Connect with us

Big Tech

Analysis: CNBCU Conditions Will Stimulate Growth, Not Restrict It

The Federal Communications Commission’s recent approval of Comcast’s purchase of NBCU has come with some major conditions that will limit any potential discriminatory policies the new firm might have engaged in.

The new entity, CNBCU, will become one of the nation’s largest content creation and distribution companies. CNBCU will be in a unique position in that they will not only control the creation of content but also the method in which it is distributed. Unchecked, this vertical integration could lead to monopolistic actions.

Published

on

The Federal Communications Commission’s recent approval of Comcast’s merger with NBCU has come with some major conditions that will limit any potential discriminatory policies the new firm might have engaged in.

The new entity, CNBCU, will become one of the nation’s largest content creation and distribution companies. CNBCU will be in a unique position in that they will not only control the creation of content but also the method in which it is distributed. Unchecked, this vertical integration could lead to monopolistic actions.

In his dissent to the merger, Commissioner Michael Copps said, “[this merger] confers too much power in one company’s hands.” However, with the conditions imposed by the commission, CNBCU, while powerful, will be unable to act in a monopolistic manner.

While some critics have called the FCC’s conditions restrictive, they are directed at potential areas where the new firm could do direct consumer harm. The main goal of these policies is to protect consumer welfare once CNBCU becomes a major market force in all of the cable, broadband, and online video markets. The FCC worked with the Department of Justice to include provisions that will ensure that the new firm will not violate anti-trust regulations.

The conditions placed upon the merger will guarantee the consumer welfare is protected while also supporting a vibrant marketplace.

The most prominent anti-discriminatory directives – compliance with the Open Internet Order –  is a major factor in ensuring broadband competitiveness. CNBCU will become one of the nation’s largest internet service providers offering access in over 30 states. The merger agreement mandates that the firm must follow all the provisions of the FCC’s Open Internet Order. Even if the Order is modified or struck down in court, CNBCU must adhere to the rules and regulations within the Order.

Compliance with the Open Internet Order by such a large player in the market will not only affect CNBCU but also its competitors.  To remain competitive with CNBCU’s open network, market pressure will mount for rival ISPs to follow the Open Internet Order as well. Given a choice between the open CNBCU network and a potentially closed or limiting internet service, consumers will likely pick the open network.

Verizon and MetroPCS have already filed suit against the FCC over the Open Internet Order; however, regardless of the outcome it will presumably be adopted by all major ISPs. The market power that CNBCU holds will ensure that its competitors will also follow the same rules to offer a competitive product.

CNBCU will be in a unique position of being a content provider and content maker. It will also be the largest player in the emerging online video distribution market. CNBCU will control nearly 5 percent of the online video distribution market including Hulu, Daily Candy, and NBC.com. Additionally CNBCU has signed a lucrative deal with Netflix to offer a large back catalog of content.

The online video market is growing faster than ever as more consumers “cut the cord” and drop traditional cable in favor of online video. The research firm SNL Kagan, estimates that 741,000 customers dropped their cable subscriptions.

CNBCU will presumably earn more revenue from advertising on its traditional cable properties than its online video properties.  The Commission, recognizing the financial incentive for CNBCU to force consumers to watch their programming over cable versus online video distributors, explicitly forbids the blocking or degrading of online video content. This anticipation shows that the FCC believes this emerging market will soon take off and become a major way in which consumers will access content.

The most prominent of these online video distributers is the popular free website Hulu, in which CNBCU – along with ABC and News Corp. – holds a major stake. The website is a limited alternative to traditional cable access. Since CNBCU competes with Hulu in the cable market, however, the FCC is justified that CNBCU may try to limit Hulu. In fact, the 2010 Comcast v. FCC case sprung from accusations that in 2007, then standing alone, Comcast degraded service to services such as Hulu and Skype, which provided free alternatives to their cable and telephone products.  The merger conditions restrict CNBCU from exercising any operational power over Hulu, but it will be allowed to keep its financial stake in the firm. To ensure that Hulu continues to get content from CNBCU at a fair price the FCC has mandated that CNBCU must maintain its current contract with Hulu and continue to provide the same level of content that its partners provide. By maintaining its financial stake in Hulu CNBCU will presumably want the company to do well and provide it with quality programming.

To prevent any exclusionary deals that would prevent other cable providers from access to its online video, the Commission has mandated that CNBCU must offer its online content to others at a reasonable market rate.

Additionally CNBCU is prohibited from offering to its broadband subscribers specialized online video content that includes only NBC programming. In order to offer an online video service the firm must include programming from outside sources as well. However, with its stake in Hulu it seems unlikely that the firm will launch a new online video service.

The online video conditions may seem unnecessary due to the relative size of the market in comparison to that of cable, but online video is continuously growing. The concern by the FCC over the market indicates that the Commission anticipates it becoming a prominent method of watching television and movies in the near future. If CNBCU blocks access to its content, it will severely hinder the growth of the online video market.

While some may claim that the conditions imposed by the FCC on the merger is strong handed government overreaching by the commission, these conditions actually promise to create new markets while protecting consumers and preventing years of anti-trust litigation.

Big Tech

Proposed Antitrust Legislation Not the Way to Regulate Big Tech, Panelists Say

Legislation currently before Congress will hurt American tech’s global competitiveness, event hears.

