Yesterday’s repeal of net neutrality rules isn’t the only good news Comcast is getting these days. In January 2018, the conditions imposed by the US government on Comcast’s 2011 purchase of NBCUniversal will begin to expire.

Smaller cable companies that compete against Comcast are worried that Comcast will raise the price for carrying “must-have” programming such as regional sports networks, NBC’s local TV stations, and NBC’s national programming. The merger conditions require Comcast to submit to arbitration when there are disputes over prices, terms, and conditions of programming agreements with other pay-TV companies.

The FCC should impose new rules to essentially replace the arbitration conditions that expire in January, cable company RCN told the Federal Communications Commission in a filing this week. RCN is an “over-builder” that competes against Comcast by building its own infrastructure in areas already served by Comcast, such as Boston and Philadelphia.

“Because the rationale supporting harm to competition and consumers in the Comcast-NBCU Order continues, an ‘unleashed’ Comcast-NBCU is certain to wreak havoc in the market, undermining rival distributors and harming consumers throughout the country,” RCN wrote. RCN also discussed its concerns in meetings with FCC Chairman Ajit Pai and other FCC commissioners and staffers.

Senator wants Comcast/NBC breakup explored

In a similar matter, Sen. Richard Blumenthal (D-Conn.) urged the Department of Justice to investigate the possibility of breaking up Comcast and NBC after the merger conditions expire.

“If your investigation determines that the Comcast–NBCU acquisition will produce anticompetitive effects, even if the merger conditions are retained, you may need to consider separating Comcast and NBCU in order to fully restore competition,” Blumenthal wrote in a letter Wednesday to DOJ antitrust chief Makan Delrahim.

The DOJ last month filed a lawsuit to block AT&T’s proposed acquisition of Time Warner Inc. The DOJ’s concerns that AT&T and Time Warner will raise prices on rivals that want access to Time Warner programming should also apply to Comcast’s ownership of NBC, RCN argues.

When contacted by Ars, Comcast pointed out that the NBC merger’s arbitration conditions have been invoked only once in seven years. (The identity of who invoked it is confidential.)

But the threat of arbitration may have been useful for companies negotiating with Comcast. Some TV providers have threatened to file for arbitration without ultimately doing so, such as Dish in 2016.

Comcast: “No credible basis”

Comcast didn’t provide Ars with any further response to RCN’s claims, but it offered a statement on Blumenthal’s letter.

“There is no credible basis to pursue an extension or modification of the consent decree or conditions,” Comcast said. “For nearly seven years, Comcast has met or exceeded all of the commitments and obligations under the NBCUniversal transaction. We have filed six annual compliance reports with the FCC setting forth in detail our exemplary compliance track record, none of which has been challenged or objected to by the Commission or any third parties, including by any member of Congress. The DOJ, which has received substantial information about our compliance with the consent decree, has never pursued any enforcement action against us.”

Since the merger, video competition has expanded greatly with the rise of online video distribution, Comcast also said. “We have reached dozens of content deals with MVPDs without loss of programming to consumers,” the company said.

While some of the Comcast/NBC merger conditions expire on January 20, 2018, others last until September 2018, Blumenthal’s letter noted. Blumenthal wants the DOJ to extend the conditions beyond September 2018 “pending further investigation.”

The conditions that expire in January include net neutrality provisions similar to the ones repealed by the FCC yesterday. The conditions also require Comcast to offer programming at fair rates to online video distributors.

“Anti-competitive conduct”

Even with the arbitration conditions in place, RCN says Comcast has been anti-competitive:

RCN, along with other mid-sized and smaller MVPDs [multichannel video programming distributors], have faced and continue to face anti-competitive conduct from the combined company. Perhaps the most egregious example is the use of extraordinarily stringent “minimum penetration requirements” for carriage of Comcast-NBCU programming that prevent rivals’ attempts to broadly sell a broadcast basic tier of service at a low price. This unusual Comcast-NBCU carriage requirement gives it a competitive advantage over mid-sized and smaller MVPDs and undermines over-the-top competition.

The American Cable Association (ACA), which represents nearly 800 small and medium-sized cable operators, recently asked the FCC to investigate this practice and prohibit it under its program access rules. Comcast is increasingly making these demands in TV programming contract negotiations and the practice could force its smaller rivals to raise their minimum cable TV prices, the ACA said.

In addition to creating a new arbitration process, the FCC should allow a consortium that represents small pay-TV companies to bring program access complaints, RCN said:

[I]t is important to understand that these merger conditions were adopted because of fundamental shortcomings in the Commission’s program access rules. For instance, NCTC [National Cable Television Cooperative], the bargaining agent for video programming on behalf of RCN and some 800 mid-sized and smaller MVPDs, is not eligible to bring a program access complaint. Other flaws include the fact that the program access rules include a “uniform price increases” loophole and do not guarantee interim carriage during the pendancy of a complaint.

The ACA made similar arguments in another filing last week.

AT&T and Time Warner

RCN’s filing draws parallels between Comcast/NBC and the DOJ’s concerns about AT&T’s proposed acquisition of Time Warner.

The DOJ’s court complaint against AT&T says, “the merger would result in higher prices for consumers for traditional subscription television because it would give the merged company the power to raise the prices that competing video distributors pay to it for Time Warner’s popular TV networks for no reason other than that those networks would now be owned by AT&T/DirecTV.”

AT&T offered to agree to similar arbitration provisions as the ones required in the Comcast/NBC merger. This offer should be seen as “an admission that vertically integrated MVPDs threaten competition, [that] existing program access rules are insufficient, and [that] additional protections need to be adopted to address them,” RCN wrote.

In April, the FCC helped clear the way for AT&T to buy Time Warner, but the DOJ lawsuit is holding up the merger.  We asked the FCC if it has any response to RCN’s letter and will update this story if we get an answer.

https://arstechnica.com/?p=1233223