In 2007, Comcast was caught red-handed blocking legal Internet traffic, and the Federal Communications Commission ordered the company to stop. Looks like that slap on the wrist didn’t work. On Monday new allegations of anticompetitive shenanigans by Comcast came to light. In just the past 24 hours, Comcast has been caught abusing its massive media power, unfairly gouging its competitors and violating Net Neutrality.
These allegations come as Comcast is looking to takeover NBC-Universal in one of the largest media mergers in history. As part of its bid to win federal approval for the merger, Comcast has claimed that it does not possess enough market power to hurt its online video competitors. It has also promised to follow the FCC’s Net Neutrality principles. But it now appears that the company has broken its own promise over and over again.
Ironically, this revelation comes just a week after Comcast executive vice-president David Cohen gave a much lauded DC speech about how “self-regulation” was sufficient to protect the open Internet. It’s clear that Comcast will say anything to get the merger through – even while it is doing the exact opposite.
Ransoming the Future of Media
The New York Times reports that Comcast has been trying to extract enormous new fees from a company called Level 3. You’ve probably never heard of Level 3 but chances are you have used its service. Level 3 is the company that streams movies for Netflix straight to your laptop or TV. Comcast’s threat: Pay up or Comcast will shut down all of Level 3’s traffic – including Netflix’s streaming service.
Comcast’s core cable business is threatened as people cut the cord and flock to services like Netflix for videos and TV. They are ready to do whatever it takes to shut these services down. One way to do this is to make it more expensive for Netflix to reach its subscribers by exorbitant rates for delivery of its content. Because Comcast has monopoly access to broadband consumers in many communities, it can unilaterally raise costs. You can read more about that case here.
Modem Madness
Another case of Comcast bullying also emerged this week. It has gotten much less attention than the Level 3 issue, but is no less troubling. According to an FCC complaint by Zoom Telephonics, Comcast has been impeding this small start-up company from making and marketing cable modems to sell directly to consumers. What this means for you is that Comcast is trying to stomp out competition and force consumers to rent pricey equipment from them bloating your monthly cable bill.
If you subscribe to Internet service through your cable company, chances are they make you rent a modem from them for about five bucks a month. You could save a lot of money over the long term by buying your own modem, but cable companies like Comcast won’t tell you that.
The law says that consumers must be allowed to be able to buy any modem and connect it to any network, but in practice cable companies do all they can to force you to rent equipment from them, jacking up your bill and crushing competition.
According to Zoom’s complaint, Comcast has taken this behavior to a new level, and has modem compliance requirements that are “unreasonable, irrelevant, time-consuming and costly” – and ultimately prohibit Zoom’s product from reaching consumers.
Comcast has imposed extra fees and bizarre guidelines for manufacturers, and applied them arbitrarily. Even more galling, Comcast mandated that Zoom sponsor five-star hotel boondoggles for Comcast staff in the guise of “factory tours” around the world.
This is no different than mob behavior – extorting the little guy. How is a start-up supposed to break through with these kinds of barriers? Read the full complaint here.
Stifling Broadband Access
The impact of this kind of practice is profound. The FCC’s National Broadband Plan found that the high monthly service fee was the largest adoption barrier for those households who do not yet subscribe to broadband.
These high fees are a direct consequence of anti-competitive and anti-consumer practices. When Comcast makes it harder to get third-party modems, they increase the total price of broadband access by leaving consumers no choice but to rent modems from them at higher rates.
Last year, Comcast increased the monthly rental fee for its cable modems by 66 percent. Clearly they have a stake in making customers rent equipment from them. A Zoom cable modem costs between $59 and $79. If you bought a Zoom modem, it would pay for itself in roughly a year and the modem would be yours to keep if you move and change Internet service providers.
If you rent a modem from Comcast, they want it back at the end of your contract – no matter how much you have paid them for it. If you don’t return it, they’ll charge you another $100.
Repeat Offender
With both the Department of Justice and the FCC nearing the end of their reviews of the Comcast/NBCU merger, Comcast has fired up its lobbying machine. All over Washington, they are touting the meager “public interest” promises they have made, and calling on Congress, regulators and the American public to trust them.
But the truth is that if this merger goes through, they will have even more incentive to engage in the kinds of bad behavior that have become their trademark. Given the size and scale of this merger, its unique mix of vertical and horizontal integration, it will have a deep impact on our media system for years to come. One company controlling so much content and distribution is a clear threat to media diversity and the nascent online video market. Studies have also shown that the merger will raise prices for consumers nationwide.
Comcast wants us to think the merger is a done deal; it has already announced NBC’s new management team. But Comcast has proven that it’s a repeat offender, who simply can’t be trusted. It’s time to rein in this arrogant media giant. The FCC must move quickly to investigate the complaints from Level 3 and Zoom and move forward now to finally adopt real Net Neutrality once and for all.