Comcast’s deal to acquire Time Warner Cable would give the communications giant unprecedented control over America’s broadband network, allowing it to serve as gatekeeper to the internet, according to critics of the deal announced last week.
If regulators approve the $45.2 billion purchase, Comcast will service one-third of U.S. broadband households and almost half of the bundle market for internet, television and phone service.
The specter of one company monopolizing the digital lanes the country uses to access the web has open internet advocates spoiling for a fight. They warn that if a deal is allowed to go through, Comcast will have the power to stifle innovation, making the path steeper for the next Google or Facebook. They are betting that the same community that rallied to prevent the passage of anti-piracy legislation such as SOPA and PIPA will get engaged again.
“We hope that the grassroots network that was activated and motivated by SOPA and PIPA and net neutrality will see that these issues are all connected with what Comcast is doing,” Craig Aaron, president and CEO of Free Press, told TheWrap. “This is not a business story. This is a democracy story. It’s about how does Comcast entrench itself at the nexus of all of the big debates of our day and position itself as the dominant force in determining what we read or watch or download.”
Activists such as Aaron contend that Comcast will be able to levy higher fees on companies to get faster connections to customers and will have the power as a web service provider to favor certain content, in essence creating a tiered internet system. That concern has been magnified by last month’s U.S. Court of Appeals for the District of Columbia ruling that overturned the Federal Communications Commission’s 2010 net neutrality regulations.
“Any business that requires lots of bits or video is at risk,” said Susan Crawford, a visiting professor at Harvard Law School, former Obama administration technology advisor and columnist for Bloomberg View. “The country’s largest cable operator is in a position to thwart the development of new jobs and new services that depend on high capacity communications and that’s a terrible risk to the country’s future.”
Comcast, which own NBCUniversal, is the rare internet service and cable provider that it also a content creator, meaning it could favor its channels and services such as Streampix, its version of Netflix, or its home security system over the high capacity services of others.
“If we re-establish the gatekeeper control in a digital world that we had in an analog one, all sorts of problems will emerge,” Michael Bracy, partner in the government affairs firm Bracy Tucker Brown & Valanzano and co-founder of the Future of Music Coalition, said. “Anything that moves the internet farther into corporate control threatens the ability of new economic models to emerge.”
Comcast counters that the risks of internet domination are greatly exaggerated. It notes that it is currently the only cable provider subject to the FCC’s net neutrality regulations, barring it from favoring its digital content over competitors. When Comcast made its deal for NBC Universal in 2011, it agreed to embrace the FCC’s open internet rules until January 2018, whether or not they were overturned in court. It may agree to extend that deadline in order to get approval for its latest merger.
“Time Warner Cable is not subject to net neutrality rules, but these rules apply to any company we acquire,” Sena Fitzmaurice, vice president for government communications for Comcast Corporation, told TheWrap. “These groups always say terrible things are going to happen and the reality turns out to be much different.”
Should Comcast defy open internet guidelines after its agreement with the government terminates it will take a big risk. Fundamentally altering the status quo on the internet would invite government scrutiny and potentially could lead to stricter regulations, something Comcast and other service providers would like to avoid.
Yet open internet advocates note that Comcast’s agreement to adhere by the FCC’s rules has an expiration date and its acquisition of Time Warner Cable and its 8 million subscribers does not.
If that day comes and companies are forced to pay more to have their content flow unimpeded along Comcast’s pipes it will make the internet less meritocratic. Companies such as Google or Netflix have the resources to pony up for better service, but the next generation of entrepreneurs may not and that uncertainty, in turn, could make venture capitalists and financiers less willing to back digital projects.
“I’m really concerned with having a marketplace set up so new entrants can come in and thrive and that may not be able to get done in a payola internet,” John Bergmayer, senior staff attorney at Public Knowledge, said. “It’s important not to be too utopian about the internet — it has its own set of problems — but I’ll take openness and YouTube any day over public access TV, which was the best the cable companies could do when they controlled everything.”
The sheer size of Comcast will give it inordinate leverage over content providers who need broadband access to move goods, putting them at a competitive disadvantage, open internet advocates claim.
“The worst nightmare for any provider of any goods is to have only one potential buyer,” said Stuart Benjamin, a professor at Duke University School of Law and co-director of its Center for Innovation Policy. “If you only have one buyer that buyer has you over a barrel. With this merger you have a massive company that controls all of the broadband access to a larger number of customers. That’s an enormous amount of buying power. The more any company bulks ups, the stronger its negotiating power will be.”
In a conference call with media last week, Comcast’s chief lobbyist David Cohen deflected claims that merging with Time Warner Cable would create a negotiating juggernaut, noting that the two companies had never operated in the same geographic region before the deal.
“The difference between having 22 million customers and having 30 million customers, in a market that has more than a 100 million customers is simply not going to be enormous in terms of our leverage around programming,” Cohen said.
Those 8 million customers are shaping up to be the focal point of a battle royale pitting cable and internet advocates against each other. Get ready for round one.