Telecom heavyweights, including Comcast, spar at Senate hearing

WASHINGTON - A Dish Network Corp. executive told lawmakers Wednesday that Comcast Corp.'s deal for Time Warner Cable Inc. should be flatly rejected because the combined cable-TV giant would serve half of the residential Internet customers in America and could thwart new streaming companies that compete with traditional TV.

The Comcast/Time Warner Cable deal and a related proposed merger of AT&T Inc. and DirecTV "will determine whether a few large companies control what Americans watch and how they do so," warned Dish Network deputy general counsel Jeffrey H. Blum.

The remarks were made before the Senate Commerce Committee, meeting to ask questions and gather information on the Comcast and Time Warner Cable deal, as well as AT&T's effort to acquire DirecTV.

Comcast executive David L. Cohen responded that it was a "scare tactic" to say that a merger of Comcast and Time Warner Cable would control 50 percent of the residential Internet broadband market after the merger.

Recent data from the Federal Communications Commission, Cohen said, showed that Comcast/TWC would have 35 percent of the residential high-speed Internet market and even a lesser percentage when experts consider the wireless services.

"This is not the woe-is-me terrible market concentration" that opponents say it is, Cohen said. He told the senators that he considered the current period a "golden age of video services" and that Comcast's proposed $45.2 billion deal for Time Warner Cable would lead to innovation and consumer benefits.

"Congress should allow this dynamic marketplace to continue to grow," Cohen said.

The almost three-hour meeting showed starkly that Washington lawmakers and policy experts were concerned about whether the consolidation of telecommunications companies could lead to poor customer service, higher bills, and greater economic power for incumbent telecom companies.

West Virginia Sen. Jay Rockefeller, a Democrat, asked in his opening comments: "Do people really want 500 channels when they only look at eight, like me?"

Sen. Ed Markey (D., Mass.) said the TV and Internet market still did not have "real competition on price, and now we have merger-mania."

Sen. Cory Booker (D., N.J.) challenged both Cohen and John T. Stankey, executive vice president and chief strategy officer at AT&T, to make broadband Internet more affordable to low-income residents who have to choose between a telecom bill and rent.

Cohen has promoted Comcast's Internet Essentials program, which offers discounted broadband service to poor parents with school-aged children. Cohen talked about that initiative at the hearing.

AT&T had said it needed to buy DirecTV to get bigger to compete with Comcast/TWC. Similar to Verizon Communications Inc., AT&T has spent billions of dollars to create a wireline TV and Internet business that it brands as U-verse.

AT&T says that 97 percent of its U-verse customers subscribe to a bundle of TV, Internet, or phone. AT&T offers its wireline U-verse services in 22 states. The U-verse business now has 5.7 million TV subscribers, 11 million broadband subscribers, and 4.1 million phone subscribers.

The combined AT&T/DirecTV will offer new and better service bundles, creating a stronger competitor to Comcast/Time Warner Cable, AT&T says.

As part of its proposed deal, AT&T has pledged to boost the Internet speeds or add to its broadband network, benefiting 15 million "customer locations," mostly in rural areas. The mobile-phone giant said it was so confident of the cost savings and synergies flowing from its acquisition of DirecTV that it would commit to the 15 million target within four years from the close of the deal.

AT&T has said in its FCC filing that the AT&T/DirecTV merger would put downward pressure on bundled prices for TV and Internet, but another AT&T top executive, in a prior Washington hearing, said he couldn't commit to lower TV or Internet prices after a merger.

"Although U-verse video service has grown rapidly in popularity, it still has only 5.7 million video subscribers," AT&T says in its FCC filing. "In comparison, Comcast has 22.6 million video subscribers, which will rise to approximately 30 million after completing the acquisition of Time Warner Cable.

"And, Comcast will be able to offer competing services to approximately 67 percent of U-verse video homes after the proposed Time Warner Cable merger. AT&T's relatively limited scale in video, and the resulting high costs for content, also limits the number of customers to whom it can offer broadband/video bundles," the filing concludes.

Shawn Ryan, a member of the Writers Guild of America, which represents 8,000 writers for film, TV, and online programming, also addressed the committee.

"I would counsel for this not to go through," Ryan said, "because there is too much to worry about. I don't think we need a new tollbooth on the information superhighway. . . . I would be very careful about what they're promising and whether they can and will live up to it."

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