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Comcast and Time Warner would like regulators to joint the 21st century

I just finished listening to a hearing in front of the U.S. House Sub-committee on Regulatory Reform, Commercial and Anti-Trust Law.  Eight panelists tried to persuade the committee that the proposed merger between  Comcast Corporation and Time Warner Cable was either great for the delivery of innovative products and services to consumers or would harm consumers with higher prices and restriction on the availability of content.  What I barely heard was any analysis regarding what type of companies Comcast and Time Warner actually are today.

Based on most of the questions posed by the sub-committee members, their constituents look at Comcast and Time Warner as either 20th century cable companies, sitting somewhere with a huge dish catching satellite signals from HBO, Cinemax, or Disney and sending their programming down some cable wire into a consumer’s home or the company’s that connect us to the Internet.  And the discussion regarding whether the merger will be harmful to competition seemed to center on competition in broadband access or the last mile.

Comcast and Time Warner don’t appear to look at their relevant market as just last mile or broadband services.  From the near beginning of their joint testimony Comcast and Time Warner describe their proposed combination as creating a “world-class communications, media, and technology company.”  Not only are Comcast and Time Warner responding to and servicing the commercial activity generated by online companies such as Amazon, Apple, Google, Facebook, and Netflix, but they are now competing against these companies as these edge providers enter the world of digital voice and broadband access.

The question the U.S. Department of Justice will have to answer is why should we treat the services of each company as a silo such that we carve out one relevant market by which to analyze two companies that operate in multiple markets based on the multiple services they provide.  If the Justice Department identifies a relevant market, then can they say that there is a monopoly in the relevant market and was that monopoly power abused?

Yes, Comcast is already a monster of a company.  It has two main businesses; Comcast Cable and NBC/Universal. Assuming that the Justice Department finds that the relevant market is a national one, can the DOJ conclude that Comcast would have a monopoly in cable services?  How about in content production?  In theme park ownership?  In broadcast television station ownership?  In broadband?

Speaking of broadband, will the merger mean no more deployment of broadband facilities?  Probably not.  It would be highly irrational for a going concern that invests in a DOCSIS 3.0 digitized platform to not squeeze the last ounce of value out of it by not selling broadband services to more consumers.  For this reason alone I don’t see broadband adoption being harmed by the merger.

Cries of the big bad broadband wolf by the opponents of the merger tells me that they are still living in the late 1980s.  Comcast and Time Warner aren’t cable companies anymore.  Ironically it is because they have grown beyond their original core cable service and gotten larger in the process that they are able to escape antitrust concerns, assuming regulators admit they are in the 21st century.

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Public Knowledge Believes Verizon and SpectrumCo part of a Cartel. Really?

Public Knowledge has been on a little rampage, referring to Verizon’s petition to obtain AWS licenses from SpectrumCo, LLC as synonymous to a cartel. Specifically, Public Knowledge is saying that the aggregation of spectrum on the part of Verizon, combined with joint marketing, reseller, and joint operating entity agreements entered into between Verizon and SpectrumCo would effectively result in a cartel.

Should the transfer go through, Verizon and SpectrumCo, a joint venture between Comcast, Time Warner, and Bright House, will cross-sell each others’ services.

In its ex-parte letter posted on the Federal Communications Commission’s website on 18 June 2012, Public Knowledge made its cartel claim, but doesn’t seem to provide evidence of current or projected cartel behavior. For example, a cartel is defined as a group of firms with an explicit, formal agreement to fix prices and output shares in a particular market. Public Knowledge offers no evidence supporting the particular market Verizon and Spectrum intend to carve up, the level at which prices are to eb fixed, or how shares of that undefined market are to be divided up.

Without a showing that Verizon and SpectrumCo have entered a contract, combination, or conspiracy to restrain trade, a cartel argument is a non-starter.

Besides, why even bring this allegation to the FCC? This claim should be in front of the U.S. Department of Justice.

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Kohl: We Might Lose the “War”.

Posted March 22nd, 2012 in antitrust, AT&T, cable television, spectrum, Verizon and tagged , , , , by Alton Drew

During a Senate antitrust review Wednesday, Senate antitrust committee chairman Herb Kohl (D-WI) said the following: “Having won the battle for competition by blocking last year’s AT&T/T-Mobile merger, are we now in danger of losing the war?” Mr. Kohl asked.

That’s the problem, Senator Kohl. Had you, your congressional colleagues, the FCC, and DOJ not looked at the AT&T/T-Mobile deal from the standpoint as a war against “the big companies”, you wouldn’t have AT&T and Verizon buying spectrum from cable. We should be mindful of the corners we back industry into with poor public policy.

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Antitrust war brewing in the Twittersphere?

Posted January 12th, 2012 in antitrust, Google, Internet, Internet search, social media, social network, Twitter and tagged , , , by Alton Drew

CNBC’s Julia Bornstein brings her insights to whether Google is favoring its Google + social network when consumers search the web for “@usernames”. Twitter, according to Ms. Bornstein, argues that Google suppresses the “@” sign during a consumer search, and instead sends the consumer to one of its Google search options.

The antitrust question maybe, is Google using its dominance in search to elevate its options over Twitter’s.

On the surface it seems a big what to do about nothing. If I’m that hard up to do a search for someone’s Twitter handle, I’d go to Twitter and do the search. Consumers have that option if they have problems with Google.

Hopefully the FTC or the Justice Department will find that they have other things to do.

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The FCC staff paper means nothing

Attorney David Balto, an anti-trust attorney and former policy director at the Federal Trade Commission, wrote an insightful article posted on The Hill.com about the Federal Communications Commissions’ staff paper released late last week. The gist of Mr. Balto’s argument is that the paper will have little, if any, impact on the lawsuit filed by the United States Department of Justice to block the AT&T, T-Mobile merger.

Release of this working paper was irresponsible. The FCC has opened itself up to having anyone subpoena its work product and use it in a court proceeding.

In addition, the FCC seems to be on a mission to confuse the public on what its role is.

With net neutrality and the notion of reclassifying broadband as a Title II service, the FCC sought to make itself out to be an uber-legislative body, willing to circumvent Congress.

With AT&T/T-Mobile, the FCC wants to play trust buster. That is not its role. It is supposed to apply its ambiguous public interest standard to the issue of whether or not wireless licenses are to be transferred from T-Mobile to AT&T. If you read the title for Docket 11-65 it says as much.

If the FCC wants to file an amicus brief, it should go through the process for certifying such a request and enter its views into the court record.

The FCC’s behavior was reckless and such tactics are best left to media manipulators, community organizers, and grass roots advocacy groups.