The FCC must protect against further consolidation

As a consumer of communications services, you’re undoubtedly concerned about monthly fees that seem to constantly creep upward; about the quality of the programming in your cable package or the consistency of your Internet connection; and about your ability to both communicate with users around the world and access all of the amazing content the Internet has to offer. Each of those concerns is justified, and things could get much worse if the Federal Communications Commission (FCC) allows Comcast to merge with Time Warner Cable, putting the combined entity in control of too much of the integrated phone, cable, and Internet markets. That’s why the Open Technology Institute joined with Public Knowledge in filing a Petition to Deny the proposed transaction, which asks the FCC to reject the proposed merger.

Our petition makes clear:

“This is not just a cable TV merger. It is not just a broadband merger. It is a proposed combination of two of the largest media companies in the country, one that would create an entity with the ability to control what millions of subscribers watch on TV and access on the Internet.”

Comcast, like other Internet service providers (ISPs), already has the ability to serve as a gatekeeper to the content you access online: it has what is called a “terminating access monopoly.” Explained simply, a terminating access monopoly means that no matter how many broadband service providers are available in a neighborhood — and in many cases, it’s only one or two — a household subscribes to only one service at a given time. And that’s where the gatekeeper status comes in: there’s no other pipe into your home and no way to access Amazon, Netflix, or Wikipedia if the ISP to which you pay money every month to provide you with Internet access decides to block or discriminate against the traffic from any of those sites.

And Comcast also owns a significant amount of content, much of it acquired during its previous merger with NBCUniversal. Some have argued that even if a company has the technical ability to interfere with your access to content online, it has no incentive to actually do so. There are many reasons why that is inaccurate, as there are many potential incentives, economic and otherwise, that might lead an ISP to engage in discriminatory behavior. But claims that no such incentives exist are especially dubious when we consider that the merged company in this case would control competing content that users would want to access on other sites.

This ability and incentive of ISPs to discriminate is why OTI also joined 64 other organizations, from consumer interest groups to social justice and democracy-reform advocates, in a letter to the FCC Chairman calling on the agency to reject the merger. The letter highlights the merger’s implications for the Commission’s Open Internet proceeding:

“...all broadband users deserve strong Open Internet protections, and that’s only possible with Title II reclassification that applies to every broadband provider. Merger conditions that apply only to Comcast are no substitute for rules protecting everyone, no matter how strong those conditions may be.”

However, it’s not just the terminating access monopoly we’re worried about and the risk of discriminatory behavior, it’s also the actual market share that the company would have post-merger in the broadband market. If Comcast and Time Warner Cable are indeed permitted to merge, the resulting entity would control nearly half of the high-speed broadband connections across the country. Control of that magnitude would mean that Comcast would have the ability to dictate terms and norms across the entirety of the Internet ecosystem, all while reducing the number of broadband providers available to consumers.

As OTI has noted before:

“...Comcast and TWC have argued that because the two companies do not compete head-to-head in any markets, competition will not be affected. This lack of direct competition, however, should not justify further consolidation—in fact, it would make an already bad situation worse. Over the last few decades, the national cable landscape has become increasingly divided along geographical boundaries, thus maximizing each company’s regional dominance. This consolidation has resulted in less consumer choice for broadband services and increased regional and national market power, which primarily benefits Internet service providers—not consumers.”

FCC Chairman Tom Wheeler gave an important speech yesterday, putting this issue into context. In that speech, he noted that the capacity needs of Internet users have increased dramatically and suggested that the FCC’s current definition of broadband does not adequately reflect those needs — and that definition could instruct how the FCC reviews the merger. He also reinforced his commitment to competition, and outlined his vision for the FCC’s role in both protecting existing competition and promoting competition where it does not yet exist.

In its consideration of this merger, the FCC has a tremendous opportunity to shift momentum away from consolidation and instead toward a place of competitive opportunity, access, and innovation. However, competition alone won’t solve everything, as we noted in our press statement yesterday — “[h]armful discrimination can occur even in competitive markets, and particularly in broadband markets where last-mile ISPs have the ability to serve as gatekeepers to content that consumers wish to access.”

That’s why OTI will continue to advocate for the FCC to reject the merger between Comcast and Time Warner Cable and for strong Open Internet protections to ensure that Internet users are able to access the content of their choosing online.