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California Floats Conditional Approval For Comcast/TWC Merger

Posted by Soulskill on from the making-it-worth-our-while dept.

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.

36 of 65 comments (clear)

  1. Weak by Rhyas · · Score: 3, Insightful

    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.

    1. Re:Weak by Frobnicator · · Score: 3, Informative

      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.

      --
      //TODO: Think of witty sig statement
    2. Re:Weak by __aanbvm4272 · · Score: 1

      You want more? Discount all we are hoping for and roll over and pay through your **** The "last mile" has been the forefront of all the 'rights advocates' for years. This means any one able to setup a distribution point in your neighborhood could be a provider of common access to the 1000s of channels yet developed because of the loss of exactly what you're against. This could be the last chance for a grab of what is rightfully ours. Choice over not. Freedom of the media conduit. Who knows what could transpire within 5 years, and be unstoppable? A force no court could deny. As it is the people (consumers) have about given up hope the corporate funded government (corporations are people too bullshit) will ever see our position again and I welcome ANY attempt to wrestle some of it out of their hands. Do you think there is much else we can hope for. like totally denying them the merger? Get real. It is likely going to happen. They have paid the gatekeeper and probably the court jester too. Ever since the "corporations are people too" ruling BULLSHIT (excuse my yelling)

  2. Why only five years? by zuki · · Score: 4, Funny

    This smells just as good as these "only $24.99 for the first 12 months" offers.

    Because after that, it reverts back to the old price of $49.99.

    1. Re:Why only five years? by radarskiy · · Score: 1

      a) a term of "forever" would be tossed out of court immediate as a discriminatory,
      b) if "5 years" makes it through, there's likely something else that will happen in that period where another term could be introduced to effectively extend the same conditions if the case can be made again.

  3. Why not indefinitely? by Noxal · · Score: 4, Insightful

    5 years? Seriously? Sounds staged, like it's merely to give the APPEARANCE of being tough on Comcast instead of actually being tough when being tough is warranted.

    1. Re:Why not indefinitely? by swb · · Score: 4, Interesting

      5 years sounds like discouragement pricing. Long enough that they might turn the entire deal down.

      But it's also long enough that if they DID take the deal they couldn't drag their feet so long that it never was effectively available.

      And it may be long enough that the investment required on their part might be financially unpalatable to just walk away from at the 5 year mark, plus there's the chance that as the five year mark approached there might be all kinds of difficulty in actually stopping it, either from a disentangling networks perspective or from all kinds of protests and lawsuits that prevent them from stopping.

      And who knows, maybe after five years of doing it their genius MBAs might just figure out that even though the margin on it is small, the revenue is like an annuity and has some kind of balance sheet value that they WANT to keep it going.

    2. Re:Why not indefinitely? by Anonymous Coward · · Score: 1

      Comcast cant oppose municipal broadband but it says nothing about 'fake' consumer groups being funded by anonymous donations. Even if they were found out the rule is ambiguous enough to take years to sort out in court.

    3. Re:Why not indefinitely? by Em+Adespoton · · Score: 5, Insightful

      There's something else that comes into play here too -- this would be brokered under Section 706, and they'd be held accountable to it. HOWEVER, they're also going to be accountable to Title II pretty soon, which will lay down an entirely different set of regulations they'll be required to follow, and (hopefully) last longer than 5 years. As such CPUC would be forcing them to open up the last mile while the FCC is also requiring them to stay net neutral (among other things). The combination of these two strategies doesn't give them too many ways to rake in the easy money -- they're going to have to work for it if they take the agreement. Smart move on CPUC's part! They can draft an agreement that by itself looks very innocent and somewhat reasonable, but paired with the other decisions coming down the pipe closes many of the loopholes in the short term, while giving communities time to start projects that won't be rescinded after 5 years (because when does that ever happen).

      Hopefully other states follow suit.

    4. Re:Why not indefinitely? by swb · · Score: 4, Insightful

      I don't understand why they can't be happy with the annuity-like return on providing a utility service.

      They could have been probably making better than average utility profits with no regulatory risk if they had backed off at some point in the past and quit jacking up the price of cable television, the cost of which pushed many people towards streaming in the first place and played fair with IP network management instead of gouging customers and content providers over phony congestion.

