Wall Street Cheat Sheet

posted by | 63sc
February 27, 2015

Comcast’s ‘Internet Essentials’ Program Needs an Upgrade

By Sam Becker

February 25, 2015

If there’s one company that exhibits the true meaning of the term “big business,” it’s telecom giant Comcast. The company is in the midst of a potential mega-merger with rival Time Warner Cable and has been hard at work greasing legislative wheels in order to facilitate its business dealings on Capitol Hill. It’s clear that Comcast is doing pretty damn well for itself, and if things continue to go in the company’s favor, it will probably be making more money than it knows what to do with.

That fact has not been lost on The Consumerist, which recently ran an article spotlighting the fact that Comcast does not — despite its immense profits and near-monopolistic market share — have plans to upgrade its special program for low-income customers. The problem with that, The Consumerist says, is that Comcast originally made the deal to create and maintain said program as a part of its merger with NBC Universal in 2011. By seemingly ignoring that program, Comcast may not be holding up its end of the deal.

The program itself, called Internet Essentials, has a stated mission to bring lower-income residents broadband, access to which is growing more important with each passing year. “Internet Essentials from Comcast offers low-cost Internet service, computer equipment and free digital literacy training to families with at least one child eligible to participate in the National School Lunch Program,” reads Comcast’s description of the program, which includes home Internet access for a flat rate of about $10 per month and doesn’t feature any fees.

The main issue is that in order for the Comcast-TWC merger to be finalized, it has to clear some final legal hurdles. The issue of the Internet Essentials program and its poor current manifestation is something that may slow that process.

Before the merger gets the go-ahead from the powers that be, the Internet Essentials program, along with some other issues, are being targeted specifically by the California Public Utility Commission. In a brief provided by the commission, it is recommended that Comcast do what it can to not only expand the program but improve it. That means providing additional equipment, bumping up speeds, and perhaps most importantly, expanding the eligibility requirements.

It’s unclear how, or even if, Comcast plans to respond.

But there are signs that the company may comply. Just this past summer, The Washington Post reported that the Internet Essentials program had its eligibility requirements lowered, making it available to even more people than before. There were, naturally, some stipulations, but all in all, it was a positive, face-saving move for Comcast to make.

While Comcast has taken a step or two toward helping the economically disadvantaged, the question at the heart of the matter is whether it should be bound to make even more concessions by regulators and further stipulations as a condition of its merger. Many people don’t like the idea of throwing additional regulations on businesses, and Comcast has, on its own, handed over a proverbial fig leaf to the poor previously. Who’s to say it won’t again?

What we need to remember is that Comcast already has near-monopolistic market power in many areas, and fears are that the merger with Time Warner Cable will only make that worse. For a company that has so much in its coffers — and has fought valiantly make sure the Internet itself doesn’t become a public utility — asking for low-cost access to broadband that is fast enough to be functional shouldn’t be an overly aggressive request.

Keep in mind, though, that Comcast is a business. Businesses exist to make a profit, and to make a profit while creating as few expenses as possible. For a program like Internet Essentials, Comcast really doesn’t have much incentive to beef up access for the poor. First, the company probably takes a solid loss on the balance sheet at the end of the day; second, there are little or no competitors to force the company to improve those services.

It looks like Internet Essentials will have to addressed one way or another, or it could continue to stall the merging of Comcast and Time Warner Cable that everyone is dreading. If the program is improved, it might be a silver lining — albeit a very small one — to the increased monopolistic powers of a freshly minted Comcast-TWC behemoth.

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