The Federal Communications Commission on Tuesday released its blueprint for increasing competition in the broadband market and bringing high-speed Internet access to every American.
In its massive 376-page plan, the FCC laid out its vision to connect 100 million households with affordable 100-megabits-per-second service in order to keep America competitive. As part of last year’s economic stimulus package, Congress asked the FCC to develop a plan to make broadband more accessible and affordable in the United States.
In developing its blueprint, the FCC relied heavily on input from the Justice Department.
In its recommendations to the commission in January, the Justice Department said the best way to promote competition in the market was to encourage the development of wireless broadband. The FCC’s suggestions today follow similar lines.
In its plan, the agency said it would make more spectrum available for wireless companies to develop networks and bring speeds closer to wired levels. Broadcasters and the government currently hold large chunks of the radio spectrum that could be auctioned off to wireless providers.
Justice also had suggested that the FCC compile data and create a set of standards to measure broadband performance in a way similar to nutrition labels found on food products. That idea that is also in the plan.
“Consumers need to understand what broadband speed they actually need for the applications they want to use; how the speeds advertised by a broadband service provider compare to the actual speed a consumer will experience; and what broadband service provider and plan will give them the best value overall,” the FCC said in its plan. “The decision is especially complex because the actual performance of broadband service can vary significantly across geographic areas.”
Wired broadband markets are usually dominated by a few large providers, because firms have large start-up costs to lay down the physical infrastructure. Because it is unlikely that new firms can enter dense urban markets, the DOJ said in its January filing that 50 to 80 percent of homes in urban areas only have one choice in terms of a broadband provider.
The DOJ traced the history of mobile phone providers and found that after the FCC opened up spectrum to more than two providers per region in the early 1990s, users saw lower rates, more types of pricing plans and better technology. The DOJ encouraged the commission to follow a similar path.
In order to make sure providers that dominate wired broadband do not purchase spectrum to keep new entrants out, the Justice Department also urged the FCC to discount incumbent bids in the auction or implement some other mechanism to ensure that wired broadband providers don’t control all the new spectrum.
The FCC held 36 meetings with 2,500 participants and waded through 75,000 pages of public comments, FCC Chairman Julius Genachowski said at a commission meeting Tuesday announcing the plan. The agency also started a blog and a Twitter account as it developed the plan, and found itself with “more followers on Twitter than William Shatner,” he said. (@FCC has 335,452 followers, as of Tuesday afternoon; @WilliamShatner has only 187,759.)
Blair Levin, who led the work on the plan said in a statement: “In every era, America must confront the challenge of connecting the nation anew. Above all else, the plan is a call to action to meet that challenge for our era.” Levin is executive director of the Omnibus Broadband Initiative at the FCC.
Comcast Corporation and NBC Universal laid out the case for their proposed merger in a filing today with the Federal Communications Commission, arguing that the deal was in the public interest and did not raise antitrust concerns.
The joint venture between Comcast and General Electric Company — the owner of NBC Universal – which would give Comcast a majority stake in NBC, would “increase the quantity, quality, diversity, and local focus of video content,” the companies said in the filing.
The FCC, which will assess whether the deal is in the public interest, has to approve a license transfer in order for the deal to go through. The Justice Department is separately investigating the merger for antitrust concerns.
In the filing, Comcast expanded on a set of commitments it issued when it announced the deal last Dec. 3. It vowed to support NBC’s free television and local news programming, and to add 1,000 hours of local programming and 1,500 on-demand choices for children and families within the first three years.
House Democrats offered initial praise for Comcast’s promises. “Comcast’s commitment to diverse programming and maintaining the journalistic independence of NBCU is encouraging,” said Rep. John Conyers Jr. (D-Mich.) who chairs the Judiciary Committee.
Conyers said the panel would hold hearings on the deal next month. Comcast and NBC execs are expected at hearings in front of two other congressional committees in the first week of February.
To make their case to antitrust regulators, the companies framed the transaction as one that is primarily vertical rather than a horizontal combination of competitors.
