California Floats Conditional Approval For Comcast/TWC Merger

New submitter Lord Flipper writes: The California Public Utilities Commission decision on the Comcast/Time-Warner proposed merger has just been released. It's not an exciting read, but the 25-bullet-point Appendix to the decision is interesting (PDF, starts on page 75). For example: "19. 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, nor any CASF or CTF application within its service territory that otherwise meets the requirements of CASF or CTF."

Whoa! Comcast was not expecting this at all, and they're not happy about it. Here's one more, as an example: "8. Comcast shall offer Time Warner's Carrier Ethernet Last Mile Access product to interested [Competitive Local Exchange Carriers] throughout the combined service territories of the merging companies for a period of five years from the effective date of the parent company at the same prices, terms and conditions as offered by Time Warner prior to the merger."

The ruling by the CPUC covers all customers, present or in the future of the merged company, in California. What they're talking about is opening up Last Mile Access. This could be a step in the right direction, but the ruling today is definitely a surprise. It could nix the merger in California, or it could light a fire under the FCC's butts, or it could bring real competition to Internet access in California.

The CPUC is basing their entire decision on Common Carrier law (Setion 706, as opposed to Title II), and, unlike the projected FCC decision (coming around the 26th of the month) the CPUC's decision has all kinds of "teeth" as opposed to the FCC's "Title II, with forbearance" approach. It could get very interesting, very soon.

Comments

Re:Weak

[Frobnicator]

So let's allow the monopoly and reduction consumer options, but we'll delay it's full impact for 5 years. This doesn't make much sense, except to the Judge, who will be getting one hell of a kickback in 5 years.

Read the whole thing, there are some gems.

One particularly expensive gem the requirement that they must roll out to rural areas and low-density housing areas under their own funds. These areas would be expensive for the state and the companies don't want to pay the bill either.

They need to provide up to 45% coverage for a bunch of areas, and offer deep discounts to anyone earning less than 1.5x poverty level. They need to support the Lifeline program (communications equipment to elderly and disabled) through their entire coverage area. They must support Ethernet for the last mile for everywhere they cover. They must pay to hook up k-12 schools and libraries up to the same ratio as their subscribers in the area. They've got about 1.7M subscribers in the bay area, Google suggests there are about 2.3M homes in the area, so roughly 70% of the population. There's several hundred million dollars they'll need to pay for supporting schools and libraries. Running all that cable and fiber to the more sparse areas will also be expensive. Some quick back-of-the-envelope estimates show they're looking at around a $2B-$10B cost for that. Yes they could afford it, but it will certainly sting.

Then this line could also sting: "Comcast shall take action to improve customer service including respecting customer choice and competitive choices, and meet the Commission’s minimum service quality standards as set forth in GO 133-C". The standards include timeliness requirements that comcast currently does not meet, so they'll be hiring lots of service techs and buying lots of service trucks to get them out fast enough.

From their response "some 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." Which is true. "market conditions" means never installing fiber or high speed connections to those areas because it is expensive.

So on the one hand it does grant them permission to merge, on the other hand they're looking at quite a few billion dollars on government-mandated action.

No, this is just like Comcast's advertising: What the big print gives, the small print takes away.