Comcast: No Competitive Threats Here, Move Along
Who knew Comcast Corp. had so much competition? Google, Apple, Facebook and Softbank are all among the companies cited by the cable giant as fierce competitors in the “highly competitive and dynamic” video and Internet markets in its latest regulatory filing.
“This particular transaction actually raises few competition concerns,” Comcast executive vice president David Cohen wrote in a blog post Tuesday. “Comcast and TWC do not compete against each other in any area, so there is no reduction in consumer choice in any market. Customers will still have the same number of video, broadband, or phone options before the deal as after it.”
Most of the 180-page document is spent arguing why Comcast isn’t dominant in any of the markets it serves, whether that’s cable service, over-the-top video, phone or Internet access.
Time Warner Cable doesn’t have ownership interests in cable channels like Comcast, so that also wouldn’t be any change to the current market. And the deal wouldn’t push Comcast over the U.S.’s old 30 percent national market cap since the cable companies have lost market share in recent years to satellite TV and video services from Verizon and AT&T.
The problem for Comcast is that critics of the deal (and regulators) are more likely to look at how it could affect the high-speed Internet market, since Comcast is already the country’s largest Internet service provider.
Comcast argues that there are plenty of local high-speed broadband providers and its merger wouldn’t decrease competition in that market. “Broadband service is sold on a local basis, and individual customers have ample and increasing choice,” Comcast said in the filing, citing LTE wireless broadband service from Verizon and AT&T as competitors.
The company cites Softbank’s Masayoshi Son’s recent pitch to offer competitive home broadband service if regulators let him buy T-Mobile USA.
“In many ways, wireless broadband is an even more formidable competitor because it offers consumers mobility and national reach,” Comcast said in the filing.
Consumers may see things differently. Most households are only reachable by one or two high-speed broadband providers, even if they live in a market like New York or Washington where companies provide service to various areas. And given the relatively high cost of LTE wireless broadband service and data caps, switching to wireless broadband may not be a realistic choice for consumers hoping to keep their monthly bills in check.
Comcast argues that it’s just a small player in the Internet and video market now, with big-foot competitors like Apple (with its Apple TV box and maybe a video service someday?), Google, Microsoft and Facebook.
“Netflix now has over 33 million customers in the United States alone, with another 11 million international customers; Google’s video websites now attract over 157 million unique viewers each month who watch nearly 13 billion videos; Apple iTunes viewers purchase over 800,000 TV episodes and over 350,000 movies per day,” Comcast said in its blog post.
The problem with this argument is that most of those services still require consumers to have a robust Internet connection from a company like Comcast. Google offers Internet service but only in a few markets.
Netflix has been outspoken about its problems with Comcast, even after cutting a deal with the cable giant to allow it to deliver its movies to Comcast’s network more directly.
As the New York Times noted this morning, the reason why Comcast and Time Warner don’t compete in the same markets is because local municipalities have given them monopolies to provide service over the years.
Review of Comcast’s deal is only beginning. Tomorrow, a Senate panel will examine the deal in some detail and provide a sense of whether lawmakers may support it or pressure FCC officials to either reject the deal or impose strict conditions on it.
Meanwhile, Justice Department officials are starting to evaluate any competitive threats the deal poses while Federal Communications Commission officials are planning to focus on whether it’s in the public interest — a squishy standard that allows them to look at just about anything.
* Comcast owns NBCUniversal, which is an investor in Revere Digital, Re/code’s parent company.