCUniversal has not had any problem reaching affiliate deals with Google Fiber
-- Google has indicated to the FCC that it is having some issues with getting
access to regional sports nets. 

The expense of the build-out of the Kansas City experiment
demonstrates the magnitude of cable's investment in building out its
infrastructure, said the Comcast exec.  "I just don't know that I see
a business model for the expenditure of that level of money to build out a
national fiber network."

He pointed out he said the same thing when Verizon came to
market with FiOS, and said AT&T must have thought the same thing since they
opted not to build out a national or even regional fiber network. "We're
not afraid of competition. We like our product and our position," he said.
He said competition just makes Comcast a better company.

Cohen said that for purposes of homework, specifically
Comcast's Internet Essentials broadband program, a smartphone is not an acceptable
substitute for a netbook, laptop or desktop for educational purposes.

Comcast's program, which is now in version 2.0, has just
extended the hardware side beyond netbooks to include laptops and desktops. The
program offers low-cost broadband -- $9.95 per month -- and discounted
computers -- $149 -- to households with at least one child eligible for low or
no-cost school lunches.

He conceded that studies show a higher uptake of mobile
broadband by the minority communities, but also said that kids could use up a
mobile data plan in one night's worth of homework, so that Comcast's offering
an all-you-can eat broadband for $9.95 a month is more attractive than any
mobile plan.

Cohen said expanding the Internet Essentials program to
seniors is "always under consideration," but he also said that
research shows that the best value-added population to target is low-income
with kids. He said the problem with populations like seniors and veterans is
that it is a more complicated population to target and reach.

Asked about TV Everywhere, which is the term for providing
cable subs access to that programming on a variety of platforms, including computers
and mobile devices, Cohen called it a "very customer-friendly and a very
programmer-friendly model" since it allows customers to get content when
and where they want it without having to pay extra.

Asked if that threatens the traditional cable delivery
model, Cohen said no. "The beauty of the concept is that it is fully
respectful of the business model." Users can only access that content by
authenticating that they are paying for that content via a traditional cable
subscription.

Does it threaten the content business model? Cohen said no
again. He said once the customer is paying for the content, authentication just
makes it more valuable but protects the company from piracy and unpaid views.

Together, he said, that protects the significant affiliate
fees distributors like Comcast are paying that allows that content to be
created. "TV Everywhere is a way to ensure that content is a continuing
revenue stream to pay for the content people want to watch."

Cohen said that, generally, the cable industry doesn't view
Netflix as being competitive, per se, with the cable distribution model, but
complementary, because it is almost all library content that you may have once
watched on cable but can't today. He also said it was complementary because in
order to view Netflix you need a broadband connection. "So, even if you
want to watch Netflix, you've got to watch it over our broadband
connection."

Cohen called the flap over Comcast's delivery of Xbox VOD
content a tempest in a teapot. He said it is wholly appropriate and does not
violate the FCC's Open Internet order, which does not apply to private network
services like Xbox VOD.

Comcast's Xfinity video service over the public Internet
does count against consumption-based billing thresholds, as does Netflix, but
not the VOD content delivered via an Xbox app through a set-top. Netflix has
complained about that disparate treatment and the Justice Department is
reportedly looking into TV Everywhere in general and its impact on competitors.
FCC chairman Julius Genachowski has also recently signaled the FCC is keeping
an eye on consumption-based billing, suggesting consumers need enough
"monthly" bandwidth not to have to choose between doing homework,
watching video and getting remote health screenings.

Cohen also pointed out that Comcast
has scrapped its data cap,
that most of Comcast's markets don't have either
a data cap or a usage threshold and that Comcast is testing consumption-based
billing in some markets, with a data usage threshold of 300 gigabytes per
month, which Netflix CEO Reed Hastings himself has said would not affect the
service.

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