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Comcast-Time Warner Deal Critics Ramp Up Opposition

New net neutrality rules don’t alleviate concerns with the deal, critics say.

Consumers Union / Facebook

Critics of Comcast’s move to acquire Time Warner Cable renewed calls Monday for federal regulators to kill the deal, saying new net neutrality rules adopted last week wouldn’t protect consumers from harm.

“Higher prices. Fewer choices. Worse customer service. That’s what we’ll end up with if Comcast is allowed to take over Time Warner Cable,” Consumers Union, publisher of Consumer Reports magazine, said in full-page ads that began running in Washington, D.C., newspapers Monday. The consumer group also launched a radio ad campaign with a 60-second spot on a D.C. local news radio station.

New Consumers Union newspaper ad.
New Consumers Union newspaper ad.

The campaign marks the start of a more concentrated effort on both sides of the deal to influence regulators, who are expected to begin focusing more intensely on reviewing both Comcast’s Time Warner Cable deal and AT&T’s proposed acquisition of DirecTV. Justice Department lawyers have been busy reviewing both deals for months, but senior Federal Communications Commission officials have been spending much of their time recently on net neutrality.

This isn’t the first time Consumers Union has tried to kill a telecom industry merger. It launched similar campaigns against AT&T’s (failed) bid to acquire T-Mobile USA as well as Comcast’s (successful) effort to acquire NBCUniversal a few years ago.

Another group of anti-Comcast critics told reporters Monday that the FCC’s decision last week to enact strict new net neutrality rules doesn’t alleviate the dangers of the proposed merger.

“Even if the net neutrality rules are upheld in court, there are innumerable ways that Comcast-Time Warner Cable can sabotage over-the-top [Internet video providers],” said Jeffrey Blum, Dish’s deputy general counsel.

The FCC’s net neutrality proposal deals with some issues that Comcast critics have raised about the deal, mostly involving how a combined Comcast-Time Warner Cable would have too much market power in negotiations with middle-mile Internet providers and content companies like Netflix. The new rules allow companies to file complaints with the agency if an Internet provider like Comcast refuses to reach a so-called peering or interconnection deal with a rival at reasonable rates.

That’s not enough, Blum said, arguing that Internet TV providers could go out of business in the time it takes the FCC to reach a decision on a complaint. If Comcast refuses to open up sufficient ports for Internet traffic and an online TV provider makes a complaint, “then is it going to take one year, two years or three years to resolve?” Blum questioned.

Comcast is already the largest residential Internet provider and would gain market share under the deal. The cable giant would spin off some of its residential video business to Charter Communications, which means its share of the national consumer pay-TV market would stay below 30 percent.

A major unknown with the government’s review of the deal is whether it will consider Comcast’s consumer Internet market share on a local or national basis. It’s better for Comcast if regulators look at Internet competition in a local context. That’s because it’s easier for the company to make a case that there are plenty of other Internet providers in major U.S. cities.

“These groups continue to use inaccurate and discredited information,” said Sena Fitzmaurice, a Comcast spokeswoman, in response Monday to criticism of the deal. “Comcast will be less than 30 percent of video in homes — about the same size we were a decade ago. Consumers will not lose any choices in video, broadband or phone service in any market.”

FCC Chairman Tom Wheeler hasn’t publicly said how he views the deal. On Thursday, he shrugged off a Re/code question during a press conference about whether he might have fewer issues with the deal now that new net neutrality rules have been approved.

* Comcast owns NBCUniversal, which is a minority investor in Revere Digital, Re/code’s parent company.

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