Comcast makes its case
Comcast on Tuesday filed a 650-page document with the Federal Communications Commission outlining the reasons it believes the proposed merger with Time Warner Cable would be in the public interest.
Much of the document spelled out in granular detail arguments made by Comcast in its original announcement of the proposed deal, but there are some notable new takes.
Comcast now sees itself as a tech company, in competition with Google, Facebook and Netflix just as much as traditional competitors like DirecTV and Verizon. Comcast argues that it doesn’t compete with Time Warner Cable, as they do not operate in the same areas. Charts in the filing compared Comcast’s size and earnings with those of Google, Apple, Verizon, Amazon and Facebook, among others. Comcast was tiny by comparison.
"I think you all realize from your own personal habits that the traditional boundaries between media, telecommunications and technology are fast becoming obsolete,” said Comcast executive V.P. David L. Cohen, on a conference call with reporters Tuesday afternoon. “The competitive ecosystem in which we operate now includes companies with national and even global scale, companies like AT&T, Verizon, DirecTV, DISH, Netflix, Amazon, Apple, Yahoo, Google and Facebook, who are competing with each other and with us in unprecedented ways.
“The difference between all of those competitors and us is that they all have national or global market scale, and with that scale comes marketing advantages, the way they can sell their products on a national basis, but it also brings scale to make investments,” Cohen added. “To make investments like R&D, in innovation and in infrastructure and technology.”
Some of those companies, like Verizon and Google, compete directly with Comcast by offering both broadband Internet and video services. The threat of Google potentially expounding its Google Fiber service was hammered home by Cohen.
“I think Google will force us to up our game, and we will be a better competitor as a result of Google’s presence,” he said. “It is precisely because of interest by a company like Google, which, today, let’s face it, being in two small Comcast communities, is hardly a major competitor.
“But the point is, Google is coming, they are a company with global scale, with enormous resources, significantly larger than we are, and the business reasoning behind the transaction is that we also need the scale to be able to compete with the Googles and other generations of competitors that will continue to flood the multichannel video marketplace,” he added.
Comcast also argued that once the transaction concluded it would control only 20 percent of the U.S. broadband market, a very different number from the 40 percent cited by public-interest groups that oppose the deal. Cohen says that the 20 percent number includes D.S.L., which has traditionally bee much slower than cable Internet, as well as wireless broadband, which is slower and more expensive than cable, though Cohen argues that the price will come down and the speed will go up once the F.C.C. frees up new broadband spectrum.
He also downplayed the national 20 to 40 percent figure.
“We actually think local share is what is important from a competition standpoint, and because Comcast and Time Warner Cable don’t compete with each other, there will be absolutely no reduction in competition from broadband as a result of this transaction,” Cohen said.
The F.C.C. filing also suggested that most Time Warner Cable subscribers would see faster internet speeds within a year after closing, as Comcast rolled out its services.
Tomorrow Cohen will testify before the U.S. Senate Judiciary Committee, which will likely question many of the claims made by the company.