After the merger, according to the filing, Comcast will control only about one-seventh of the channels its cable systems will carry, and around 12 percent of national cable network advertising. NBC would still rank behind Disney, Time Warner, and Viacom in cable market size after the merger, Comcast says.
And in the market for online video, which critics have prodded the Justice Department to investigate, Comcast argues it is too nascent a market for regulators to involve themselves in. The NBC-owned video Web site Hulu accounts for only about 4 percent of that market, while Google, with its You Tube, accounts for around 40 percent, according to the filing.
“Indeed, to the extent that any one company maintains a substantial advantage in attracting online video viewers, that company is Google – not Comcast or NBCU,” Comcast says.
Critics of the deal have focused on the vertical aspects of the transaction, and argue that it puts too much control over the production and distribution of television programming in the hands of one company.
The price of coveted channels that Comcast would own — MSNBC, for example — could increase for other cable or satellite distributors, said Corie Wright, a lawyer at the consumer group Free Press, which has been a vocal critic of the merger.
Comcast would have an incentive to bundle such channels with other, less popular channels, she said, and force distributors to pay higher fees that would ultimately get passed on to viewers.
“Comcast is trying to downplay the value of that programming,” Wright told Main Justice, “but Comcast can charge rivals more money.”
Comcast says that, after pouring billions into NBC, it would be “irrational” to forgo revenues from licensing the channels to other providers in hopes of attracting more customers to Comcast within its “limited footprint.”
Critics also argue that Comcast would have an incentive to not carry independent television channels that might compete with NBC programming. But Comcast says that, as a content buyer, it lacks the market power it would need to effectively shut others out. Comcast also said it would add six new independent channels to its lineup in the next three years.
Even though critics focus on the the deal’s vertical components, recent Justice Department settlements might give Comcast and NBC hope that regulators will look closer at any horizontal aspects of the transaction.
In the Ticketmaster-Live Nation merger approved this week, with conditions, the DOJ focused its complaint on the deal’s horizontal impact in the ticketing market. The settlement did extract promises from the combined firm that addressed vertical concerns the deal raised.
Updated at 4:23 p.m. to include comments
When Comcast Chairman Brian Roberts and NBC Universal President Jeff Zucker head to Capitol Hill in the first week of February for a hearing in front of the Senate Judiciary antitrust subcommittee about the proposed merger between Comcast and NBC, they will also be stopping by the House.
According to a person familiar with the schedule, the House Energy and Commerce communications, technology, and the internet subcommittee chaired by Rep. Rick Boucher will hold a hearing on the public interest concerns the deal raises. Both hearings will be scheduled for the same day.
A final witness list has not been announced, but previous reports have confirmed that top company chiefs will attend.
The deal will be reviewed by either the Justice Department or the Federal Trade Commission for possible antitrust violations, and by the Federal Communications Commission, which assess if the deal is in the public interest.
Additional hearings on the deal are expected later in the year before the House Judiciary Committee and the Senate Commerce Committee.
The deal, which was announced in early December and valued NBC Universal at $30 billion, would fundamentally alter the media landscape and would give the cable giant control over up to one in five TV viewing hours, according to some analysts.
Critics have voiced concerns about access both for Comcast’s rival cable providers to content owned by NBC, and for rival television channels to be included in Comcast’s programming packages.
Earlier this week, media watchdog group Free Press attacked Comcast and other cable companies for their TV Everywhere strategy to provide television online for existing subscribers. The group said it had the potential to limit competition in the emerging online video industry.
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As rumors about Google’s upcoming clash with the Justice Department’s Antitrust Division swirl, Google has opted to continue its charm offensive, reports the New York Times.
The task of convincing journalists, professors, lobbyists, and Congressional staffers of Google’s harmlessness largely falls to Google’s Senior Competition Counsel Dana Wagner, formerly an antitrust lawyer with the Department of Justice. His money line: “competition is a click away.”
For those of you keeping track, Google is currently the subject of three antitrust-related inquiries:
- Collusion between technology companies to not steal employees away from each other (DOJ)
- The Google Books settlement (DOJ)
- Shared members on the boards of Apple and Google (FCC)
You can read the full NYT article, detailing Wagner’s charm (as well as some of Google’s arguments) here.