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Comcast-TW Cable Merger Debated at California Hearing

The proposed Comcast-Time Warner Cable merger came before a public forum in Los Angeles on Tuesday, as dozens of activists and community leaders offered their owns support or opposition to the combination of two of the country’s largest cable and Internet providers.

While the majority who spoke focused on the merger’s impact on the adoption of broadband service by low-income households, “The Shield” creator Shawn Ryan, representing the Writers Guild of America West, warned that an enlarged Comcast would use greater control over TV distribution and broadband to the detriment of content creators and the health of the Los Angeles economy.

“This unprecedented level of control would allow Comcast to squeeze content providers on television and online,” Ryan said, noting that the transaction would allow it to “pay less for content while charging customers more.”

Ryan said that content creators are enjoying new opportunities from online platforms as Netflix and Amazon, but that Comcast would be a powerful gatekeeper with “near monopoly on high speed Internet.”

Comcast spokeswoman Sena Fitzmaurice, however, said that the WGAW is arguing that “trying to keep consumer prices down by rising programming prices isn’t good for consumers.” She noted that the company spends $10 billion a year on programming, more than any other provider.

Mark Israel, an economist who presented for Comcast, said that the company wouldn’t have the incentive to try to choke off Internet video growth in favor of its cable service because broadband is the most profitable part of its business.

Ryan also argued that Comcast will have the “ability and incentive” to give its own networks an advantage in the marketplace, citing the case of Tennis Channel, which fought for years for better placement on Comcast tiers comparable with sports channels the cable provider owns, including the Golf Channel and NBC Sports Network. An FCC decision in favor of Comcast was thrown out by a federal appellate court, and the agency recently decided not to rehear the case.

Comcast has said that the merger would leave it with less than 30% of the video market and 35% to 40% of the broadband market. Yet the FCC recently raised the standard benchmark for Internet service to 25 mbps, meaning that Comcast’s share is at about 57%, according to company filings. The company notes that the FCC is still using slower-speed benchmarks in other proceedings.

Even though speaker after speaker focused on Internet service and other issues related to the merger, the Public Utilities Commission could face challenges if they attempt to impose conditions beyond its impact on phone service.

The FCC is reviewing the transaction to see if it is in the public interest, while the Department of Justice is examining its antitrust implications.

In February, an administrative law judge recommended that the PUC approve the merger, but with conditions, including one that Comcast enroll at least 45% of eligible households to its low-cost Internet Essentials program within two years of the merger.

Comcast has said that such a target is unrealistic — its penetration rate is 40% across their markets — and is instead proposing alternative connection targets, including 30,000 homes within two years.

Last week, PUC Commissioner Mike Florio recommended that the merger be denied.

Representatives from a number of minority and community groups spoke out in favor of the merger, with many noting the support that Comcast or Time Warner Cable have provided to their organizations through the years.

Sonia Tower, senior VP of community relations at Ovation, said that Comcast have the cable arts channel a big break in 2007 when it picked it up for carriage on its systems. “We appreciate them in assisting us in reaching culturally specific communities,” she said.

But Rocky Delgadillo, former Los Angeles city attorney who is now, in private practice, representing Estrella TV, called the merger “troubling for California.” Estrella has been in a carriage dispute with Comcast.

The merger “will chill creativity, and creativity is the nerve center of our economy,” he said.

Surprisingly, there were just a few comments about Dodgers, and an ongoing standoff between Time Warner Cable and other multichannel providers that has left Los Angeles’ hometown team off 70% of the market.

 

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