A disingenuous protest from Comcast

Posted: Sunday, September 28, 2014, 1:09 AM

You might call it David L. Cohen's Casablanca moment.

Like the police captain who announced he was 'shocked to find that gambling is going on' in a gaming hall, the Comcast executive suggested to journalists last week that he was shocked that companies wanting stuff from the cable and Internet giant had turned to an unseemly method to get it: using Comcast's proposed $45 billion acquisition of Time Warner Cable as leverage.

And if Comcast, as Cohen put it, 'declined to play ball'? The company faced 'numerous specific threats to oppose the transaction' being weighed by federal regulators, he said.

Cohen even used the E word - extortion - in referring to positions taken by large companies such as Netflix and Discovery as well as by tiny start-ups seeking carriage on Comcast's cable systems.

Cohen wasn't just speaking loosely - as if he ever does. Comcast used the same language last week to the Federal Communications Commission, which is reviewing the deal to ensure it meets the agency's official 'public interest' standard.

'The significance of this extortion lies in not just the sheer audacity of some of the demands, but also the fact that each of the entities making the 'ask' has all but conceded that if its individual business interests are met, then it has no concern whatsoever about the state of the industry, supposed market power going forward, or harm to consumers, competitors, or new entrants,' Comcast said.

Netflix, locked in a long dispute with Comcast over how its Xfinity broadband system treats a video-streaming business that competes with Comcast's TV and movie content, took umbrage.

Netflix said it wasn't extortion to demand that Comcast provide its own customers the broadband speeds they have paid for. But the company added, 'It is extortion when Comcast fails to provide its own customers the broadband speed they've paid for unless Netflix also pays a ransom.'

Cohen, to be sure, backed off a bit on the rhetoric. He said he was 'absolutely not accusing anyone of criminal activity in connection with the transaction,' just talking about the familiar practice of trying 'to leverage a transaction.'

'That's the kind of extortion that I'm referring to,' he said.

Still, let's get real. There's nothing shocking about the transactional nature of proceedings before the FCC - or about companies' using them for leverage. All that's shocking is that Cohen or Comcast could say otherwise with a straight face.

Cohen inadvertently offered a perfect illustration when he quoted a dire warning about cable companies dominating the Internet, then revealed his punch line: It dated to 1998.

'Does anyone actually believe that the marketplace hasn't had incredible innovation, economic growth, and free expression over the last 16 years?' he said. 'Despite the apocalyptic warnings of these groups over the years, the Internet hasn't faltered.'

But consider some history he glossed over - riddled with some of those same icky transactions.

Comcast's 'open Internet commitment,' which Cohen cited as a key safeguard that will extend to Time Warner and Charter customers if the deal goes through?

Comcast's promise to at least temporarily abide by those rules was the result of a deal with the FCC to approve earlier Comcast transactions, most recently its takeover of NBCUniversal.

Its effort to address the digital divide with its $10-a-month, broadband, 'Internet Essentials,' provided to low-income families?

Comcast dangled the offer to the FCC in 2010, as it was trying to push through that same deal.

The list of concessions won by the FCC as Comcast has grown is much longer than that, and it includes some mixed successes, such as Internet Essentials, and outright failures, such as its promise to make its Philadelphia SportsNet channel available to the satellite services, a concession apparently honored more in the letter of a deal than the spirit.

The worst part of the whole system is that Comcast - and any regulated company - may be pushed to hold back good, consumer-friendly decisions as future bargaining chips.

But should anyone be shocked at such demands? Not at all - and especially not Comcast.

jgelles@phillynews.com

215-854-2776 @jeffgelles

http://ift.tt/1cQfmw3

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