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Key lawmaker urges approval of Comcast-NBCU merger without net-neutrality conditions

The chairman of the House communications subcommittee urged federal regulators on Monday to approve Comcast’s proposed merger with NBC Universal, on the condition that the combined company promise not to withhold online video from competitors or distribute some content exclusively to its own cable subscribers.

In letters to Justice Department Assistant Attorney General Christine Varney and Federal Communications Commission Chairman Julius Genachowski, Rep. Rick Boucher (D-Va.) said the merger could harm consumers without those conditions.

But Boucher also warned that open Internet rules, which would prevent Comcast from blocking or slowing certain Web sites or applications, should not apply to the merger. He said that such rules – which Congress may take up in so-called net neutrality legislation – should “apply a uniform set of network openness principles to all broadband providers.”

AT&T, Verizon, Google and Skype continue to meet this week with senior FCC officials on a potential compromise for managing network traffic. If an agreement is reached, the FCC hopes that lawmakers will introduce legislation on net neutrality that would spare the agency from a controversial effort to pursue its own rules.

Comcast has argued that it should not be singled out by having net-neutrality conditions attached to the merger. But there is a precedent for applying net-neutrality conditions to corporate acquisitions. Former FCC Chairman Kevin Martin applied net neutrality conditions to Bell South’s merger with AT&T.

Comcast declined to comment on Boucher's letters.

Most of Boucher’s letter focused on competition in the burgeoning Internet video industry.

“I have some concerns about the potential for consumer harm, particularly with respect to the continued availability of a wide array of video programming content to all Americans, regardless of whether they subscribe to a combined company’s various services,” Boucher wrote.

The merger, which was first proposed in December, is being reviewed by the two agencies. Analysts say the merger is likely to be approved by antitrust and communications regulators. But the process has been costly -- in the quarter ended June 30, Comcast said legal and other costs associated with the NBC Universal transaction amounted to $59 million.

And the most contentious points concern how video programming rules will apply to the distribution of content over the Internet. Because Comcast is the nation’s biggest broadband Internet service provider and NBC Universal has a large library of television shows and movies, analysts say the merged company could be inclined to withhold content from competitors, particularly Internet video services such as Boxee or YouTube. And the company could elect to supply Internet video to subscribers of its cable service – a model called TV Everywhere launched by some paid television providers.

As such, Boucher said programs broadcast over the air or online at should not be held only for Comcast cable subscribers in the TV Everywhere model or customers of exclusive partners.

Other conditions outlined by Boucher include:

  • The merged company shouldn’t be allowed to keep competitors from offering video programming that isn’t affiliated with Comcast. This would discourage exclusive agreements that would prevent customers of other paid television and video Web service providers from accessing those shows.
  • If Comcast buys distribution rights for premium sports programming--including from the NFL, NBA, MLB, NHL and NCAA and PGA--the combined company should not be able to distribute those shows exclusively on Comcast’s networks.
  • The combined company should not be allowed to block Internet-enabled devices, such as Boxee or Tivo, from displaying online programming.

By Cecilia Kang  |  August 2, 2010; 5:58 PM ET
Categories:  AT&T , Antitrust , Comcast , DOJ , FCC , Google , Verizon  
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