      Instead they just had to keep pushing the rent-seeking, monopolist path and trying desperately to hold onto the TV business. Now the entire enterprise is at risk. People stream what they want cheaply instead of paying for shit channels at high prices, there's increasing regulatory pressure and entire cities are making an effort to supplant their true remaining value, high speed internet with a vastly superior replacement that only underscores their lack of investment and inferior product.

      It's the same problem Microsoft faced in many ways. Relentless rent-seeking that only led people to seek other alternatives. Had Microsoft let up a little they could have probably put off the search for alternatives forever and been seen as a benign market giant like Google instead of as the evil empire.

    5. Re: Why not indefinitely? by Catbeller · · Score: 1

      You're either a troll or a really stupid business analyst. Right-o, no-one ever leverages obviously lousy deals that *sound* good. Especially not billionaire companies with a legal and marketing staff (pro liars) of hundreds.

    6. Re:Why not indefinitely? by Jawnn · · Score: 1

      I don't understand why they can't be happy with the annuity-like return on providing a utility service.

      Yes, you do. We all do. Some of us call it greed, and in a less nuanced way, that's what it is. Comcast is a corporation. It's single overriding mission is to generate profit for it's shareholders. Anything that detracts from that mission is to be avoided. Indeed, shareholders would have legal cause to seek action against a board that failed to pursue profit with due vigor.
      Now, with that in mind, would someone kindly explain why a public that has been demonstrably ill-served by such a corporation should not regulate it just as vigorously?

    7. Re:Why not indefinitely? by swb · · Score: 1

      OK, I do, but then again I don't.

      Let's say I go to work for a retail store as a manager. The store makes an average profit margin. As a manager, I have control over pricing. I decide to raise prices regularly and at a multiple of the rate of increase of my suppliers. I cut spending on store operations, like training, store facilities, etc, so the shopping experience gets less pleasant. I start requiring shoppers to buy my bags for their purchases.

      Eventually such tactics will piss off my consumers so much that they will seek alternatives. Proposals are circulated to build a better store that will offer products I can't because I haven't invested in mine. When I need to seek regulatory approval for necessary changes, the regulatory bodies greatly scrutinize my actions because the consumers are pissed off and there is a belief my changes are only about seeking ways to charge even more.

      Won't the owners eventually see that I have damaged what was once a profitable business? Alienated my customers, brought on regulatory scrutiny that risks the flexibility to run the business?

      Sure, as a corporation, Comcast has a fiduciary duty to their shareholders to be profitable and find ways to increase profits. But there's a point at which monopolist behaviors seem to violate that fiduciary duty because they're reckless to the business model.

    8. Re:Why not indefinitely? by farble1670 · · Score: 1

      TWC's "basic cable" is $19.99 (for 12 months, then it goes up of course) and includes no internet.
      http://www.timewarnercable.com...

      not to mention that basic cable doesn't really compare to a streaming service like Netflix. first is that basic cable is SD. then there's the whole "tune it at 9.30pm on tuesdays" problem.

  4. bullshit by slashmydots · · Score: 1, Interesting

    So it's illegal abuse of their monopoly...but only for 5 years then it's a free for all. That makes sense. What a load of crap. The next president should run his entire platform on crushing ISPs and replacing them with companies that actually give a crap about service and fair pricing. I use my internet a lot more than I use healthcare so guess which one I want reformed.

    1. Re:bullshit by Catbeller · · Score: 2

      You will use healthcare. Oh, you will. Care.

    2. Re: bullshit by Anonymous Coward · · Score: 1

      I got that service in asia. Why cant I have it here?

      You are ok with getting ripped off, so others should be too?

