U.S. Sen. Franken sees higher prices if Comcast buys Time Warner Cable

WASHINGTON Thu Feb 27, 2014 7:54pm EST

WASHINGTON Feb 27 (Reuters) - U.S. Senator Al Franken warned telecommunications regulators on Thursday that Comcast Corp's proposed acquisition of Time Warner Cable Inc could mean "higher prices, fewer choices, and even worse service for consumers."

Comcast, the largest U.S. cable company, said on Feb. 13 it had agreed to acquire No. 4 Time Warner Cable for $45.2 billion. The proposal faces reviews from U.S. regulators who will study its effect on competition.

In a letter to Federal Communications Commission Chairman Tom Wheeler, Franken, a Minnesota Democrat, said Comcast had failed to live up to a long list of promises made when its 2011 agreement to acquire NBC Universal won U.S. approval.

Comcast responded that it was "proud of our track-record on complying with the conditions from our past transactions."

"We've gone above and beyond in compliance with most conditions, including our low-income broadband program, the amount of local news programming and investment in local stations, the amount of on-demand programming, especially children's programming," said spokeswoman Sena Fitzmaurice.

Franken complained that Comcast had interfered in 2007 with BitTorrent, a peer-to-peer network that Comcast viewed as a competitor to its cable offerings.

The FCC subsequently passed rules requiring all data be treated equally by Internet providers, although those rules were struck down by a federal appeals court. Comcast agreed, however, in 2011 to net neutrality provisions to win approval for the NBC Universal deal. Net neutrality requires that all data be treated equally by Internet providers.

Still, Franken said, "The underlying merits of the dispute and the conduct at issue remain relevant to the FCC's consideration of Comcast's proposed acquisition of Time Warner Cable."

Franken also cited a study by the Free Press consumer advocacy group, which found Comcast had failed to live up to promises to increase local news and programming. "The FCC should scrutinize whether these allegations have merit," Franken wrote.

He also questioned whether Comcast had lived up to promises to provide reasonably priced broadband to customers who did not take cable.

Franken noted that the advocacy group Public Knowledge, had petitioned the FCC in 2012 to look into Comcast's use of data caps for some users. "The FCC should examine this issue in connection with Comcast's proposed acquisition," he wrote.

COMCAST DEFENDS DEAL

A source close to Comcast said on Thursday the company had no data caps, which limit Internet use, outside of a few test areas. The source was not authorized to speak on the record and requested anonymity.

In an early 2013 report that Comcast did on its merger with NBC Universal, the company said it had introduced three independent networks, was investing in news and children's programming and had donated broadband access to schools, libraries and areas with many low-income residents.

Comcast has argued that the combination would not reduce competition because the two cable providers do not compete in any markets. The company pledged to divest 3 million subscribers, so the combined customer base of 30 million would represent just under 30 percent of the U.S. pay television video market.

An FCC spokesman declined to say whether the agency was looking any of the allegations made by Franken.

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