2. Mergers – What’s Going On
• Comcast-Time Warner – Charter (merger of 1st
and 2d largest providers of cable and broadband;
spin-offs and consolidations to Charter to create
regionally concentrated dominance for Charter-
Comcast)
• AT&T Acquisition of DIRECTV
• Both pending federal approval
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3. Flow Chart of the Federal Process
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Application Filed
F.C.C. Communications Act
Transfer licenses
requires public interest.
Approve
Disapprove
Condition
Justice
Clayton Act/Hart Scott
Rodino/Sherman
Cannot lessen
competition
Approve
Disapprove
Condition or Consent
Decree
FTC
Clayton Act/Federal Trad
Commission Act
Cannot lessen
competition
Clayton Act, 15 U.S.C. § 18, Sections 1 and 2 of the Sherman Act, 15
U.S.C. § 1, 2, and Section 5 of the Federal Trade Commission Act, 15
U.S.C. § 45
4. Government Relations Services
FCC
Communications Act
• Jurisdiction -- Communications Act poses a separate and some feel higher
standard for approval of the transfer of the hundreds of licenses (e.g.
microwave, satellite and other licenses,) from Time Warner to Comcast.
• Standard: Comcast bears the burden of proving that the deal is in the
“public interest, convenience and necessity.”
Public interest standard offers FCC greater latitude than the DOJ has.
FCC can base its actions on a determination of what the deal’s approval might
do to affect the diversity in the marketplace of ideas, competition or localism.
Commission decision is afforded considerable deference.
• Process
Companies required to file a detailed application showing transaction is in the
public interest
Public has opportunity to file comments
Response and Reply processes
Opportunities to meet with staff (ex parte)
5. Government Relations Services
FCC
• MB 14-90 is docket for AT&T – DIRECTV merger
Application materials available for public
review on FCC website
http://www.fcc.gov/transaction/att-directv
• Initial comments/petitions filed September 16,
response Oct. 16, replies November 5
6. Government Relations Services
FCC
• MB 14-57 is docket for Comcast-TWC-Charter
merger. Application materials available for public
review on FCC website
http://apps.fcc.gov/ecfs/proceeding/view?name=
14-57
• Initial comments/petitions were due August 25.
Nearly 12,000 comments/petitions filed
• Responses to comments/petitions filed Sept. 23;
Reply comments due Oct. 8
7. Government Relations Services
FCC
• Seeking conditions if approved: Cities of New York, Boston,
Dallas, Chicago, Los Angeles, Montgomery County,
Maryland, Portland, NATOA, SEATOA, Public Telecomm
Institute (PTI), and others, including groups supporting
public, educational and government access (Alliance for
Community Media and Alliance for Community Democracy
(ACD). Several technology groups and “edge providers”
including Netflix are in this category
• Seeking approval: Coalition of 50 mayors in support of the
merger, Philadelphia, amongst others.
• Full Denials: Consumers Union, Public Knowledge, Open
Technology Institute, Free Press
8. Government Relations Services
FCC
• Major conditions proposed by local gov/PEG
Conditions to close digital divide
• Enhance Internet Essentials program
• System expansions to underserved areas
Conditions to preserve “open Internet”
Conditions to protect consumers/availability of
alternative end user equipment
Conditions to protect local programming
• Allow use of PEG support for PEG operations
• Ensure PEG providers (and local governments) are able to take
advantage of capabilities of cable system
Conditions to maximize competitive entry potential
Extension of conditions to Charter/GreatLand
9. Post-Merger – National Picture
1.53% 0.85%
8.66%
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48.96%
13.45%
9.22%
4.56%
1.93%
10.84%
Comcast
Charter
U-Verse
Verizon
Cablevision
Suddenlink
Mediacom
Cable ONE
All others
10. Description of the Merger
• Effectively consolidates systems and clusters:
Comcast gains in California, New England,
Tennessee, Georgia, North Carolina, Texas, Oregon,
Washington and Virginia.
Charter gains in Ohio, Kentucky, Wisconsin,
Indiana, and Alabama
GreatLand in Michigan, Minnesota, Indiana,
Alabama, Eastern Tennessee, Kentucky and
Wisconsin
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11. Mergers – In the Context Of:
• Court decision striking down net neutrality rules;
FCC considering rule to allow providers to create
Internet “fast lanes”
• FCC allows VZ Wireless to sell Comcast services
outside FiOS footprint, and Comcast to sell VZ
Wireless across its territories
• Announcement of possible order classifying
linear OTT as MVPDs (???)
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12. What Does Comcast Say In Response?
• No one submitted an economic study that rebutted
our submittal that the merger is good
• There is no impact on video competition, because
there is none, and there is no impact on broadband
competition
• We deal on a case by case basis with franchise
issues, so no need to establish any federal standards
to address franchising issues
• No conditions should be extended to
Charter/GreatLand (Internet Essentials dead in
Midwest)
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13. What Does Comcast Say In Response?
• No improvements to Internet Essentials required or
appropriate – unrelated to merger
• No additional PEG requirements – public interest is
satisfied by extension of PEG conditions in
NBC/Universal to TWC systems; PEG conditions
unrelated to transaction
• No broadband/net neutrality conditions
• No customer service conditions because no showing
customer service will get worse because of merger
• No local enforcement of federal conditions
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14. Government Relations Services
So…
• If you don’t file something, don’t be surprised if
the merger is approved without locally
important conditions
15. What Issues You Are Likely To Face –
No Matter How Issues Are Resolved
• We’ve seen the triple play and the impact on
franchise fees
The developing quad play
…the developing 5…6…7…play
• Should we be looking at 47 U.S.C. 542(h)?
(h) ….Nothing in this chapter shall be construed to limit any authority of a
franchising authority to impose a tax, fee, or other assessment… on any
person (other than a cable operator) with respect to cable service or other
communications service provided by such person over a cable system for
which charges are assessed to subscribers but not received by the cable
operator….
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16. What Issues You Are Likely To Face –
No Matter How Issues Are Resolved
• What is the cable system? What about other facilities
attached to the “cable system.”
• How do we deal with a mobile population and our own
P, E & G communications?
• What are consumer rights in this multi-play world?
Rate regulation limitations v. consumer protection
• How do we deal with competitive equity (and should
we?)
• Do localities need to develop their own alternatives,
and what does the alternative look like?
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17. Questions?
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Joseph Van Eaton
Best Best & Krieger LLP
2000 Pennsylvania Avenue N.W.
Suite 4300
Washington, DC 20006
(202) 370-5306
Joseph.VanEaton@bbklaw.com
Notas del editor
Justice Department won the interagency struggle with the Federal Trade Commission over who will oversee the Comcast-Time Warner Cable deal,
Deciding which agency gets to oversee the $45.2 billion deal is the first step the government had to take as it begins its review of the merger.
DOJ was seen as the best fit for the review since it handled Comcast’s acquisition of NBCUniversal.
The Clayton Act prohibits one company from purchasing another if “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”