      Nice philosophy. Cork sucking icehole. Go die in a ditch

    3. Re: bullshit by Catbeller · · Score: 1

      "I got that service in asia. Why cant I have it here?
      You are ok with getting ripped off, so others should be too?
      Nice philosophy. Cork sucking icehole. Go die in a ditch"

      I think we need less - or none - of the both-sides neoliberal accommodation to the assholes robbing us blind and more "Go die in a ditch." Seems to work brilliantly for the neocons. Sometimes there is no arguing with a robber; they are assholes and need to be called assholes, before we toss their carcasses into the aforementioned ditch. Figuratively, of course. This isn't a polite discussion about law - this is aiding and abetting mass robbery of he public. BILLIONS of dollars flowing into the accounts of MBAs in the name of the "free market". There Ain't No Such Thing As A Free Market! Simply witness the truth of it. They have the juice and the money to take over their own regulators, and have done so.

  5. Re: 8 - Isn't going to happen even if it happens. by Catbeller · · Score: 3, Interesting

    "8 is related to a pre-existing requirement from awhile ago, they just want it extended for 5 years and to apply to the merged area, but even so, then what, whos going to use it or build a business around it knowing it will killed off after 5 years?"

    Who? An organization who just wants to provide broadband, instead of a corporation which wants infinitely increasing revenue. For instance, a municipal government, or a companied chartered by that government. Who can also simply say "It will be so!" and lay the lines whereever they are needed.

    I really don't care about the motive to make infinite profits. Water and electric and gas were provided for over a hundred years at a reasonable cost. People got paid to run and maintain the systems, and it worked. They're selling our municipal utilities off while we're speaking. Result: prices are doubling and will redouble, and service goes down or practically disapears, the systems disintegrate, and a few billionaires get rich.

  6. Well if you live in California by Crashmarik · · Score: 1

    Complain to your utilities commission 5 years isn't enough.

  7. Garbage.. by wbr1 · · Score: 4, Interesting

    BS Comcast is not happy about this. They have the cash and power to out compete any last mile startup on municipal network in that five years. this gives the public the feeling that something is being done about these ISPs, while giving them more of a stranglehold on the market in a short time. They may act affronted all they like but in reality, behind the mask they are rejoicing because they know what it would mean for them. Whoever architected this, be it lawmakers or some behind the scenes lobbyist or industryman, they are very smart. Well played there bro. I hope you karma is to be ass-fucked my syphilis ridden camels from here to eternity.
    Data connections should be a public utility. period.

    --
    Silence is a state of mime.
    1. Re:Garbage.. by aaarrrgggh · · Score: 1

      In areas where there is already a gap, it gives a huge leg up. In areas with both telephone and cable high speed options it is less of an issue at the moment. But, if you wanted to build a gigabit municipal or coop network, this would give you some reprieve.

      Yes, I would wish that there was a longer period of lock-out, but it does at least price in the costs for the deal.

    2. Re:Garbage.. by Shakrai · · Score: 2

      Data connections should be a public utility. period.

      That is a political non-starter in the United States. You may wish that wasn't the case but for better or worse it is, so there's no point in crying about it.

      One can make a compelling case that Government has in fact make the situation worse, through franchising agreements and other artificial barriers to entry that keep upstarts out of the market. That's the Republican argument and it has some merit, though I think it kind of glosses over the bigger picture that broadband is no longer a growth market. Growth markets can maintain multiple providers of service; stable markets tend to gravitate towards mergers to take advantage of the real and imagined benefits of synergy.

      Incidentally, more than anything I think the mature market consideration is the reason why Verizon and AT&T have halted upgrades of their wireline plant and equipment to focus on wireless, which remains a growth market. In wireline they're forced to compete against established cable companies that have the advantage of cheaper technology (HFC vs. ripping out an ancient twisted pair copper plant and rebuilding it with fiber from the ground up), the ability to cannibalize voice customers without meeting the same reliability metrics POTS has to live up to, a less restrictive regulatory framework, and no hassles offering video (Verizon had to kiss a lot of asses to get video franchises for FIOS in many markets)

      At the end of the day we have to make a public policy decision regarding whether or not broadband internet is a natural monopoly. If it is then we should decide if we want to bring Ma Bell back or not. Is a regulated monopoly better for the internet than what we currently have? I can't answer that question. I do know that Ma Bell largely lived up to her obligation to maintain the network and believe that if she was still around she'd have brought the network into the 21st Century. Verizon and AT&T seem content to milk it for all it's worth before abandoning it. Conversely, there were plenty of people around who hated Ma Bell, for various reasons, so is that really a door we wish to reopen?

