Comcast Gets a Merger Approval, But Objects to New Low-Income Requirements
California seeks more cheap Internet for the poor. Comcast says it's too hard.
By Jon Brodkin
Feb 14, 2015
California has tentatively approved Comcast's $45.2 billion acquisition of Time Warner Cable, but Comcast isn't entirely happy because some of the conditions demanded by the state "create a more intrusive regulatory regime."
The proposed approval with conditions came yesterday from Public Utilities Commission Administrative Law Judge Karl Bemesderfer. Comcast Executive VP David Cohen quickly wrote a response criticizing Bemesderfer's proposed conditions.
"We are reviewing the proposed decision and conditions closely and look forward to engaging with the full California Public Utilities Commission (CPUC) as it completes its review of the transaction," Cohen wrote. "While we have just received the recommended decision, it appears that a number of the conditions are ones that will benefit consumers and the company can work with. Some of the suggested conditions, however, could potentially prevent the full benefits of this transaction being realized by Californians, and create a more intrusive regulatory regime where innovative services could be hampered rather than helped. In addition, at least some of the suggested conditions simply lie outside the authority of the CPUC or are unrealistic."
The only specific conditions Cohen pointed to cover how quickly Comcast must bring broadband to underserved populations. Comcast offers $10-per-month Internet to poor people through its Internet Essentials program, which was required by its 2011 acquisition of NBCUniversal. California wants Comcast to expand eligibility for this program, offer it throughout the Time Warner Cable territory, double download speeds to 10Mbps, provide free Wi-Fi routers, connect schools and libraries in underserved areas, and sign up at least 45 percent of eligible households within two years. Comcast must submit specific plans for signing up more low-income subscribers, reduce wait times, and make the sign-up process less difficult. Customer advocates complained in July 2014 that only about 11 percent of eligible households in California were getting the discount Internet service because of how difficult it is to sign up.
Comcast says the penetration goal is unrealistic.
"[S]ome of the penetration rates and time frames suggested by the conditions are simply unattainable under market conditions, especially with populations that have been slowest to adopt broadband," Cohen wrote. "Deeper broadband penetration among all populations is a goal we share, and one we’ve worked very hard on for the nearly two decades we’ve been marketing broadband. Nationally, across our footprint though we only have a penetration rate of 40 percent of homes we pass taking our broadband service. In California, it’s about the same. And that’s after we’ve spent billions marketing and advertising those services."
The California proposal does give Comcast leeway on the 45 percent number. If Comcast can show that its penetration rate is less than 45 percent among potential customers with incomes too high for Internet Essentials, then it can target that lower number rather than 45 percent. (Note that the 40 percent figure offered by Cohen included all homes regardless of income, and thus isn't relevant to the proposed condition.)
Other demands: Stop treating customers like crap
Expanded Internet service for the poor was not the only demand California made. One provision requires improvements to customer service and would prevent Comcast from pressuring customers not to cancel subscriptions. Much of Comcast's worst publicity has come from customers recording cancellation calls in which customer service agents practically refuse to disconnect service. Comcast employees have also changed customers' billing account names to "asshole," "whore," "dummy," and "super bitch"
"Comcast shall take action to improve customer service including respecting customer choice and competitive choices, and meet the Commission’s minimum service quality standards... related to voice service installation intervals and service orders completed, and complete installations, including broadband installations, in a time frame no longer than Time Warner’s average service prior to the merger," the proposed condition states. "Comcast shall report to the Commission within six months of the effective date of the parent company merger any complaints about customer service for voice and broadband customers, including, but not limited to, complaints about Comcast employee rudeness or slow action to allow customers to change or drop Comcast services. Comcast shall not contest Commission jurisdiction regarding any customer service, slamming, cramming or service quality is sues for its California voice customers."
Comcast must also not try to block cities and towns from building their own broadband networks. "Comcast shall for a period of five years following the effective date of the parent company merger neither oppose, directly or indirectly, nor fund opposition to, any municipal broadband development plan in California," the proposed condition says.
Other requirements include:
- Offer Lifeline phone service for the poor.
- Achieve diversity goals.
- Offer free backup batteries for phones.
- Improve accessibility of communications with disabled people.
- Maintain Time Warner's compatibility with Roku and other third-party video programming platforms.
- Offer broadband in areas that currently have only video service.
- Offer speeds of 25Mbps downstream and 3Mbps upstream throughout the service territory within five years.
- Offer standalone broadband service for five years at prices not exceeding those charged by Time Warner.
- Protect customer privacy.
- Improve reliability of phone and broadband service, and ensure adequate 911 support.
Besides state approvals, Comcast must also get merger approval from the federal government.
"We already have the vast majority of state and local approvals necessary to close the transaction, and we continue to work with the FCC [Federal Communications Commission] and the DOJ [Department of Justice] on the federal approval process, as we work toward an early-2015 closing," Cohen wrote.
Read more at Ars Technica