Judge rules Comcast’s Internet video plans are beyond CPUC’s reach

by Steve Blum • , ,

Internet video is a video service, not an Internet service.

Accusations that Comcast intends to begin selling video programming via the Internet won’t be considered by the California Public Utilities Commission administrative law judge reviewing its proposed merger with Time-Warner and market swap with Charter.

The problem, according to a report submitted by the CPUC’s office of ratepayer advocates (ORA), is that if Comcast gets into the Internet video business, it would be directly competing with other cable companies, like Time-Warner. That’s good. But if it buys Time-Warner, Comcast would be eliminating its major competitor in California and effectively become a monopoly. That’s bad. But it doesn’t have anything to do with broadband, according to yesterday’s ruling by ALJ Karl Bemesderfer

While video programming services require high speed broadband networks to function effectively, in themselves they promote the deployment of high-speed broadband only in the tenuous sense that potential demand for those services might stimulate the deployment of additional broadband capability. Reading the motion in the light most favorable to protesters, at most it demonstrates that Comcast and Time Warner have considered entering an interstate—or even an international—market which would be per se beyond the Commission’s jurisdiction. Treating those expressed intentions as materially impacting broadband deployment in California stretches the English language to the snapping point. In short, video programming issues of the sort discussed in [the ORA report] are beyond the Commission’s jurisdiction.

From a market perspective, the ruling is nonsense. Taking a competitor off the table and creating a monopoly in one line of business – video – will give Comcast huge market and financial power that it can leverage with other lines of business, like broadband.

But there’s a legal perspective, too. The CPUC took a big leap when it decided to review the broadband aspects of Comcast’s proposed deals. Adding video issues to any future decision could make it harder to defend when Comcast inevitably challenges it in court. The CPUC already has more than sufficient reason in the record to deny the merger, so nonsense notwithstanding, playing it safe might be a good idea.