      --
      I want peace on earth and goodwill toward man.
      We are the United States Government! We don't do that sort of thing.
    3. Re:Garbage.. by Anonymous Coward · · Score: 1

      I think the problem is there's market confusion in what these companies do. Some of this relates to technological change.

      A twisted-pair telephone line was dedicated to voice communication. A coaxial cable was dedicated to television. (Cable TV was less regulated I believe because it was deemed a luxury.) You had to lay both if you wanted both.

      And then one day packet switching technology came along. It didn't care about what the wires were made of. It could carry packet and therefore grant Internet access. You could now send voice, video, or anything else over telephone, coaxial, fiber, and whatnot. The only different would be maximum throughput.

      Cable companies had an easier time adding internet services since coaxial could provide higher bandwidth than telephone. They started offering telephone service via VoIP. (They later instituted bandwidth caps to discourage internet TV usage. Wouldn't want people competing with their television service. It's to the point I think they'd shut down their Internet service rather than risk cable TV.)

      Telephone companies were reluctantly to upgrade to fiber probably because they didn't want to run new wires. Ironically, some communities didn't want to lose the dependability of copper telephone (and they already had cable internet), so they resisted upgrading to fiber. They also cover a lot more customers than cable, so the upgrades would be significantly costly.

      People are focusing on Comcast and cable companies a lot, but perhaps everyone should just focus on forcing telephone companies to upgrade to fiber? They're already supposed to be regulated. (Yeah, Verizon is hosing people around what with not expanding FiOS.) If every telephone company upgrades to fiber, Comcast and the other cable companies would be shit out of luck.

      Alternatively, the government could just say "we subsidize people who are common carriers, permit unlimited bandwidth, have a fair pricing structure, etc." That might open up the market to new competitors.

  8. Because the CPUC is so trustworthy... by ZipK · · Score: 1

    http://www.sfgate.com/bayarea/...
    http://sanfrancisco.cbslocal.c...
    http://www.bizjournals.com/san...
    http://www.naturalgasintel.com...
    http://www.mercurynews.com/bus...

    1. Re:Because the CPUC is so trustworthy... by HiThere · · Score: 1

      They have occasionally done the right thing. I wouldn't want to claim that it was their common practice, but they have done it.

      --

      I think we've pushed this "anyone can grow up to be president" thing too far.
  9. Re: 8 - Isn't going to happen even if it happens. by aaarrrgggh · · Score: 1

    Exactly. It makes it quite easy, at least in relative terms, to start a competing local carrier. The five years gives you time to build business and fund your own backbone over time.

    Right now, today, if you have an area in California without FIOS or Uverse this makes it possible to secure pockets of interest, build things out at a small scale, and develop a long term business.

    While I don't think all the consolidations are in consumer interests, at least ensuring that new competitors aren't locked out of the market is a huge start.

  10. Lemme get this straight by Snotnose · · Score: 2

    You have 2 companies who each end up in the bottom 10 of the country's most hated companies, both are considered monopolies, and yet somehow, due to, I dunno, campaign contributions, you think letting them join forces to fuck their customers more than each entity alone can do, is a good thing?

    I hate the D's and the R's equally, who the fark can I fire for letting this merger go through? Oh, none? You mean, I'm helpless? If I say any more I'll have agents from DHS at my door before my alarm goes off tomorrow morning.

    1. Re:Lemme get this straight by neminem · · Score: 1

      Yes. I'd be all in favor of his "conditional" approval. The *problem* with both of these companies is that already, neither of them has much/any competition. If the merger goes through, they still don't. If the merger *doesn't* go through, they *also* still don't.

      Much of this lack of competition is legislated. If part of the deal for them to be approved to merge is that they are *forced* to stop blocking any competition, either public or private, from existing, then yes, I'm all for it. What we really need is some actual competition, I don't care who by. I have an amazingly cheap phone bill from a company with amazingly good service, because that market actually has decent competition.

