New Broadband Threshold Won't Much Affect Comcast/TWC

The expected FCC increase of the standard for what’s considered broadband (see 1501280056) could affect the review of Comcast’s proposed buy of Time Warner Cable, but not very much, attorneys involved in the proceeding and industry analysts said. Though a 25 Mbps downstream threshold would mean Comcast controlled close to half of U.S. broadband, the use of that benchmark in the FCC broadband progress report doesn’t automatically mean the same number is used in the transaction review process, said Public Knowledge Senior Staff Attorney John Bergmayer. He has asked the FCC to deny the deal.

A change in the broadband threshold would affect only that report, not other FCC actions, Bergmayer said. “It’s not a mechanical process, they don’t flip over some big numbers on the wall at the FCC.” Though transaction review officials at the commission and the Department of Justice are likely to take the threshold used in the broadband progress report into account, there’s no legal requirement they do so, Bergmayer said.

When gauging the effect of a deal on a market, DOJ is more likely to look at the specific effect on competition in the market than be bound by another agency’s definitions of what is or isn’t broadband, Bergmayer said. “We don’t know whether the Department of Justice will rely on the FCC definition of the market share,” MoffettNathanson analyst Craig Moffett said. DOJ and the FCC are likely to raise the issue of Comcast’s control over broadband if they deny the deal or impose tough conditions, and could ignore it if they approve the deal with less-strict conditions, Moffett said.

Even if the new threshold is applied to the deal, it doesn’t necessarily work against it, said Fletcher Heald communications attorney Thomas Dougherty. The conclusion that Comcast has control over a large chunk of the broadband market doesn’t necessarily indicate a harm to the public interest, Dougherty said. Broadband providers don’t compete nationally, so it’s not clear that the deal creates a competitive harm, he said.

Comcast has made similar arguments, and said in reply comments in docket 14-57 that its large slice of the higher-speed broadband market isn’t a deal-specific issue and so shouldn’t have any effect on consideration in the TWC buy. “The combined company’s broadband share would increase by only 1 percent” after the deal, Comcast said. With such a large section of the broadband market under its control, even a small increase in market share matters, Bergmayer said. “If they’re super dominant, any increase is a harm,” Bergmayer said. “The FCC or the DOJ have never used national broadband share as a part of a merger review,” a Comcast spokeswoman told us in an email. “National broadband share isn’t relevant.”

An increase of the broadband threshold would be a further sign that the political tide has turned against the deal, Moffett said. Though Moffett said political resistance to the transaction won’t decide the final outcome, he conceded it does have an effect.