NYPSC Has Concentration Concerns With Comcast/TWC

Takes no position on merger, beyond urging FCC to look carefully at market power, digital divide issues
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The New York State Public Service Commission says it is "currently" not taking a position on whether the FCC should approve or block the Comcast/Time Warner Cable merger, but has a number of "potential concerns," including that the companies may be lowballing the potential of vertical and horizontal harms.

The NYPSC, which is conducting its own review of the deal's impact on the state, did say that the FCC should focus its review on vertical and horizontal market power issues, as well as bridging the digital divide and mitigating market power harms.

The FCC's deadline for initial comments is Aug. 25, the same day that reply comments are due in the NYPSC's review, so when those comments are vetted NYPSC might have more to say.

But currently, it is simply advising the FCC that it should look carefully at issues including "access to and affordability of broadband service, continuing local program diversity and enhancing the Comcast/NBCU conditions."

Comcast and TWC argue that the deal will not present any plausible vertical anticompetitive threats. NYPSC isn't so sure.

"While we acknowledge that both Comcast and Time Warner face competitive pressures in the provision of services from satellite, wireless, and telephone providers, the combined company would have access to the same NBC-Universal line of business that Comcast currently enjoys," the commission says in its comments. "The combined company could be a more powerful buyer of programming and other upstream wholesale services. This added buying power and control over a larger footprint could increase the combined company's incentive to engage in exclusionary practices that increase its market power over retail customers and result in less of an incentive to pass along savings to those consumers."

It has other "potential" concerns. Comcast/TWC say that the deal has no horizontal competitive concerns because they don't compete in each other's service areas. But NYPSC says that takes too narrow a view of horizontal competition.

"While it is true that Comcast and Time Warner do not compete directly against one another in overlapping service territories, they do compete with other providers of telephone, video and broadband services, whose competitive position could be undermined as a result of the proposed merger given the combined company's enhanced market power over programming and other upstream wholesale services," NYPSC said.

The commission also wants the other commission (the FCC) to consider extending the NBCU conditions to 2020 (they expire in 2017) and modifying them "to recognize the changing landscape in which Comcast and Time Warner operate," particularly the growth in importance of Internet services.

NYPSC is suggesting that the FCC require Cocmast to offer a $50 per month service with download speeds of at least 10 Mbps, which the FCC has suggested could be its new baseline for high-speed broadband.

IT points out that there was a similar requirement in the NBCU deal for a $49.95 per month, 6 Mbps service, but says even that 6 Mbps, which is higher than the FCC's current definition of high-speed broadband, "is not longer relevant."

NYPSC also suggests the FCC could beef up enforcement of conditions by allowing an arbitrator to award attorneys fees for successful complaints.

And since insuring continued local programming, including diverse programming and local news, are beyond the purview of the NYPSC—except PEG channels—the NY commission recommends the FCC "use its broad authority in this area to ensure that local programming, including programming designed for rural audiences, is allowed to thrive."

Comcast has until Sept. 23 to reply to the comments.

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