January 15-21: Comcast Wins NBC

Comcast Wins NBC

After the nation seemed to take a week to reflect on the shootings in Tucson, telecommunications policy was big news again this past week. Not that there wasn't some lingering effects from Tucson. Many groups -- including the Benton Foundation -- renewed calls on the Federal Communications Commission and the National Telecommunications and Information Administration to study the effects of hate speech in media.

On January 18, both the Federal Communications Commission and the U.S. Department of Justice approved the complicated transaction that will give Comcast, the nation's largest pay TV and broadband service provider, control of NBC Universal. The merger review took over one year and Comcast has agreed to a number of conditions aimed at fostering competition in the video marketplace.

Reaction to the announcement ranged from conservative policymakers and pundits accusing the FCC of moving to slowing to accept the deal while using it to promote the Administration's priorities -- to public interest advocates who accused the FCC of failing to live up to its own public interest mandate, as well as Barack Obama’s promise to promote media diversity and prevent excessive media concentration. FCC Commissioner Michael Copps dissented from the decision, saying the merger confers too much power in one company's hands. He said he searched for public interest benefits of the merger and found only "the elimination of double marginalization." He said the conditions placed on the merger aim no higher than maintaining the status quo.

For Comcast, the regulatory win is defined by what the FCC and the Department of Justice did NOT make part of the conditions:

  • No divestitures;
  • No substantive changes to the program access rules (including changes to bundling and volume discount rules);
  • No extension of program access rules to the online space;
  • No substantive changes to the program carriage rules (and no arbitration requirement);
  • No general “neighborhooding” requirement (although we have accepted a condition that if we neighborhood news channels, we won't discriminate against non-owned news channels);
  • No wholesale high-speed data remedy;
  • No structural separation between Comcast and NBC Universal; and
  • No programming or cable channel quotas.

One industry analyst said that unless broadcast television competitors ABC, CBS or FOX do "very bad things" then the conditions are meaningless.

On January 20, Verizon asked the United States Court of Appeals for the District of Columbia Circuit to "vacate, enjoin, and set aside" the FCC's recently-adopted network neutrality/open Internet rules -- even before the rules were published in the Federal Register and even though the rules adopted are eerily similar to rules it and Google proposed in 2010. House Republicans praised Verizon's move saying that what is at stake is both innovation and economic growth -- and the FCC's acting beyond the authority granted to it by Congress. Network neutrality advocates accused Verizon of venue shopping. "Under this bizarre legal theory," said Media Access Project's Andrew Schwartzman, "virtually every FCC decision would wind up in one court. Verizon has made a blatant attempt to locate its challenge in a favorable appeals court forum. The company's theory assumes that all agency actions changing rules are ‘modifications' to hundreds of thousands of licenses. This would insure the case remains in the District of Columbia Circuit, and keeps others from seeking review in different courts."

These two big announcements overshadowed for some the announcements about the agendas for the House and Senate Commerce Committees. From the House Subcommittee on Communications, Technology, and the Internet look for efforts to nullify the FCC's network neutrality rules, a hearing to examine the FCC's review of the Comcast-NBC Universal deal, a spectrum auction bill, perhaps an attempt at reforming and modernizing the federal Universal Service Fund to support broadband services, and oversight of the broadband stimulus program at the National Telecommunication and Information Administration.

On the Senate side, broadband deployment and USF reform are also on the agenda as is cybersecurity, public safety communications, and online privacy.

The FCC plans to launch a proceeding to tackle USF and intercarrier compensation reform at its February 8 meeting. Of note, Bandwidth.com and Verizon Communications signed an agreement reported this week that sets the fees Bandwidth.com will pay Verizon to connect calls. The FCC has never ruled on intercarrier compensation rates for VoIP services, because it has never decided if VoIP is a telecommunications service like wireline telephone or an information service like email. This private agreement classifies VoIP as an information service and sets a rate.The FCC has decades of rate setting and compensation agreements for voice traffic, it has never made the leap to set rates for VoIP. This has left the Verizons and other telcos of the world able to set prices, and the market for VoIP to develop in a way that’s vastly different from the market for email. So this rather dull-sounding agreement is a big deal for companies like Google, Skype, Twilio and Bandwidth.com, as well as for rural telcos and the FCC.

Finally, two conferences in Washington this week are in news. The State of the Net 2011, sponsored by the Congressional Internet Caucus Advisory Committee, generated lots of discussion about policymakers' agendas for the year. And the Minority Media & Telecom Council's Broadband and Social Justice Summit 2011 is addressing achieving universal broadband access, adoption and informed use, meeting the nation’s spectrum needs, and using broadband for civic engagement and social justice.