The marriage of Comcast and NBC is bad news for consumers. But Washington and Wall Street have already bought into the idea that it's a done deal. That's why Americans need to speak out now and stop the mega-merger!
In 2007, Comcast was caught red-handed blocking legal Internet traffic, and the Federal Communications Commission ordered the company to stop. Looks like that slap on the wrist didn’t work. On Monday new allegations of anticompetitive shenanigans by Comcast came to light. In just the past 24 hours, Comcast has been caught abusing its massive media power, unfairly gouging its competitors and violating Net Neutrality.
These allegations come as Comcast is looking to takeover NBC-Universal in one of the largest media mergers in history. As part of its bid to win federal approval for the merger, Comcast has claimed that it does not possess enough market power to hurt its online video competitors. It has also promised to follow the FCC’s Net Neutrality principles. But it now appears that the company has broken its own promise over and over again.
Ironically, this revelation comes just a week after Comcast executive vice-president David Cohen gave a much lauded DC speech about how “self-regulation” was sufficient to protect the open Internet. It’s clear that Comcast will say anything to get the merger through – even while it is doing the exact opposite.
Ransoming the Future of Media
The New York Timesreports that Comcast has been trying to extract enormous new fees from a company called Level 3. You’ve probably never heard of Level 3 but chances are you have used its service. Level 3 is the company that streams movies for Netflix straight to your laptop or TV. Comcast’s threat: Pay up or Comcast will shut down all of Level 3’s traffic – including Netflix’s streaming service.
Comcast’s core cable business is threatened as people cut the cord and flock to services like Netflix for videos and TV. They are ready to do whatever it takes to shut these services down. One way to do this is to make it more expensive for Netflix to reach its subscribers by exorbitant rates for delivery of its content. Because Comcast has monopoly access to broadband consumers in many communities, it can unilaterally raise costs. You can read more about that case here.
Modem Madness
Another case of Comcast bullying also emerged this week. It has gotten much less attention than the Level 3 issue, but is no less troubling. According to an FCC complaint by Zoom Telephonics, Comcast has been impeding this small start-up company from making and marketing cable modems to sell directly to consumers. What this means for you is that Comcast is trying to stomp out competition and force consumers to rent pricey equipment from them bloating your monthly cable bill.
If you subscribe to Internet service through your cable company, chances are they make you rent a modem from them for about five bucks a month. You could save a lot of money over the long term by buying your own modem, but cable companies like Comcast won’t tell you that.
The law says that consumers must be allowed to be able to buy any modem and connect it to any network, but in practice cable companies do all they can to force you to rent equipment from them, jacking up your bill and crushing competition.
According to Zoom’s complaint, Comcast has taken this behavior to a new level, and has modem compliance requirements that are “unreasonable, irrelevant, time-consuming and costly” – and ultimately prohibit Zoom’s product from reaching consumers.
Comcast has imposed extra fees and bizarre guidelines for manufacturers, and applied them arbitrarily. Even more galling, Comcast mandated that Zoom sponsor five-star hotel boondoggles for Comcast staff in the guise of “factory tours” around the world.
This is no different than mob behavior – extorting the little guy. How is a start-up supposed to break through with these kinds of barriers? Read the full complaint here.
Stifling Broadband Access
The impact of this kind of practice is profound. The FCC’s National Broadband Plan found that the high monthly service fee was the largest adoption barrier for those households who do not yet subscribe to broadband.
These high fees are a direct consequence of anti-competitive and anti-consumer practices. When Comcast makes it harder to get third-party modems, they increase the total price of broadband access by leaving consumers no choice but to rent modems from them at higher rates.
Last year, Comcast increased the monthly rental fee for its cable modems by 66 percent. Clearly they have a stake in making customers rent equipment from them. A Zoom cable modem costs between $59 and $79. If you bought a Zoom modem, it would pay for itself in roughly a year and the modem would be yours to keep if you move and change Internet service providers.
If you rent a modem from Comcast, they want it back at the end of your contract – no matter how much you have paid them for it. If you don’t return it, they’ll charge you another $100.
Repeat Offender
With both the Department of Justice and the FCC nearing the end of their reviews of the Comcast/NBCU merger, Comcast has fired up its lobbying machine. All over Washington, they are touting the meager “public interest” promises they have made, and calling on Congress, regulators and the American public to trust them.
But the truth is that if this merger goes through, they will have even more incentive to engage in the kinds of bad behavior that have become their trademark. Given the size and scale of this merger, its unique mix of vertical and horizontal integration, it will have a deep impact on our media system for years to come. One company controlling so much content and distribution is a clear threat to media diversity and the nascent online video market. Studies have also shown that the merger will raise prices for consumers nationwide.