Published

on

Screenshot from the Foreign Policy event on Thursday

WASHINGTON, June 29, 2022 – Critics at a Foreign Policy magazine event blasted the efforts of the Federal Trade Commission and lawmakers to crack down on Big Tech, saying legislative efforts could impact America’s global competitiveness in the tech industry.

On Thursday, panelists were divided on how Washington should approach antitrust legislation proposals, referencing six antitrust bills introduced to Congress in June 2021 that target big tech companies. Those bills – including the American Choice and Innovation Online Act, H.R. 3816, Platform Competition and Opportunity Act, H.R. 3826, Ending Platform Monopolies Act, H.R. 3825, Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, H.R. 3849, Merger Filing Fee Modernization Act, H.R. 3843, and State Antitrust Enforcement Venue Act, H.R. 3460 – aim to rein in the power of Big Tech through anticompetitive measures, new merger and acquisition review, and providing government enforcers more power to break-up or separate big businesses.

Sean Heather, senior vice president of international regulatory affairs and antitrust from the U.S. Chamber of Congress, criticized current antitrust laws saying it will hurt U.S. competition in the global world. He said “the answer is not to do it through antitrust” or implementing “sweeping judgement” that puts all businesses under one rubric. Instead, he suggested “targeted legislation” that would address individual issues of each business.

Clete Willems, from the Atlantic Council’s geoeconomics center, said that many of the proposed antitrust laws are ineffective. He stated a major flaw of these bills is that they penalize big technology companies because of their size, instead of for abuses of market power in common business practices.

Willems said that the bills simply ban “big tech companies because they are big but are not tying it to abuse of market power. That to me illustrates the fundamental problem with this agenda.”

Some panelists echoed flaws presented by Robert Atkinson, president of the Information Technology and Innovation Foundation in April, saying that antitrust regulation could hamper U.S. competition in the tech world or negatively hurt customers, as FTC Commissioner Noah Phillips said in May.

Continue Reading

Antitrust

‘Time is Now’ for Separate Big Tech Regulatory Agency, Public Interest Group Says

‘We need to recognize that absolutely the time is now. It is neither too soon nor too late.’

Published

on

Photo of Harold Feld, senior vice president at Public Knowledge

WASHINGTON, June 21, 2022 – Public Knowledge, non-profit public interest group, further advocated Thursday support for the Digital Platform Commission Act introduced in the Senate in May that would create a new federal agency designed to regulate digital platforms on an ongoing basis.

“We need to recognize that absolutely the time is now. It is neither too soon nor too late,” said Harold Feld, senior vice president at Public Knowledge.

The DPCA, introduced by Senator Michael Bennet, D-CO., and Representative Peter Welch, D-VT., would, if adopted, create a new federal agency designed to “provide comprehensive, sector-specific regulation of digital platforms to protect consumers, promote competition, and defend the public interest.”

The independent body would conduct hearings, research and investigations all while promoting competition and establishing rules with appropriate penalties.

Public Knowledge primarily focuses on competition in the digital marketplace. It champions for open internet and has openly advocated for antitrust legislation that would limit Big Tech action in favor of fair competition in the digital marketspace.

Feld published a book in 2019 titled, “The Case for the Digital Platform Act: Breakups, Starfish Problems and Tech Regulation.” In it, Feld explains the need for a separate government agency to regulate digital platforms.

Digital regulation is new but has rapidly become critical to the economy, continued Feld. As such, it is necessary for the government to create a completely new agency in order to provide the proper oversight.

In the past, Congress empowered independent bodies with effective tools and expert teams when it lacked expertise to oversee complex sectors of the economy but there is no such body for digital platforms, said Feld.

“The reality is that [Congress] can’t keep up,” said Welch. This comes at a time when antitrust action continues to pile up in Congress, sparking debate across all sides of the issue.

Continue Reading

Big Tech

Young American Views on Social Media Regulation Shaped by Use, Panelists Discuss

A March Gallup and Knight study found young Americans are less concerned about hurtful online discourse.

Published

on

Photo of Gallup Event

WASHINGTON, June 13, 2022 – Panelists at a Gallup event on Wednesday said young American’s use of social media primarily as an entertainment source shapes their views on tech regulation.

The view comes after a March study by Gallup and Knight said that young Americans aged 18 to 34 are less likely to stay within partisan boundaries about tech regulation. The study of 10,000 adults sought to compile American views on internet regulation and found that young adults are less likely to be very concerned about hurtful discourse online than adults 55 and older.

The report outlined a dichotomy between older and younger generations, with the report indicating that younger Americans are more motivated to participate in “traditional” civic behaviors like attending protests or donating to social causes as a result of social media than their older counterparts.

The older generation, on the other hand, generally use social media as a news source, the report claimed.

The study comes amid debate about what types of antitrust action needs to be taken by Washington on big tech companies with respect to content management. Some Americans are concerned that social media platforms allow for the spread of misinformation and hate speech. The study was conducted to better understand how U.S. citizens view regulation of online content and the responsibility for the internet’s governance.

The study developed six broad sample groups. One of these groups was “the unfazed digital natives,” characterizing 19 percent of the population. This group was the youngest of segments and favored, regardless of party affiliation, “individual responsibility and a hands-off approach by the government. Nevertheless, they support some degree of content moderation by social media companies.”

Continue Reading

Recent

Signup for Broadband Breakfast

Get twice-weekly Breakfast Media news alerts.
* = required field

Trending