Comcast, Time Warner Cable and Net Neutrality

Five Predictions for the Connected Enterprise in 2014

Whether or not an individual has a bright or dim view of the acquisition of Time Warner Cable by Comcast, the deal will crystallize the issue underlying net neutrality: Under what circumstances, if any, can an ISP monkey with the attributes of a connection that it is hosting between a third-party content provider and the public.

Comcast has the deepest history of dealing with the government on this issue. Last September, PCWorld’s Grant Gross gave a year-by-year rundown on net neutrality, dating back to 2004. Comcast makes repeated appearances beginning in 2007. The pattern is consistent: Comcast asserts control and is accused of slowing traffic and the Federal Communications Commission (FCC) tells it to stop.

The deal comes at a point when net neutrality is a hot topic. Last month, the United States Court of Appeals for the District of Columbia basically voided the net neutrality rules. At that time, the cable operator said that it would abide by the current rules until 2020, the date set in last year’s agreement under which Comcast was allowed to acquire NBCUniversal. And again, in the announcement this morning, Comcast said that the newly constituted supergiant would abide. (See the bottom of page 17 of Comcast Chairman and CEO Brian Roberts’ investor presentation on the deal.)

A Wall Street Journal piece posted at MarketWatch by Gautham Nagesh and Brent Kendall tackled the issue:

Last month the U.S. Court of Appeals for the District of Columbia Circuit struck down most of the FCC’s Open Internet rules, leaving the Commission with few options to ensure Internet service providers don’t discriminate between competing content companies. Meanwhile, Comcast has said it would continue to honor its agreement with the FCC. Expanding Comcast’s net neutrality agreement to cover Time Warner Cable subscribers would give the Commission a backdoor to enforce net neutrality on roughly a third of the nation’s broadband subscribers.

If Comcast is serious, a short-term payoff exists for those favoring an open Internet. Even today, Comcast sets the agenda for the cable industry. The supersized company would almost certainly bring the rest of the cable world along with it, as well as other types of service providers, in offering a level playing field.

Of course, the negotiations with the government over approval of the deal will have to build in all sorts of guarantees, sanctions and other ways of ensuring that Comcast remains good to its word. The government almost certainly will try to make the conditions that Comcast has agreed to until 2020 permanent.

The downside for net neutrality proponents is that the move from a landscape in which net neutrality is entrenched in law and one in which it is based on a pledge by the party being controlled (and doesn’t extend in any real way beyond that company) is a clear step backwards. At some point, Comcast executives will realize that it is up to their shareholders to play with the broadband speed dial. It will be legal. Comcast may almost have to put its digital finger on the bandwidth scale.

While it is possible that a future administration would not enforce net neutrality laws, having them on the books still is better than relying on a pledge that may not be extended or, perhaps, extended and then renounced.

The negotiations between the U.S. Justice Department, the FCC and Comcast will be vital and interesting. Whatever the outcome, the government should simultaneously pursue policies and legislation that maintain an open Internet.