Comcast wants us to think the merger is a done deal; it has already announced NBC’s new management team. But Comcast has proven that it’s a repeat offender, who simply can’t be trusted. It’s time to rein in this arrogant media giant. The FCC must move quickly to investigate the complaints from Level 3 and Zoom and move forward now to finally adopt real Net Neutrality once and for all.
Tuesday, November 23rd, 2010 by Mitchell Szczepanczyk
Back in 2007, I was heavily involved in work organizing for the Chicago FCC media ownership hearing. I was also the first person to testify in the public comment period of that hearing. It was heartening to help organize this important event with Chicago Media Action and allies, and to see hundreds of Chicagoans turn out at that critical moment.
In 2010, the FCC returned to Chicago to hold one of only a few field hearings on the proposed merger of Comcast and NBC Universal. Despite the breathtaking potential implications of the proposed merger, the 2010 hearing was a more subdued event with a much smaller turnout. In 2007, almost 1,000 people showed up and more than 200 people testified, while only 69 people testified in 2010. Admittedly, the 2007 hearing covered potentially all of media, while the 2010 hearing covered a just single proposed merger (albeit a big one). And we had more than two months to prepare for the 2007 hearing in the late summer and early fall (which included five training sessions held across Chicago), while we had just a few weeks to prepare for the 2010 hearing.
The results of the hearing were more encouraging than I had initially feared. Although at first glance there was a surprising amount of pro-Comcast commentary in the beginning, by the end of the public comment period, pro-democracy forces rallied to the point where the 69 comments were almost evenly split.
Here are the numbers: There were 35 speakers in support of Comcast and 34 critical of Comcast. But what really struck me is how the pro-Comcast speakers barely referred to the merger at all. By our count, only eight of those “Comcast 35″ even mentioned the proposed merger and 29 of those 35 were nonprofit organizations who had received funding or other support directly from Comcast. Not one of those “Comcast 35″ gave any reasons to support the merger that were directly relevant to the merger itself.
For a forum that drew so few people, this analysis helped give the matter and the forum new life, to reach out to those who weren’t involved this summer, and to give another stick to use against the proposed merger.
This is a guest post from Mitchell Szczepanczyk. Mitchell is a software developer and longtime organizer with Chicago Media Action (CMA), who has worked on CMA campaigns around the Federal Communications Commission and corporate media concentration, public access television, public radio and television, community internet initiatives, network neutrality, and the U.S. digital television transition. Mitchell’s website is www.szcz.org.
Comcast wants you to trust them — to really, really trust them.
That’s why the company’s top lobbyist, David Cohen, convened what could best be described as a Kumbaya sing-along in Washington on Monday, to declare Net Neutrality an issue over which Washington needn’t concern itself any longer.
“It’s time to put this [Net Neutrality] debate behind us,” he told an audience of D.C. insiders at the Brookings Institution. “Check the box and move on.”
Now, don’t think this means Comcast has changed its tune on the importance of the open Internet. It’s still trying to kill Net Neutrality. It’s just making a softer sell to convince Washington to forget about protecting the rights of Internet users.
“The courts, the FCC, and the Congress — all valuable institutions filled with capable, conscientious people … but few of them with the background to work out consensus on what are essentially complicated technical issues,” Cohen said.
To whom, then, should we turn to look out for the public interest? Why, the industry itself. According to Cohen, “real self-regulation” with the assistance of an industry-formed advisory group is the answer.
Minding the Hen House
The advisory group Cohen has in mind, known as BITAG, was quickly cobbled together by Verizon, Comcast, AT&T, Microsoft, Intel and other major industry players in June 2010 — just as the Federal Communications Commission was starting to craft rules to safeguard Internet users from an industry push to exert more control over Web content and applications.
Never mind that BITAG’s list of charter members includes the biggest violators of Net Neutrality — not least of all, Comcast.
To that end, Cohen skimmed over Comcast’s covert campaign to block peer-to-peer users on its network — for which it was sanctioned by the FCC.
Cohen would like us to forget that it was Comcast that was caught red-handed blocking lawful Internet traffic in 2007, and that then lied about what it was doing. It was Comcast that tried to evade scrutiny by obstructing public participation in an FCC hearing investigating its Internet blocking. And when the FCC forced the company to stop discriminating against its customers, without even levying a fine, it was Comcast that sued on a technicality to avoid any accountability.
But in an effort to whitewash its record of underhanded activity, Cohen claimed that the public reaction to this debacle taught the company a lesson about being better self-regulators.
“In retrospect,” he said, “we made the wrong decision for the right reasons.” Though those who were blocked from sharing barbershop quartet music and the King James Bible might remember things differently.
Bygones, said Cohen, who now claims Comcast was vindicated and can be trusted with the fate of your Internet — and of NBC Universal, which it hopes to acquire.
