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Policy

DOJ Will Monitor Impact of Cable Prices, Bundles On Consumers

New Competition Cop Pledges That as One Focus of Antitrust Division 4/16/2013 1:33 PM Eastern

The Department of Justice's new antitrust enforcer pledged to the Senate Tuesday that monitoring merger deal conditions and cable pricing and bundles and the ability of consumers to drop MVPD service in favor of free online fare would all be major focuses for his division.

That came in an antitrust oversight hearing in the Senate Antitrust Subcommittee featuring William Baer, assistant attorney general in the DOJ antitrust division, and new Federal Trade Commission chairwoman Edith Ramirez.

DOJ and FTC share antitrust oversight of mergers, along with the FCC for communications mergers that involve transfers of licenses.

Sens. Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.) focused in on communications issues.

Franken began his questioning of the witnesses by saying that consumers were having a time stretching the family budget to pay for $200 cable bills and $200 mobile phone bills. "These markets are very consolidated," he said.

Franken, who was among the harshest critics of the Comcast/NBCU merger and had issues with Verizon's purchase of spectrum from Comcast and the other SpectrumCo. partners, invoked both in asking for the pledge from Baer.

"The Comcast/NBCU merger and agreements like the one between Verizon and big cable companies [he appeared to be talking about the SpectrumCo. deal] are going to make it harder for consumers to find affordable options."

He pointed to longstanding reports that Justice is investigating most-favored-nation clauses in the communications industry. "I want to urge you to continue that work and to keep a close eye on the terms of the Comcast/NBCU deal and the [SpectrumCo] agreement."

He said the agreements mean nothing if they are not "properly and aggressively monitored and enforced." He got Baer to pledge to do just that. But the Justice official had not yet earned his antitrust merit badge.

Franken said he was worried about the broadband market, saying Comcast had previously imposed "discriminatory data caps on its customers," while others had artificially raised the price of stand-alone broadband--he did not name names--in order to "force customers to buy expensive bundles."

He elicited a second pledge that Baer would keep an eye on that market to make sure that consumers would be able to cut the cord and watch online video rather than "pay for expensive pay TV service."

"Senator, that is a key part of our mission and I can make that commitment to you," said Baer.

Blumenthal focused on the upcoming FCC spectrum auctions, setting Baer up with questions that allowed him to echo comments to the FCC last week that Justice supported a spectrum screen that gave different weights to different spectrum--lower-band spectrum being more valuable than higher for mobile wireless--when it was coming up with auction rules to create a level playing field. He also reiterated that the FCC should take factors like whether some carriers were hoarding spectrum into account when drawing up its rules.

Baer said DOJ had been working "cooperatively and quietly with the FCC on these difficult policy choices."

Blumenthal seemed fine with that, but ranking subcommittee member Mike Lee (R-Utah) said he was concerned that the government would be "meddling" in the competitive bidding process to pick winners and losers.

Lee said antitrust is meant to protect consumers, not subsidize certain carriers. He asked Baer about Justice's comment to the FCC that it should take a "close look" at whether some carriers are hoarding and whether it was Justice's view that absent government intervention, larger carriers will hoard it, meaning perhaps their spectrum needs are already met. The Obama Administration has been unequivocal in their view that carriers need more spectrum, which is the driving force behind the auction of broadcast spectrum.

Baer said DOJ was urging the FCC to look at possible warehousing since that has the ability to affect competition "downstream" and to factor that into whether the playing field was level.

September