  11. Re: 8 - Isn't going to happen even if it happens. by Catbeller · · Score: 2

    It is nearly impossible to create a local carrier. Witness: no local carriers. All bought up by Comcast. Free markets create monopolies when the realities of the situation does not support multiple versions of the same service. Hence we go to what works - the local utility model. Kick the bastards out.

  12. Re:More giveaways to non-workers by Catbeller · · Score: 1

    I do hope there is a hell so John Calvin is burning eternally on a pile of gold for what he has done to the western world. Good Burghers who obviously are virtuous and rewarded with money by God's will for their business skills, and the worthless freeloaders destined to hell for their laziness; it informs all that we do. That world view is based on hatred of the poor, who somehow are getting Something for Nothing, and complete blindness to the hereditary wealthy you are draining you of every penny you make or borrow. They play on your jealousy *of the poor* for Godssakes. Darn those Lucky Duckies!

  13. Re:More giveaways to non-workers by HiThere · · Score: 1

    I don't believe you. There are too many "give aways" built into society, and everyone uses some of them. Why were you entitled to anything?? The state defends the title to land of those who inherit from those who brutally stole it from the original inhabitants. That's a give away on a massive scale. Those who benefit from it have no right to complain if someone else gets a smaller give away. (And, yeah, I benefit from that too. But I don't lie to myself and claim otherwise.)

    --

    I think we've pushed this "anyone can grow up to be president" thing too far.
  14. Re:More giveaways to non-workers by HiThere · · Score: 1

    If you own land, the title comes from someone who stole it. You didn't pay what the original inhabitants paid (usually their life). If you drink water, you depend on title to land that was stolen from the original inhabitants. Et multitudinous cetera.

    Money is based on fraudulent accounting, and has been since its inception in the US, I can't say for sure WRT other countries, but that would be my expectation. The countries that used honestly founded money (that I'm aware of) only exist multiple centuries into the past. Greece, e.g., is not the same country as Classical Greece (which wasn't a country, but a collection of cities and the land separating them). Classical Greeks had honest money, though not much of it. The Romans that followed them engaged in governmentally authorized counterfeiting, though perhaps not under the Republic. Perviously fraudulent money was called "adulterating the currency", but that doen't easily apply to money printed on clothish paper (or paperish cloth). So what you paid wasn't anything honest, no matter what your intentions. Current money has it's value changed out from under you at the whim of the treasury department.

    Please note that all this isn't to extol the gold standard. It was a terrible standard (but don't think that bitcoins are any better). It's just that no individual has "earned" their position in life. NOBODY. Richer people tend to be given larger subsidies by the government, and though they usually think of them as "no more than my due" they usually get all huffy if you suggest that the same subsidies be extended to less wealthy individuals. Of course, the most desireable subsidy changes as your wealth increases, so it's usually possible to arrange things so that:

    In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread. La majestueuse égalité des lois, qui interdit au riche comme au pauvre de coucher sous les ponts, de mendier dans les rues et de voler du pain. -- Anatole France -- http://en.wikiquote.org/wiki/A...

    --

    I think we've pushed this "anyone can grow up to be president" thing too far.
  15. Re:More giveaways to non-workers by pnutjam · · Score: 2

    There is a cost to line-iteming that out. I don't object to it being shown, but then you end up with stuff like the phone companies do, advertise 19.99 and then you get your bill and it's 32.57 due to all the fee's and surcharges. Those should be included in any advertised price. How can you compare costs and have a workable free market when half the costs are hidden. I could honestly care less about the companies overhead.

    Also, Company A might figure out that the cost to providing is x, because they are a crappy company. Company B figures the cost is X, based market rate, but they only really spend x/3. What do they report? Meanwhile company C is lean and mean and the provide the same services for x/4. Your demand is just asking to be abused by accounting tricks.

    --
    Cheap storage VM.
  16. here's the problem by farble1670 · · Score: 1

    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

    why is it even POSSIBLE for them to oppose municipal broadband? why isn't it ILLEGAL for them to do so?

  17. none of that is enforable by johncandale · · Score: 1

    They will just delay for 5 years then wait for everyone to forget about them. if someone sues in 6-7 years it will just be a minor settlement.