American Cable Association board member Colleen Abdoulah warned the U.S. Senate that competition will suffer and consumers will face sharply higher monthly bills if the giant merger between Comcast Corp. and NBC Universal is approved without suitable conditions that meaningfully restrict the new company's ability and incentive to use its greatly enhanced market power in anti-competitive ways.
Abdoulah, President and CEO of WOW! Internet, Cable & Phone, told the Senate Commerce Committee that Comcast-NBCU's total control of so much "must have" content -- including 10 NBC TV stations, 10 regional sports networks, and more than twenty cable networks sold in an unbreakable bundle - will give the combined company much greater power over rival providers in the future than when Comcast and NBCU stood apart and competed for viewers and advertisers.
"Post-merger, we would be negotiating with one consolidated entity with much greater leverage to extract higher fees from operators and consumers," Abdoulah told the Senate panel on March 11. "We are going to pay substantially more for the same programming we distribute today if this merger is approved without conditions, and we will have little choice but to pass this on to consumers."
The pricing power of "must have" content was documented to the Federal Communications Commission by cable operator Suddenlink Communications, which showed that when one company negotiated carriage for two "must-have" broadcast stations, it was able to charge 20% more than a company that controlled a just single "must-have" station. The Department of Justice considers a proposed transaction as anti-competitive if prices are likely to go up by more than 5% after the deal closes.
Abdoulah's small cable company competes head-to-head with Comcast systems in an area covering approximately 1 million households in Chicago and Detroit. WOW! has 465,000 customers in Illinois, Indiana, Michigan and Ohio. On Feb. 4, Abdoulah also testified on the merger's significant harms before the House Subcommittee on Communications, Technology, and the Internet and the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights.
On all three occasions, Abdoulah clearly and consistently explained that Comcast-NBCU will have the power to drive up WOW!'s programming costs and force WOW! to distribute Comcast-NBCU content that WOW! customers do not want. The veteran cable operator executive said that forced carriage of unwanted cable channels will leave her company with less network capacity for broadband upgrades needed to meet surging demand for faster and faster download speeds.
She also noted that Comcast-NBCU is just as capable of harming rivals like WOW! by strategically withholding desired cable and online content, and possibly giving it up only at the conclusion of costly and protracted arbitration or some other form of dispute resolution.
Abdoulah called on the FCC and the DOJ to consider "structural and behavioral relief" that at a minimum would strengthen program access rules that are rife with loopholes and allow for discriminatory pricing, prohibitively expensive arbitration and no ability to continue carry programming while contract disputes are pending.
"The goal is to prevent increased consumer pricing, prevent competitors from being squeezed out, and set a positive precedent for future mergers of this type," Abdoulah said.
Abdoulah testified on behalf of WOW! and nearly 900 ACA members who are deeply troubled with the Comcast-NBCU merger. ACA is fully committed to discussing appropriate merger conditions with FCC and DOJ officials. Abdoulah testified at the same hearing as FCC Chairman Julius Genachowski and U.S.Assistant Attorney General for Antitrust Christine Varney.