Free Press to FCC: Say No! to Comcast/NBC Merger

The following is the prepared testimony of Free Press President Josh Silver at the FCC Public Forum on the Comcast/NBC Universal merger that took place in Chicago today, July 13th, 2010:

My name is Josh Silver. I am president and CEO of Free Press, a national, nonpartisan,
nonprofit organization working for media and technology policy in the public interest.
Free Press has been an outspoken critic of consolidated media ownership and of the
proposed Comcast/NBC Universal merger.

Free Press opposes the merger for several reasons. But beyond the technical factors, there
is a broader historical context that we ignore at our peril. Policymaking at the behest of
the largest companies - across industries - is threatening our economy, our oceans, our
security and the very viability of our democracy. Just look at the ongoing recession or the
Gulf of Mexico for the most recent examples.

Allowing the Comcast/NBC merger would be yet another giveaway to industry titans at
the public's expense. Insufficient government oversight has already allowed companies
like Comcast to overcharge customers who have no alternative providers when bills are
too high or service quality is too low. Failure of regulators to ensure competition and
reasonable prices has left our nation with broadband service that is far slower and far
costlier than in other nations. We've slipped from fourth to 22nd place in broadband
adoption in just the past decade.

With the proposed merger, the facts speak for themselves. Comcast is the nation's largest
cable operator, largest high-speed Internet service provider, and a leading provider of
regional cable sports and news. NBC Universal owns one of only four major national
broadcast networks and one of just two national Spanish-language networks. It is an
important producer of local and national news and has a major motion picture studio. The
proposed merger represents the first time that such a vast range of large media properties
would be housed under one corporate roof.

The merger would allow a single company to own a huge array of popular content, and to
exert excessive control over how it is distributed over the airwaves, cable and Internet.
Such dominance over any one of these provides sufficient reason for the FCC to block
the transaction. The merged giant's power over all three platforms requires that regulators
stop the deal.

By combining vast programming assets with distribution dominance, the merger would
dramatically increase Comcast's incentive and ability to raise prices, block competitive
entry, force bundles on other cable systems, and discriminate in carriage of competing
programming. For consumers, this would spell even higher prices and fewer
programming and provider choices - in a market that is already uncompetitive. It would
diminish media diversity, and hurt innovation in promising emerging markets, such as
online video.

Indeed, this would be the first major media merger since the deployment of Internet
technology capable of distributing high-quality video content. While the anticompetitive
effects would be felt across multiple sectors of content and distribution, it is the threat to
the nascent online video market that distinguishes this merger from previous deals.

Comcast ownership of NBC Universal films and content, as well as an equity stake in the
online site Hulu, provides the company with a powerful weapon to kill off emerging
Internet-based competitors before they even get off the ground. It would also increase
Comcast's incentive to degrade or block consumers' access to competing online video
providers. Furthermore, if Comcast decides to "enhance" access to its own content or to
degrade access to competing content or providers, the FCC does not currently have Net
Neutrality rules in place to protect consumers from this anticompetitive conduct. Even
more alarming, a court recently ruled that the agency lacks authority to even enforce Net
Neutrality and other key consumer protections.

The bottom line is this: With increasing broadband speeds, any website could have the
reach of a television or radio network, breaking open access and distribution of media
content, and allowing anyone with Internet access to have a voice in the public square.
This merger is a direct threat to that historic opportunity.

Locally, the implications of the deal are equally alarming. In Chicago, a merged
Comcast/NBC would own the dominant cable system, the dominant broadband system,
and not one, but two broadcast stations -- the local NBC affiliate, NBC-5, and the local
Telemundo affiliate, channel 44 - as well as all of NBC's cable networks, like CNBC.

That means Comcast would control cable access, Internet access and nearly a quarter of
all the commercial channels offered in the most popular "expanded basic" cable package.
These numbers give you a rough idea of how this merger will adversely impact the
people of Chicago. But it is even more essential to hear from the people themselves. To
that end, I commend the FCC for providing the public time during this forum to voice
their own concerns about how this merger will affect them and their communities.

I don't need to tell you that the FCC has a special role in reviewing this merger. The
agency is required by law to ensure that mergers will affirmatively promote the public
interest, convenience and necessity. What's more, Comcast and NBC bear the burden of
proving to the Commission that this transaction not only will not harm consumers and
competition, but that it will actually advance public interest goals. Comcast and NBC
have not made and cannot make this showing. Anyone who thinks they can is likely
among those who cheered the gutting of regulatory oversight of Big Banks and Big Oil.

Some have suggested that if we place conditions on the deal, everything will be OK. But
requiring conditions to neutralize the harms of a bad merger is not the same as ensuring that the merger affirmatively produces real public interest outcomes. Importantly, such
conditions would expire in a few years. With this deal, the anticompetitive incentives
would be part of the DNA of the merged company, making conditions with a shelf life
about as helpful as putting a Band-Aid on a broken leg.

The realities simply don't support the agency's blessing of the merger, and neither do the
American people. Once people understand the size and scope of the deal, they
overwhelmingly oppose it. Yet there exists a conventional "wisdom" in Washington,
D.C. that Comcast/NBC is a "done deal" that can be patched up with a few conditions.
Such conventional wisdom, however, is anything but wise. It is the result of tens of
millions of dollars spent by Comcast on PR firms, lawyers and lobbyists - many of them
former members of Congress - to cajole and arm-twist regulators, and manipulate public
opinion.

To embrace their rhetoric requires that we ignore the real threats, as was done with
financial and oil industry oversight. If the FCC follows suit, and puts Comcast's interests
ahead of the interests of the American people, it will cause irrevocable harm to our
nation's 21st century communications system. The stakes are that high.

Finally, I want to thank Commissioner Copps and the FCC staff for coming to Chicago.
However, I must express my disappointment that Chairman Genachowski chose to stay in
Washington instead of coming here. Washington is a bubble, and policymakers must
escape that bubble from time to time to hear from real people.

Consider that while the public interest community opposed many policies by former FCC
Chairman Kevin Martin, in one year alone, he held six full-fledged media ownership
hearings, bringing the full Commission to listen to hours of public testimony. The last
time the FCC was in Chicago, it was for the fifth of those hearings. All five
Commissioners stayed until 2 a.m. to listen to local people speak about why media
consolidation is bad for Chicago.

Chairman Genachowski found time last week to rub elbows with the most powerful
media and technology leaders at an elite conference in Idaho. It is a shame that he was
not able to be in Chicago to hear the voices of the people his agency is charged with
protecting. We call on Chairman Genachowski to follow the lead of his predecessors and
to hold more public hearings, with ample time for public input and full participation by
all FCC Commissioners.

I thank the Commission for this opportunity to speak, and look forward to hearing from
my fellow panelists as well as from members of the public. Thank you.

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