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Comcast claims competition from Google Fiber, Netflix & Hulu are reasons to approve merger

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The $45.2-billion Comcast/Time Warner Cable merger sure is good for the two cable companies, who were already the #1 and #2 cable providers in the U.S. and will now have about 30 million customers combined. But the deal, which the companies hope to close by the end of 2014, will face scrutiny from the FCC under its new chairman, Tom Wheeler (a former cable industry lobbyist), and the U.S. Department of Justice.

And though Comcast and Time Warner claim the merger creates “a pro-consumer cable competitor,” my colleague Stacey Higginbotham, in a post on the deal’s potential winners and losers, puts consumers in the losers column: TWC customers will probably get a cap on their broadband, which they didn’t have before, and Comcast “will gain even more power when it comes to dictating the terms of over a third of the nation’s broadband and TV experience.”

Comcast(s cmcsa) said Thursday morning that it would divest about 3 million subscribers in order to keep its share of customers post-merger below 30 percent. In a memo Thursday (PDF), Comcast EVP David Cohen listed some of the measures that the company “[intends] to include and expand upon in our public interest filing with the Federal Communications Commission and with the relevant antitrust agency as appropriate.” Among them:

“In today’s market, with national telephone and satellite competitors growing substantially, with Google having launched its 1 GB Google Fiber offering in a number of markets across the country, and consumers having more choice of pay TV providers than ever before, Comcast believes that there can be no justification for denying the company the additional scale that will help it compete more effectively.”

In a separate “public interest benefits summary” (PDF), Comcast and Time Warner Cable (s twc) laid out reasons they believe that “the MVPD marketplace is more competitive now than ever before”:

“Satellite companies have taken share from traditional cable companies, and the vigorous new entrants like Verizon FiOS and AT&T U-verse have also entered the video and broadband space. Google(s goog) has also introduced Google Fiber in a number of markets across the country.

Since 2005, satellite subscribers have grown by 7.0 million subscribers; telco subscribers have grown by 10.7 million subscribers; while cable subscribers have declined by 10.4 million subscribers. (Source: SNL Kagan)

A number of online businesses like Apple, Google, Amazon, Hulu, Netflix, and a host of smaller companies are entering the online video space and trying to position themselves as competitors. While we view online businesses as complementary to our business, previous antitrust concerns about further cable consolidation are truly antiquated in light of today’s marketplace realities.”

Ironically, Comcast owns a third of Hulu but is not allowed to influence its business due to regulatory conditions put in place at the time of Comcast’s merger with NBC Universal (s NBCU).

19 Responses to “Comcast claims competition from Google Fiber, Netflix & Hulu are reasons to approve merger”

  1. Andrea Glass

    They’re claiming they have all this competition, however, that competition is only available in limited, select areas. I think most people don’t have much of a choice, especially with TV service. Google Fiber has only just begun and who knows if they will build out across the country or not. Fios is only available in very select areas and they’re not longer building out. In my area, I can’t get Dish or DirecTv because of all the trees, so my only option is Comcast.

    Also, doesn’t Comcast (and maybe other cable providers) have contracts with towns/buildings for their service such that they are the sole cable provider? If that is true, then, even if say Google Fiber built out, they wouldn’t be able to offer their service to those areas?

  2. Walter Riker

    What I want to see is that the government rules that there must be 3 non-affiliated companies providing service in a given area otherwise this industry should be regulated. This merger is only for the shareholders gain and has nothing to do with benefits for the consumer.

  3. Michael Elling

    Unfortunately, comments like these from Comcast get admitted into court proceedings and become fact upon which ignorant (amongst other things) judges base their opinions.

  4. Shawn Murphy

    The Key term, legally, will be “effective” competition. At least when it comes to Google Fiber. This will bear on how Comcast/TWC can compete and advertise and adjust prices vs. Google.

  5. Martin Wilson

    Those are all reasons NOT to approve the merger. What does Netflix and Hulu have to do with anything?

    What they want to do is throttle Netflix and Hulu and cap our internet service. The most I’ve used in a month has been 158 GB and I used 458 GB over the last year but I already pay a lot of money for tiered internet service so there should be NO cap to begin with.

    I can’t get any of what I watch on TV through Netflix. I don’t use Hulu. I use Vudu on occasion.

