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Net neutrality back at FCC, a look at how it can affect Comcast-NBCU merger

The hot-button issue of net neutrality is back at the Federal Communications Commission -- and not just its proposal for new rules. Observers said the merger between Comcast and NBC Universal could also be a vehicle for the embattled chairman to carry out his net neutrality ambitions.

But it would be unfair, according to a company executive, if Comcast was singled out as the only broadband service provider to have to abide by net neutrality rules. That's the dilemma for Comcast, which has in the past opposed new industry-wide net neutrality rules but now believes that if there are rules, everyone should be covered by them.

"You can't protect the Internet with conditions on a company with 20 percent of the market and leave the 80 percent of the rest of the market alone," the executive said in a recent interview. That official spoke on the condition of anonymity because of the ongoing federal reviews of Comcast's merger.

According to a source familiar with the Justice Department's antitrust review, the investigation is moving forward, and the agency is working closely with the FCC. Comcast has said it expects to wrap up the federal reviews of its merger by the end of the year. A spokeswoman for the FCC declined to comment on a timeline for its review of how the merger affects the public interest.

The FCC imposed net neutrality conditions on AT&T and Bell South's union in 2006 and other mergers. But the Comcast executive pointed out that those conditions were enforceable rules on existing Internet access guidelines at the FCC. For the agency to impose additional rules that prevent discrimination of traffic on networks (FCC Chairman Julius Genachowski has prosed two more provisions to the existing four net neutrality principles) would be "inappropriate," the official said.

Some of the more interesting questions from the merger, according to a source familiar with Justice's review, center on how program-access conditions could apply to the new media giant. In other words, whether Comcast/NBCU should be required to distribute its own content to over-the-top Internet video providers such as Apple TV, Netflix, Google and Roku.

Federal regulators are considering businesses practices in the nascent marketplace such as TV Everywhere, which is a cable- and satellite-industry initiative to offer certain shows and movies online -- over desktop computers and wireless devices -- only to subscribers of its broadband and cable service. The question is whether that practice will impede future competition -- a question for the FCC -- and even current competition -- which could fall under Justice, according to the source.

Senator Herb Kohl (D-Wisc.) has pushed for program-access rules that apply to broadcast and paid television providers to also apply to the Web. Comcast warns against such rules, saying the Internet video space is so new and dynamic that rules could harm growth of that market. Also, questions arise when applying traditional paid-TV access rules to the Internet, the company executive said. There are questions about what video firms would be eligible for content, what obligations would apply to those Web firms (would they carry emergency public notices?).

"It sounds appealing and rational, but when you try to implement that argument, it falls apart," the Comcast executive said.

By Cecilia Kang  | September 30, 2010; 11:46 AM ET
Categories:  AT&T, Antitrust, Apple, Broadband, Comcast, Consumers, DOJ, FCC, Google, Media, Net Neutrality, Online Video  
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