Between The Lines

Cable World, Dec 2, 2002

Byline: ALICIA MUNDY

The surface calm surrounding the Federal Communications Commission's approval of the merger between AT&T Broadband and Comcast may belie major churning within the agency involving alleged or potential monopoly behavior by Comcast and other cable companies.

The FCC recently put the National Cable and Telecommunications Association on notice that the industry should study carefully the official order OKing the Comcast deal and what was contained therein. Specifically, the NCTA was told to take note of the sections on predatory pricing and on "clustering's" effect on competitors' access to video programming, such as that carried by MSO-owned sports networks (Comcast owns Comcast SportsNet in the Mid-Atlantic and Southeast). Those issues have implications for Comcast as well as other members of the NCTA and have been "teed up" for separate review in other proceedings by the FCC. Chairman Michael Powell is "very concerned" with these two trends, say staffers.

"The Commission has noted with satisfaction that terrestrial MVPD [Multiple Video Program Distributors] competition has begun to emerge in several markets," said Ken Ferree, chief of the Media Bureau. "Anticompetitive acts or practices designed to choke off this incipient competition will be dealt with as immediately and forcefully as possible consistent with our statutory authority."

Although the FCC said in its Nov. 14 order that it found no evidence against Comcast regarding predatory pricing, the FCC said, "The applicants may well have engaged in questionable marketing tactics and targeted discounts designed to eliminate competition," and went on to express concern that MVPD distributors and overbuilders could be strangled by targeted price discounts. The FCC confirmed that it is investigating a predatory pricing complaint against Comcast by WideOpenWest in the Detroit area. In addition to individual investigations, predatory pricing will probably be included in the current review of uniform pricing at the FCC, said a staffer.

The potential stifling of video distribution by cable companies employing a clustering strategy is also now under scrutiny at the agency in its review of horizontal ownership limits. In the order, the FCC said, "Because the issue of regional clustering is an industrywide phenomenon, we will consider in our pending rule-making proceeding the relative harms and benefits of clustering as it may affect the flow of local and regional programming to consumers."

The program access rules exempt terrestrially delivered programming. However, in a footnote, the FCC pointedly reminded MSOs that federal law requires the FCC "to ensure that cable operators affiliated with video programmers do not unreasonably restrict the flow of the video programming of such programmers to other video distributors."

Asked about these issues and the cautionary briefing from the FCC, the NCTA declined to comment, noting only that "We were not a party to those proceedings, the AT&T Comcast merger." However, FCC staffers said that the point of reminding the NCTA about the various land mines in the Comcast order is that they could impact NCTA members, including Comcast, in the near future. "Just because we approved the merger doesn't mean we don't take these problems seriously," said one longtime staffer. The words in this order have teeth in them, he added.

THE NEXT QUESTION:

*Will the addition of Democrat Jonathan Adelstein to the FCC move the agency to scrutinize cable rates more closely?