Fear and Self-Loathing in Washington
“Unfortunately, the national debate around Net Neutrality and an ‘open Internet’ has been almost exclusively driven by lawyers,” declared Cohen (who is a lawyer). In fact, Comcast hates lawyers so much that the company employs at least 100 of them from 30 different D.C. firms to lobby Washington to get its way.
All of Cohen’s lip service about consensus would be more palatable if his company hadn’t poured so much money into astroturf front groups and lobbyists determined to undermine all efforts to encourage fair competition and a level playing field online.
The only thing you can trust about Comcast is that it seeks to boost its bottom line and serve shareholders by any means possible. That’s the nature of corporations. And naturally, the public shouldn’t expect corporations like Comcast to look out for its best interests.
Public policy is designed for that role — to make it profitable for corporations to behave in ways that don’t harm the rest of us. The only thing that will keep Comcast honest is clear rules of the road and a real watchdog such as the FCC to enforce them.
Comcast is itching to complete their takeover of NBC by the end of the year and they aren’t hiding it. They sent one of their vice presidents, David Cohen, to the Brookings Institute to rewrite their past bad behavior, and encourage policy makers to stay out of media policy. At the same time, Comcast’s Steve Burke, who will take the helm of NBC if Comcast has their way, is set to announce a new line-up for NBC management this week.
Comcast thinks this merger is a done deal and they just want the Department of Justice and Federal Communications Commission to speed it up. Today, however, one senator said “not so fast.”
Sen. Bernie Sanders (I-Vt.) submitted a letter to the Federal Communications Commission on Tuesday calling on the agency to deny approval for the proposed merger between Comcast and NBC Universal based on a failure to meet public interest requirements, the potential harm to competition, and the anticipated rise in cable rates.
“At a time when a small number of giant media corporations already control what the American people see, hear, and read, we do not need another conglomerate with control over the production and distribution of sports, news, and entertainment,” Sanders said. “In my view, we need more media diversity, more local control, more points of view – not more media concentration.”
The letter also criticized Comcast for moving to restructure NBC while the deal is still pending before the FCC and the Justice Department.
“Comcast is already rearranging the deck chairs over at NBC with little regard for the antitrust review at the Department of Justice and the FCC, and we are glad to see leaders in the Senate like Bernie Sanders speaking out,” said Free Press’ Joel Kelsey.
Comcast is expected to spend $100 million trying to push through this deal. Unfortunately in politics today, money too often buys silence. But, so far a growing chorus policymakers have called on the FCC to protect competition and consumers in reviewing this merger.
On election night in Honolulu, a Honolulu resident recorded the coverage aired by her local TV news outlets. Although she kept changing the channel, the coverage was the same on every station. That’s because three of Honolulu’s TV stations are controlled by a single company, Raycom Media. The stations share a single newsroom and broadcast identical news coverage.
The nonprofit group Media Council Hawaii (MCH) is working to restore diversity and competition to Honolulu’s media landscape. MCH filed a complaint against Raycom with the Federal Communications Commission a year ago, citing contractual agreements that appear to violate the agency’s media ownership rules and asking the FCC to revoke Raycom’s station licenses. The FCC has yet to take action. Tell them they should.
Under FCC rules, it’s illegal for one company to own three TV stations in a single media market. Raycom has gotten away with controlling three because it doesn’t own the stations outright – it just operates them. But under an agreement signed with MCG Capital, which owns one of the three stations, Raycom paid $22 million for the majority of its assets, and receives 90 percent of the cash flow from the station. Raycom now controls production and sales and makes other key business decisions for all three stations. It’s ownership in all but name, and it’s a clever way to circumvent the FCC’s ownership rules by way of a contractual agreement that Raycom is not required to submit to the regulatory agency.
When Raycom signed the deal with MCG a year ago, there were dramatic changes to Honolulu’s media landscape. More than 60 people lost their jobs, many of them journalists. Operations for the CBS, NBC and mynetworkTV affiliates moved to the same building and consolidated newsrooms. Honolulu lost two whole news teams, and suddenly had access to just one set of viewpoints and one-third of the coverage, which is broadcast on all three stations. The stations even stopped pretending to maintain separate identities, calling their coverage “Hawaii News Now,” and doing away with network affiliation.
Raycom has so much power in Honolulu that it appears politically untouchable. In the run-up to the midterm elections, Raycom partnered with Honolulu’s leading daily paper to provide news coverage, with the result that residents could no longer turn to the paper for a different set of viewpoints and stories. And there’s almost no one left to cover Raycom’s flagrant violations of FCC ownership rules since Raycom is quickly becoming the only media game in town.
And Honolulu is not alone. All over the country, media companies are striking similar deals to get around FCC ownership rules and eliminate competition. It’s the newest pathway to consolidation, forged in the wake of the huge public outcry that put the brakes on big media’s plans to deregulate entirely in 2007. To help prevent covert consolidation from spreading, help Media Council Hawaii set precedent at the FCC.
