Amid antitrust complaints to federal regulators, a leading U.S. senator this week pressed the Federal Communications Commission and the U.S. Department of Justice to investigate whether Comcast Corp. (Nasdaq: CMCSA), the nation's largest cable operator, is leveraging its market power to hinder competition.
Al Franken (D-Minn.)
Citing complaints by an online-video distributor (OVD) and other companies, Sen. Al Franken (D-Minn.) made his request Monday in a letter to FCC commissioners and the chief of the Justice Department's Antitrust Division.
Franken is chairman of the Senate Judiciary Subcommittee on Privacy, Technology, and the Law, and also sits on the Subcommittee on Antitrust, Competition Policy and Consumer Rights.
In his letter to FCC commissioners and Acting Assistant Attorney General for Antitrust Sharis Pozen, Franken said he was "very concerned" over Comcast's recent announcement that it will exempt its Xfinity on-demand service for the Xbox 360 from counting against the carrier's data cap for broadband service.
Franken said officials ought to probe the matter to determine whether the move would run roughshod over Internet neutrality principles by giving Comcast's on-demand service preferential consideration not afforded to competitors, particularly rival online video service providers.
"Comcast's actions will almost certainly drive consumers to Comcast's Xfinity Streampix, rather than other Internet video streaming services, which I fear will thwart your agencies' efforts to create an open and level playing field for current and future competitors of Comcast," Franken wrote to the officials.
The five-page letter also cites allegations that Comcast has flouted provisions of the order that allowed its acquisition of NBCUniversal, noting that "several" complaints of discriminatory conduct have been filed against Comcast.
Among complaints to the FCC is one by Lexington, Mass.-based online-video distributor (OVD) Project Concord Inc., which alleged that Comcast has flouted a condition in the merger order that requires the carrier to make comparable programming available to an OVD, at comparable terms, once an OVD has entered into a distribution agreement with one of Comcast's peers.
Franken, who opposed the Comcast-NBCUniversal merger, said Comcast has asked the FCC to clarify the condition. According to Franken, Comcast has argued that the carrier needs to have complete, unredacted copies of the underlying peer agreement before it can provide its programming.
"I fear that this is yet another tactic to delay Comcast's compliance with the terms of the merger order," Franken wrote. He said the dispute has "far-reaching implications" for the online-video distribution industry.
Urging the FCC to act quickly on Project Concord's complaint and others, Franken said smaller companies are not equipped to engage in protracted litigation with an industry beheomath such as Comcast, and that "prompt, decisive action" on pending complaints sends the message to potential complainants that they can "expect to receive help" if they encounter anticompetitive behavior from Comcast.
"I am concerned that if the commission fails to address conditions disputes in a timely manner, it will only incentivize Comcast to challenge future conditions and delay resolution of disputes through a protracted complaint process," Franken wrote. "It will also dissuade other companies from seeking relief before the commission, if they believe Comcast has violated a condition."
The result, he said, would be an undermining of the conditions imposed by the FCC and DOJ "to promote the public interest and to foster competition."
FCC commissioners, in a 4-1 vote, and the DOJ, in January 2011, approved the Comcast-NBCUniversal merger.
FCC Chairman Julius Genachowski, a Democrat, said in a statement at the time, "After a thorough review, we have adopted strong and fair merger conditions to ensure this transaction serves the public interest."
As a part of the deal, Comcast was required to take steps to boost competition in the online video market. Comcast also agreed to cease its management of the video-sharing site Hulu, an over-the-top (OTT) video-on-demand service that streams video content such as movies and television shows.
Then-chief of the DOJ Antitrust Division, Christine Varney, said the condition was to ensure Comcast cannot use NBCUniversal's partial ownership of Hulu to "diminish its competitive significance."
Overall, she said, the Comcast-NBCUniversal merger conditions imposed "will maintain an open and fair marketplace."
In the merger, Philadelphia-based Comcast acquired a 51 percent stake in NBCUniversal from General Electric Co. (NYSE: GE). Hulu is co-owned by News Corp. (Nasdaq: NWS), The Walt Disney Co. (NYSE: DIS), NBCUniversal and Providence Equity Partners.
- see Franken's letter (.pdf)
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