Comcast: Opposition To TWC Merger Is Just “Extortion”

(Consumerist)

(Consumerist)

UPDATE: Some groups are now calling on Comcast to apologize for the “extortion” allegation, with former FCC Commissioner Michael Copps saying that “Comcast’s suggestion that we’ve offered to withdraw our opposition in return for favors from the company is absolutely unfounded and untrue.”

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The approval process for the Comcast and Time Warner Cable merger continues to grind along. In August, everyone got to file their thoughts about the corporate marriage with the FCC. Then last night, we hit the deadline for replies and opposition to those comments. As you might imagine, Comcast has quite a lot to say about their detractors — and none of it is flattering. In fact, according to Comcast, companies that object to the Comcast/TWC merger are doing it out of an impulse for “extortion.”

Comcast’s “Opposition to Petitions to Deny and Response to Comments” (PDF) is a behemoth 337-page tome of indignant, offended justifications for why Comcast is clearly in the right and nearly everyone else is self-serving, venal, and wrong.

The document starts out on a comparatively pleasant note. Comcast sets the stage by explaining how awesome and beneficial they are, and then by quoting heavily from the people who are not wrongity wrong, in Comcast’s eyes: various public officials and non-profit organizations that Comcast just happens to have donated to or sponsored volunteer efforts for. But after the first dozen or so pages, Comcast starts to get down and dirty.

Poor beleaguered Comcast. Despite Comcast’s clean and honest intentions to make piles of money by taking over as much as they can of the nation’s cable and broadband infrastructure, everyone else keeps objecting!

“Every step of the way,” Comcast writes, “we continue to hear cries of alarm about ‘bottlenecks’ and ‘chokepoints’ not only on the Internet, but also in the programming and video distribution marketplace, as well as the program buyers’ marketplace.”

And despite the fact that it sure does seem like Comcast could exert even more anticompetitive control after buying TWC, Comcast insists that’s just plain nonsense:

“In fact, all of these marketplace segments are more competitive today than they have ever been before. Nevertheless, opponents of this Transaction (e.g., Dish, Free Press, Consumer Federation, Consumers Union/Common Cause, Netflix) persist in making the same speculative and unsupported claims here that have been made for years in every major cable transaction.”

Comcast adds that since those other transactions were approved, that the claims are clearly as totally wrong and unfounded now as they were “when the Commission rightly and repeatedly rejected them in prior decades.”

Of course, the marketplace itself has changed dramatically over the course of prior decades and particularly the past few years, turning away from cable programming and toward broadband access. The concerns brought by two cable companies merging in 1990 are not the same as the concerns brought by two cable companies merging in 2015, but those are facts Comcast doesn’t need to be troubled with right now.

Comcast doesn’t just attack consumer advocacy groups; they also directly challenge the big companies that have objected to the merger. And while comments from advocates might just be “unfounded” and “unsupported,” Comcast literally calls the ones from businesses “extortion.”

Perhaps no entity ranks higher on Comcast’s hit list than Netflix, which has been extremely and publicly vocal about their problems with Comcast.

Netflix, Comcast says, has an agenda to push and is punishing Comcast to do it:

What [Netflix’s] comments and trumped-up economic theories here show is that Netflix will use any proceeding, in any context, to try to shift the costs for carrying its content onto the backs of others – a great business result for Netflix, but one that would increase prices to consumers and disserve the public interest.

Comcast also accuses Netflix of deliberately sabotaging the quality of their own traffic, rather than simply agreeing to pay Comcast for transit up front. And why would Netflix do that? According to Comcast, in order “to gain additional commercial advantages” over the ISP by forcing the government to put regulatory restrictions in place on Comcast’s behavior.

Netflix has of course been a constant thorn in Comcast’s side this year, but the cable giant does not reserve their ire for streaming video alone. Cogent, Dish Network, and Discovery Communications also rank high among Comcast’s list of supposed self-serving extortionists.

These companies and others, Comcast says, have been asking for Comcast and TWC to agree to meet certain conditions in order to support — or at least not object to — the merger.

Every company Comcast mentions almost certainly has had exactly those meetings with Comcast. Those kind of agreements actually entirely par for the course.

In pretty much any merger, businesses that either compete with the merging entity or work with them in the supply chain ask for certain merger conditions to be imposed to protect their own interests. For example, when Comcast bought NBCUniversal, they were required to let other cable news and finance channels like Bloomberg air in the same “channel neighborhood” as their own MSNBC and CNBC — but it took two years and an FCC order for them to comply.

Certainly, a condition like that was good for Bloomberg’s business and their commercial interests. But it was also good for consumers, who were able to find and watch the programming of their choice.

Comcast, however, claims that there is no possible way they could or should meet all of these demands from greedy, greedy companies:

If just the programming asks alone were considered – and even then, only those that are concrete enough to estimate – these demands and related proposed conditions would cost Comcast upwards of $5 billion above any reasonable estimate of what its programming costs might be over the next several years, which would translate into increased costs for Comcast customers of more than $4 per month by 2019 and in perpetuity.

Most consumers would be ecstatic if their cable bills only increased by $4 per month in the five-year timespan between now and 2019, given that these days they jump as much as $11 with basically no notice and for no apparent reason except that companies can.

Even setting that claim aside, it also seems unlikely that every single company that spoke with Comcast made entirely draconian demands would only accept 100% capitulation to their terms. Negotiation and compromise are the cornerstone of commercial arrangements. Asking for concessions is business, not extortion.

Comcast repeatedly (and wrongly) claims that they have no track record of doing any of the harmful things everyone is concerned about, so they obviously won’t do it in the future either — despite an expanded footprint, additional incentive, and additional opportunity. The marketplace is too competitive for them to get away with any shenanigans, Comcast insists, despite loads of evidence to the contrary.

Netflix fired back on Comcast saying in a statement, “It is not extortion to demand that Comcast provide its own customers the broadband speeds they’ve paid for so they can enjoy Netflix.” Netflix also turned the “extortion” tables back on the ISP, continuing:

It is extortion when Comcast fails to provide its own customers the broadband speed they’ve paid for unless Netflix also pays a ransom. Netflix grudgingly paid to improve performance for our mutual customers, a precedent that remains damaging for consumers (who ultimately pay higher costs) and for other innovative businesses (that can be held over the barrel by Comcast to do the same).

A statement from Discovery likewise dismissed Comcast’s extortion allegations, saying, “We stand by our concerns that Comcast could use its enhanced leverage from the proposed merger to impose onerous terms” that would make business as usual much more difficult for content companies like Discovery.

The Discovery spokesman added that Comcast’s “continued strategy of intimidating voices that are not fully supportive of its position, is troubling.”