Comcast has to clean up its act if it wants to merge in California

by Steve Blum • , , , ,

How about starting with some botox and a manicure?

If Comcast wants approval for its mega merger and market swap with Time-Warner and Charter, it’s going to have to meet some stiff, if mostly temporary, conditions. That’s the preliminary determination of a California Public Utilities Commission administrative law judge in his review of the deal.

The proposed decision – there’s still some back and forth to come, and final approval is subject to a vote by the five commissioners – reaffirms that the CPUC has authority under federal law to assess the impact of the merger on broadband, as well as telephone, service in California. It rejects calls to prevent the merger completely, instead imposing broadband (and telephone) performance, pricing and build out requirements on what would be a greatly expanded Comcast.

As the proposed decision notes, Comcast’s share of Californian homes would grow from 34% to 84% and regarding “the provision of broadband speeds at or above 25 Mbps, which represents Comcast’s standard broadband offering and is considered the FCC’s benchmark broadband speed, almost 80% of Californians will have Comcast as their only provider”.

Those conditions would require Comcast to…

  • Build out broadband service to every home in its new territory that currently gets cable TV service within 2 years, and expand into some nearby areas.
  • Within five years, ensure that all homes in its service area can get broadband service at 25 Mbps down/3 Mbps up. That’s the new FCC standard, which the proposed decision would also “take official notice of”.
  • Offer many services, including standalone Internet access, to its entire expanded service area at Time-Warner rates. Time-Warner sells standalone Internet service at prices ranging from $15 per month for 3 Mbps to $45 per month for 100 Mbps. This price cap would last five years.
  • Expand its $10 per month Internet package for low income households to its new service area, hit hard benchmarks for selling it, and up the service level to 10 Mbps down/1 Mbps up.

There’s more, including provisions for schools and libraries, customer service and reporting standards, supplier diversity, handicapped access, lifeline and 911 service and battery back ups. My favorite, though is…

Comcast shall for a period of five years following the effective date of the parent company merger neither oppose, directly or indirectly, nor fund opposition to, any municipal broadband development plan in California, nor any CASF or CTF application within its service territory that otherwise meets the requirements of CASF or CTF.

That won’t stop Comcast’s lobbying efforts, but it will blunt some of its nastier tendencies.

There’s a lot that has to happen before any of this would take effect. Not only does it have to survive review by the commission and inevitable court challenges, but the merger has to be approved at the federal level too. And then there’s next week’s impending decision by the FCC to bring broadband under common carrier rules: to a certain extent, this proposed decision might be read as anticipating that change, but a completely new regulatory regime might also require a complete rewrite.

Download the full text of the proposed decision here.