    Google Fiber is only available to a few neighborhoods in the country. It’s available in parts of Kansas City, MO and KS, Provo, Utah and is coming to parts of Austin, TX. This is hardly competition. They say they’ll only offer it to large neighborhoods in the 250 to 1,500 house range. We have 30 houses in my neighborhood and we’re not a Google Fiber city anyway.

    You have to pay for high speed internet to use Netflix and Huly as well.

    AT&T doesn’t offer U-Verse here and Verizon isn’t a provider here. The best internet we can get aside from TWC is AT&T DSL at 6 Mbps. I get 30 Mbps through TWC.

  6. Jack N Fran Farrell

    Comcast knows or should know that its network will not support 4xHDTV. Telcos will clean Comcast’s highest paying client list to near zero when they support 802.11ac modems (Gbit WiFi and 2160p) in the home. Google could do it too, but now that ATT and Verizon see the that their real choice is upgrade for 2160p video, or nothing, the race for Gbit/sec fiber to homes that want it is on (with or without Google).

    By the way, home users that want 4xHDTV have business that could use videoconferencing at home or field or office. Ready or not the competition will be fierce. A few caveats to the regulators approval are required to prevent price gouging over the next 3-5 years.

  7. Paul Gallo

    Yes, so much competition for them… a service that exists in only two midwest cities, and two services that don’t even compete in the ISP space whatsoever. As a TWC subscriber, I guess I can look forward to data caps and horrible Netflix performance for double the price – awesome.

  8. I could care less about TV subscriptions it’s Internet speed/price that concerns me and both these companies OWN that in their markets no real alternatives exist. I called TWC to complain about the recent price increases and they told me that Verizon, At&T and TWC all share pricing data so he knew I didn’t have a choice. Sounds like collusion to me!

  9. Dave Anthony

    No merger should be approved until the FCC eliminates local franchising regulations. That is the primary reason why we have little to no competition in internet service providers.

  10. Craptastic

    So much LOLs…
    First off, Crapcast acquiring TWC is like a bigger turd swallowing a smaller turd.
    Secondly, how many cities is Google Fiber available in that it is such a threat?

    I feel fortunate to have FiOS from Verizon. I actually get the dedicated bandwidth I pay for, it works as expected and I pay less than I did for comparable service from Crapcast or TWC.

    I will never pay another cent to Crapcast. They’re overpriced and their customer service leaves a lot to be desired.

    • Yeah that Google Fiber argument is bogus. By end of 2014 it will be in two cities. From what I understand Google mostly did this as a sandbox to test its own products. Shame really, I would drop Comcast in a heart beat if I had access to Google Fiber. Anyway if Google wanted to be competitive it should offer fiber optics, not swallow up the remaining alternative providers.

  11. Ha! Look at the Netflix Speed Index. Tom Wheeler should slap a requirement that Comcast offer an average of 3 Mbps or higher Netflix speeds to its customers. I don’t know how they can claim Netflix is offering them competition when they aren’t allowing Netflix to get to its customers. I’m not talking about throttling, refusing to upgrade peering infrastructure has the same effect.

    • The FCC requires broadband to meet advertised speeds (which they do according to FCC measured data). Netflix is the one accountable for THEIR video performance and similar to Hulu, Amazon, YouTube, etc they make real time delivery decisions which have a direct impact their service performance for customers.

      The peering issue is a red herring fabricated by Netflix. Similar to all the other video players and CDNs they have so many options to reach ISPs saying a peering point is at issue is BS as the reason a point is suddenly problematic is Netflix floods it and blames ISPs vs balances the load. Modern day CDNs route around any issues… Netflix chooses not to.

      Simple test… does everything else work OK? Why only Netflix across many ISPs? Simple answer…

      • “Simple test… does everything else work OK? Why only Netflix across many ISPs?”

        It’s not across many ISP’s, genius. Netflix is only slow on Comcast.

        To figure it out, I and many others encrypted the internet connection via VPN (so Comcast can’t identify the traffic as Netflix) and all the sudden Netflix became 10 x’s faster and started streaming in High Definition again.

        When I disguise Netflix, Comcast can’t figure out what it is, so it works fine.
        When I do not disguise Netflix (which most people don’t, of course), Comcast slows it.
        Results are the same on laptop, phone, Roku projector, and Netflix TV app.

        Comcast is slowing Netflix instant streaming to unwatchable levels in an effort to destroy a competitor.