Comcast believes that a number of companies are trying to bully the cable and Internet provider in order to get favorable terms in exchange for their non-opposition of the merger with Time Warner Cable. In a response(PDF) to the comments filed with the Federal Communications Commission (FCC) over the proposed merger, Comcast thinks that companies are engaging in extortion to further their business interests at the cost of the deal.
After spending time talking about the benefits of the merger and thanking various people for support, including non-profits and politicians that Comcast has donated money to, Comcast took to the offensive. The provider believes that many of the complaints levied about the potential merger are only happening because it refused to grant any special compensation or requests that were directed its way after the merger announcement.
The long list of demands, which includes free backbone interconnections, sharing of advertising technology, and requests to carry networks that don’t exist, would be traded for support or silence in the transaction. Comcast estimates that if it caved to demands for the programming portion alone, only considering the networks that were “concrete enough to estimate,” it would cost the company more than $5 billion. This cost would be handed off to customers, reaching $4 by 2019.
“The significance of this extortion lies in not just the sheer audacity of some of the demands, but also the fact that each of the entities making the ‘ask’ has all but conceded that if its individual business interests are met, then it has no concern whatsoever about the state of the industry, supposed market power going forward, or harm to consumers, competitors or new entrants,” said Comcast.
Discovery Communications, Cogent, Dish Media and Viamedia were called out directly, with Comcast also focusing heavily on the comments on made by Netflix. With Cogent, Comcast believes that it is trying to stop the provider from competing further in the edge provider market in its own “self-interested agenda.” While Dish’s claims are perhaps the least demanding of the companies, as it point to the potential for Internet choke points that would be anticompetitive, Comcast believes that the remaining companies are looking for something to gain.
Viamedia is said to be seeking “mandatory access to Comcast’s advertising interconnects,” as well as placing constraints on Comcast’s ability to compete with Viamedia in advertising. Discovery Communications is accused for demanding “unwarranted business concessions” for its own financial interests.
As for Netflix, Comcast thinks that it barking something that has nothing to do with the transaction and is economically unsound in reasoning. In the filing, it said that Netflix is mirroring what it’s advocating in the Open Internet issue, and coincides with complaints the video streaming company makes about other providers. Using “trumped-up economic theories” Netflix is attempting to push the cost of “carrying its content onto the backs of others.” Comcast brings up the deal it made with Netflix earlier in the year, adding that CEO Reed Hastings said it would work “well for both of us for the long term.”
Both Netflix and Discovery have denied the extortion charges in statements to Recode. Discovery spokesman David Leavy told the publication that the company stands by their concerns that the resulting company could leverage “onerous terms that jeopardize the ability of independent programmers” from investing into different content.
“Comcast’s silence on the details of key issues like program discounts, and instead, its continued strategy of intimidating voices that are not fully supportive of its position, is troubling,” said Leavy.
Netflix stated that it wasn’t extorting Comcast, but it believes that the provider is the one forcing business to bend to its whims. Netflix adds that it’s something that customers are ultimately suffering for, as well as setting a bad precedent for future businesses.
“It is not extortion to demand that Comcast provide its own customers the broadband speeds they’ve paid for so they can enjoy Netflix. It is extortion when Comcast fails to provide its own customers the broadband speed they’ve paid for unless Netflix also pays a ransom,” said the company. “Netflix grudgingly paid to improve performance for our mutual customers, a precedent that remains damaging for consumers (who ultimately pay higher costs) and for other innovative businesses (that can be held over the barrel by Comcast to do the same).”
