Update: McDowell: Deal Desperation Fueled Comcast Acquiescence to Net Rules

Did not dissent in net neutrality conditions in merger because they were commitments as part of a side agreement
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Republican FCC Commissioner Robert McDowell said Wednesday that Comcast told him the reason it agreed to voluntarily abide by the FCC's network neutrality rules whether or not they were overturned by the courts was because it was desperate to get the deal approved.

That observation came in a marathon oversight hearing in the House Communications & Internet Subcommittee on the FCC's new network neutrality rules and including all five FCC commissioners.

Asked by ranking member Anna Eshoo (D-Calif.) why he did not dissent against the network neutrality conditions in the Comcast/NBCU merger, he pointed out that they were not conditions, but commitments as part of a side agreement. (A senior FCC official speaking on background following the hearing took issue with McDowell's characterization of the Comcast/NBCU network neutrality commitments, saying they were indeed enforceable conditions of the deal and pointing out that they were in the ordering clause of the approval.)

But they were voluntary, Eshoo pointed out, "and you could have objected to them if you thought they were so onerous. Have you ever asked them why if you find them to be onerous, they would find them to be acceptable?"
"Absolutely, I think they were desperate to get their merger done and they would have agreed to almost anything."
He said he had asked them, "and that was pretty much their answer, that they were desperate to get their merger done," though he pointed out that was a paraphrase.

Eshoo said that was not the way it had been presented to her.

For his part, FCC Chairman Julius Genachowski had no trouble referring to them as conditions. He was asked by Committee chairman Greg Walden (R-Ore.) why, if he had adopted industrywide rules it was necessary to impose net neutrality conditions on Comcast/NBCU. His answer was that it was a transaction-specific condition on a deal that involved the nation's largest ISP and a major content provider. "We certainly had a lot of information in the record in that transaction about the incentives to favor their own online content and disfavor others, so having a condition related to the open Internet was a transaction-specific condition that I personally felt was very important."

"We appreciate the hard work of all the FCC Commissioners and the staff, and the Justice Department, on our transaction review," said Comcast in a statement. "It presented some novel issues on which the FCC and DOJ worked hard to develop fair answers. A workable compromise was achieved on all issues including the open internet, and will result in benefits to consumers and allow our business to grow." A company source familiar with top executives' thinking said that Comcast believes the conditions are enforceable by the commission.  

The source also pointed out that Comcast talked with all the offices to get their votes on the deal.  

In an interview with B&C after the hearing, Commissioner McDowell elaborated on his answer to Eshoo

"The key here is that the network neutrality condition does not appear in the appendix listing the merger conditions," he says. "That was an important pre-condition to Commissioner [Meredith] Baker and I voting for it." McDowell supported the merger, but opposed the network neutrality conditions on the deal just as he opposed the FCC's new network neutrality rules.

"So, Comcast struck its own deal with the chairman's office with whatever commitments they agreed to and Comcast agreed that they would be enforceable and the chairman's office decided to staple it to the back of the order," he said.

But does the commissioner see that as making them enforceable by the FCC or not? "When all the merger conditions are enumerated in the apendix that has all the merger conditions, net neutrality is not there. So, if it is enforceable, it is not enforceable because of what Commissioner Baker and I voted on. The FCC and Comcast can say it is enforceable, and that's fine, but it is not in the apendix listing all the merger conditions."

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