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Why Dish Wants the FCC to Kill the Comcast-Time Warner Cable Deal

Charlie Ergen trashes Comcast/Time Warner deal, says slightly less negative things about rival DirecTV’s deal with AT&T.

Dish Network

Dish Network Chairman Charlie Ergen has asked federal regulators to kill Comcast’s $45 billion deal to buy Time Warner Cable, saying the combined company would have too much power over Internet and pay-TV distribution.

Ergen met with FCC Chairman Tom Wheeler and the other four FCC commissioners Monday, according to a company disclosure.

“The pending Comcast/Time Warner Cable (“TWC”) merger presents serious competitive concerns for the broadband and video marketplaces and therefore should be denied,” Ergen and other Dish executives said in the meeting, adding that they didn’t think there were “any conditions that would remedy the harms that would result from the merger.”

Dish is trying to build an over-the-top Internet video streaming service, which could launch later this year. During meetings with the FCC commissioners, Ergen and Co. raised concerns that Comcast might try to kill Internet video services like his that are aimed at cord cutters tired of ever-increasing cable bills.

Why does Dish hate the Comcast* deal? In the company’s own words:

Too much control over Internet connections: “High-capacity cable broadband connections are the lifeblood of over-the-top (“OTT”) video services. Among other things, the combined company would have an increased incentive and ability to leverage its control over the broadband pipe to undermine these services.”

It’s not just about last-mile connections to subscribers’ homes: “Comcast/TWC will have at least three ‘choke points’ in the broadband pipe where it can harm competing video services: the last mile ‘public Internet’ channel to the consumer; the interconnection point; and any managed or specialized service channels, which can act as high speed lanes and squeeze the capacity of the public Internet portion of the pipe. Each choke point provides the ability for the combined company to foreclose the online video offerings of its competitors.”

Programming cost leverage: “It will be able to extract lower prices from programmers, which, in turn, will force programmers to extract even higher rates from smaller pay-TV providers like Dish in order to compensate the programmers for lost revenue. And a combined Comcast/TWC will have the incentive and ability to restrict programmers’ ability to grant digital rights to competing pay-TV and OTT video providers.”

In a statement, Comcast responded that “Dish has long been one of our most vigorous competitors, and unlike us has a national footprint available in tens of millions of more homes than a combined Comcast–Time Warner Cable. Dish not wanting stronger competitors isn’t surprising and it isn’t new. Any issues regarding NBCUniversal programming and other video services, whether they be traditional or over the top, are already amply covered by pre-existing FCC rules and deal conditions.”

Interestingly, Ergen had slightly less negative comments about rival DirecTV’s deal to be acquired by AT&T, according to the filing. He didn’t suggest the agency reject the deal, although he did say that it “presents competitive concerns.”

“Among other things, AT&T and DirecTV will also be able to combine their market power to leverage programming content, to the potential detriment of consumers,” Dish told senior FCC officials.

* Comcast’s NBCUniversal unit is an investor in Revere Digital, Re/code’s parent company.

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