Monty Tayloe

Price hikes for video and broadband in 2015 for Comcast, DirecTV and Time Warner Cable likely have more to do with rising content costs than their pending deals before the FCC, several communications attorneys and the companies themselves told us Tuesday. “The cost of content is increasing for everyone, and these rate hikes are just part of the trend,” said American Cable Association President Matthew Polka in an interview. Though price hikes could be an attempt to get ahead of possible conditions on the deal that would keep prices down, rising content costs are likely an influence, said Public Knowledge Senior Staff Attorney John Bergmayer. PK opposes media consolidation and the Comcast/TWC deal. Price hikes are always blamed on content costs, Bergmayer said. “There's nothing forcing Comcast to pass its costs on to consumers,” Bergmayer said.

The FCC wants information from some companies that deal with Comcast or provide similar services in order to complete its review of the cable giant’s proposed buy of Time Warner Cable, said letters posted online in docket 14-57 Monday. To complete its review, the FCC requires “information and data from other commercial wireline carriers against which the applicants compete,” said the letters to DirecTV, HBO, Netflix, Hulu, Sony Network Entertainment International and to network providers Limelight Networks, Level 3 Communications and Akamai Technologies. Though information requests to third parties are unusual in merger reviews, they aren’t in reviews of this scale, several communications attorneys told us. The focus on companies that provide content or deliver content-containing data suggests that the inquiry could be connected to the peering dispute between Netflix and Comcast last year, one cable attorney told us.

In the months leading up to the FCC incentive auction, communication and sharing of information among telecom companies will be severely restricted by anti-collusion and conflict of interest rules, likely shutting down mergers and acquisitions within that sphere, said attorneys studying the matter. The concerns are consistent with our report that many major communications law firms face potential conflicts of interest on the first-of-its-kind auction that should raise billions of dollars for the government, giving TV stations selling all or some of their frequencies a cut of proceeds. After the reverse auction application deadline, FCC anti-collusion rules will prevent all Class A and full-power broadcasters from communicating about their auction participation plans or lack thereof, and participants in the forward auction will be barred from communicating anything about auction plans with any TV licensee, the FCC’s incentive auction order said.

Cable associations and satellite providers disagreed whether the FCC has the authority to create a regulatory fee category that would apply to all multichannel video programming distributors. The split became clear in reply comments posted in docket 14-92 Tuesday. “It is long past time to end the competitive disparity that the current regulatory fee structure perpetuates,” the American Cable Association and NCTA said in joint reply comments. The associations devote too little attention to the FCC’s authority to enact such a system, DirecTV and Dish Network said in their own joint reply comments. “Such hand waving cannot suffice” when the law prohibits the cable proposal, the DBS companies said. CenturyLink and HyperCube Telecom also filed reply comments in the proceeding, focusing on how new regulatory fee rules would apply to toll-free services.

A review of the record in Comcast’s proposed buy of Time Warner Cable leads to the conclusion that it will deliver public interest benefits and generate no “cognizable competitive harms,” said Comcast in reply comments filed Tuesday, the last day docket 14-57 would be open for comments. Though Tuesday was the deadline for commenters to file, Comcast filed its own rebuttal. “We can think of no previous merger in which an Applicant has felt compelled to take this kind of action,” said Amanda Keating of Stop Mega Comcast Coalition, a group of opponents to the deal. The group held a press call Tuesday morning to highlight the evidence against the transaction.

Comcast’s willingness to hire representatives with a background at the FCC gives the cable operator an advantage when dealing with the agency, said attorneys and executives -- some former FCC officials themselves. Though industry observers disagree over whether that advantage stops at merely having one’s phone calls returned or extends to more palpable agency favors, all said inside knowledge of FCC processes and personnel gives Charter Communications, Comcast and Time Warner Cable a boost when dealing with the commission.

Industry observers, FCC commissioners and analysts are divided over whether an FCC rulemaking notice seeking comment on extending multichannel video programming distributor (MVPD) privileges to some online video services will have a strong effect on the video industry. “We expect Internet-based linear programming services to develop as a competitor to cable and satellite,” as a result of the shift, FCC Chairman Tom Wheeler said in a statement released with the NPRM.

The FCC approved an rulemaking notice seeking comment on broadening the FCC definition of a multichannel video programming distributor to include over-the-top providers, with three yes votes from Democrats and two concurrences from Republicans, FCC officials told us Thursday. The item seeks comment on defining linear online video services as MVPDs and includes tentative conclusions about how broadly the new definition would reach, the officials told us.

A circulating draft NPRM on broadening the FCC definition of a multichannel video programming distributor to include online video distributors is being held back by the chairman’s office as part of an effort to reach consensus with the Republican commissioners, officials at the agency including on its eighth floor told us. Chairman Tom Wheeler said at Thursday’s FCC meeting that a vote on the item would happen before the week was out (see 1412110069), but the vote was delayed, the officials said. The item already has enough votes from the FCC’s Democrats to pass, said the officials.

Broadcast industry observers are divided over whether interest in the incentive auction expressed by CBS CEO Les Moonves last week is likely to have much effect on potential participation in the incentive auction, they said in interviews Friday.