Recently the dynamic duo of NBC President Jeff Zucker and Comcast CEO Brian Roberts went before a Senate subcommittee hearing to discuss their merger. The duo got very little love from the panel. Is the Senate being tough for the cameras or do they actually have concerns.
The toughest critic so far has been Senator Al Franken (D-MN). I am certainly no fan of Stuart Smalley but he made some valid criticisms of NBCU and actually seems to understand what is going on here and what is at stake. Ars Technica has a great write up on their exchange which frankly seemed to be a bit personal. It certainly makes for interesting reading as these matters are usually handled behind closed doors but this disagreement was made public. Here is the video.
As I have said before, what is really going on here is not about traditional TV but TV served over the internet. Companies like Hulu, Netflix, and Youtube are really the ones who are at risk. NBCU and Comcast know that is where the future lies and they are fighting it tooth and nail. These providers like Netflix are particularly threatened by this merger because Comcast is the largest ISP in the US, therefore a large number of its streaming customers rely on Comcast to view the content. Comcast can use that as leverage against Netflix when negotiating NBCU content distribution deals with Netflix. With the proposed network neutrality rules (which is a sham) Comcast will be able to
throttle manage Netflix data streams to where users become dissatisfied and look elsewhere for that content. Comcast has already demonstrated a willingness to battle over this territory.
Netflix has commented, ““If left unchecked, the “managed services” category could engulf the Commission’s open Internet policies altogether. As such, the Commission must carefully circumscribe the network operators’ ability to exempt certain services from the openness rules by classifying them as managed services,” Netflix wrote in its filing.”
They can get cut off by Comcast at any time on both the back end from the NBCU side or on the front side by the ISP side of Comcast. You can also think of a managed service as a dedicated channel on the Internet for things like telemedicine or streaming video like Netflix. An ISP like Comcast allots a certain amount of bandwidth and assurance for quality to that channel. Those companies have pushed for exemptions in the FCC’s net neutrality rules, bringing up examples of video for remote medical care that need prioritization. But also imagine how a company would put their own video services in that channel – essentially extending the cable television model to the Internet. We know how well that is working out for consumer household budgets.
Netflix is among a growing number of Internet video companies pairing up with TV makers like LG, Samsung, and Sony who provide “apps” on their devices or set top boxes like Roku, which enable your large living room TV to conenct ot the internet and watch streamign content. This is really the convergence of the Internet and televisions that has been long sought after. Those companies have pushed a slow but remarkable move by consumers to cut their cable and satellite subscriptions. Almost every TV and Blu-ray player announced at CES this year had some sort of VoD app capability.
Congressman Mark Cooper (D-GA) challenged the very idea that the Comcast NBCU merger was not a horizontal integration. NBC has a significant stake in Hulu.com, and Comcast with Fancast.net and its TV Everywhere initiative. Comcast’s efforts will allow it’s cable video customers to access Comcast provided content online.
“Comcast is clearly attempting to control the distribution of the video content it makes available on the Web by restricting sales exclusively to Comcast cable customers,” Cooper charged, in that the content is not available to non-Comcast subscribers.
“By contrast, NBC has exactly the opposite philosophy—or at least it did,” he warned. “Through Hulu, NBC is competing for both Comcast and non-Comcast customers by selling video online that is not tied to cable. NBC also has incentives to make its programming available in as many points of sale as possible. Merger with Comcast will put an end that pro-competitive practice.” He nailed it.
Comcast is continuing to stifle competition and innovation in an attempt to protect it antiquated business model. Comcast isn’t interested in you as their customer.