Californian conditions on Comcast merger may be trumped by FCC

17 March 2015 by Steve Blum
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The ref seems okay with it.

Comcast correctly anticipated the details of the FCC’s Internet common carrier ruling when it objected to conditions that a California Public Utilities Commission administrative law judge wants to slap on its mega merger and market swap with Time-Warner and Charter. In its response to the CPUC’s proposed decision, Comcast said…

The [CPUC] Proposed Decision directly conflicts with this new federal policy by imposing a host of requirements pertaining to rates, service terms, and wholesale offerings, as well as burdensome reporting obligations…These are necessarily interstate offerings, and as such, the [CPUC] is preempted under long-established principles of federal law from regulating broadband services in the ways suggested in the Proposed Decision.

The FCC’s decision, which Comcast should not have seen before it was published last week, says much the same thing…

The [FCC] has previously found that, “[a]lthough . . . broadband Internet access service traffic may include an intrastate component, . . . broadband Internet access service is properly considered jurisdictionally interstate for regulatory purposes”…

The [FCC] has used preemption to protect federal interests when a state regulation conflicts with federal rules or policies, and we intend to exercise this authority to preempt any state regulations which conflict with this comprehensive regulatory scheme or other federal law. For example, should a state elect to restrict entry into the broadband market through certification requirements or regulate the rates of broadband Internet access service through tariffs or otherwise, we expect that we would preempt such state regulations as in conflict with our regulations.

The proposed decision in front of the CPUC would do a number of things that the FCC specifically bans – forbears, as it puts it – including specifying prices, plans and services that the new merged and melded Comcast would have to offer in California. Comcast’s battalion of Philadelphia lawyers would gleefully chew through any such CPUC conditions, as they have repeatedly threatened to do. Which would turn a heavily conditional approval into, effectively, an unconditional one.

The CPUC isn’t powerless, though. It can still refuse to approve the merger, albeit with the certainty of a legal challenge and the possibility that the FCC has Comcast’s back on that too. But it beats unconditional approval.