Telephone and Broadband Universal Service, Consumer Protection, and Rate Concerns Raised at Hearing on Comcast Takeover of Time Warner

At a June 18, 2014 Public Service Commission informational forum regarding the proposed acquisition of Time Warner by Comcast, the Utility Project’s Executive Director identified concerns with the Joint Petition regarding telephone and broadband universal service, affordability, consumer protection, and rates.  He pointed out in a written Statement that

  • Time Warner, with its 1.2 million phone customers, is the state’s second largest telephone company.
  • Telephone subscribership in New York continued to fall as the number of telephone customers served by cable VOIP providers grew.
  • FCC reports show New York State household telephone subscribership has fallen to third from the bottom nationally.
  • Close monitoring of service denials and terminations is warranted to improve performance toward a subscribership goal
  • Lifeline assistance should be expanded to reach all eligible low-income telephone customers and improve affordability.
  • Comcast should be recognized by the PSC as a telecommunications service provider like Time Warner, and should make Lifeline assistance available and provide state consumer protections to Comcast’s phone customers.
  • Time Warner should not be allowed to disavow its status as a telephone company subject to universal service and state regulation, including consumer protection rules.
  • Time Warner’s New York state telephone service quality reports now filed with the Commission as claimed “trade secrets”  should be made public.
  • Corrective measures should be required for any failure of Time Warner to satisfy state telephone service quality standards.
  • Without rate protection there is a risk of post-merger rate increases, recovery of merger costs from customers, and insufficient investment to maintain and improve networks.
  • Time Warner and Comcast Rates should be reviewed for reasonableness and established prospectively if the merger is approved.
  • Broadband internet service is part of utility service because the cable companies utilize the public streets and public highways and their powers to enter onto private property to operate their businesses.
  • This use of public resources and utility powers carries with it the obligation to provide services at just and reasonable rates to all, without discrimination, even if statutes do not address the provision of internet service over cable TV or phone lines.
  • With Verizon halting its expansion of its fiber broadband network service (FIOS), there is a risk that in the absence of real competition, for example in Albany, Comcast and Time Warner have market power and will not maximize the social utility of expanding high speed broadband in New York, will not upgrade existing slow networks, or will refuse to build out their networks in less densely populated areas, even though profitable, and may deploy their capital investments in other jurisdictions where higher returns are possible.
  • Goals should be set to expand availability and reliability of affordable, high speed broadband to all New Yorkers in areas served by Comcast and Time Warner.
  • Comcast’s Internet Essentials plan with reduced rates for new customers with low incomes does not provide affordable broadband service to current Comcast customers with equally low incomes.
  • Longstanding New York common law utility principles bar unequal treatment of broadband customers.
  • The Joint Proposal makes no commitment regarding future rates of Comcast and Time Warner or eschew the collection of merger related costs from captive customers.
  • The Joint Petition lacks data regarding the proposed acquisition, DPS discovery questions are not public, and all the answers of Comcast and Time Warner to Staff interrogatories are being filed as claimed “trade secrets” and are not in the public record.
  • No advocate for consumers or competitors is an active party conducting discovery in the case.
  • Thus far,  the public record of the case does not contain sufficient evidence to support a conclusion that the proposed takeover of Time Warner by Comcast would result in significant net positive benefits achievable only through the transaction that outweigh the risks to universal service and consumer protection.  Thus, the proposal fails to pass muster under the customary public interest standard utilized by the PSC for merger approvals..

Gerald A. Norlander

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