Comcast Xfinity customers in 14 states and D.C. are about to get a bump in Internet speeds. As of Wednesday, the company is more than doubling its mid-tier Xfinity Internet Blast tier to 105 Mbps, and customers using its 105 Mbps tier will be increased to 150 Mbps, at no extra charge.
Comcast's executive vice president David Cohen promises that there's more to come if regulators approve the company's proposed merger with Time Warner Cable. Testifying before the Senate Wednesday, Cohen vowed to bring "more investments, faster speeds," and expand Comcast's program for low-income broadband subscribers to current Time Warner Cable subscribers.
But pressed by lawmakers about the changes, Cohen also said that many of the benefits would be implemented for Comcast customers either way — they'd just be accelerated if the merger went through.
That introduces a trade-off. All the other questions about customer service and consumer protection aside, one of the biggest questions to be raised by Wednesday's hearing is whether lawmakers should use a carrot or a stick to press Comcast to roll out these benefits. The carrot -- allowing the merger with Time Warner Cable -- would allow Comcast to turn on its expanded scale. The big stick: denying the merger Comcast seeks and putting it at greater risk from competitors who would like nothing more than to knock the cable company out of its top position in broadband, video and potentially telephony?
The carrot approach would give Comcast the benefit of the doubt, while opening the way for regulators to impose conditions on the merger. There's some precedent for this. When Comcast purchased NBC Universal, Comcast was forced to comply with the Federal Communication Commission's net neutrality rules at least through 2018, and it made other commitments with respect to media diversity and low-income broadband access. A recent report from Comcast showed that it had made significant strides on meeting those goals. (An aside: When asked by lawmakers whether Comcast would recommit to net neutrality beyond 2018, Cohen did so in a roundabout way, saying that by then he would expect the FCC to have drawn up new, enforceable rules to replace the ones that got struck down by a federal court earlier this year. He didn't make any mention of a voluntary commitment.)
"When Comcast makes promises, it keeps them," said Cohen in his written Senate testimony Wednesday.
Adding conditions to the merger is one lever the government could pull again to ensure that Comcast moves forward with its promises (and perhaps to extract bigger commitments in the process).
On the other hand, it's not clear whether that would be substantially better than the alternative.
Doesn't Cohen's constant reliance on mrgr cndt'ns make us question value of #ComcastTWC cndt'ns? Is the juice worth the squeeze? Doubt it
— Jonathan Lee (@telecomsense) April 9, 2014
Google Fiber has pretty convincingly shown in places like Austin that new broadband entrants can encourage existing providers to increase their own speeds. City governments are increasingly interested in building their own high-speed fiber optic networks — an initiative that has led to resistance from incumbent cable companies that stand to lose customers as a result of the publicly operated infrastructure. The FCC has signaled its interest in aiding those municipal efforts by pre-empting state laws that in some cases ban cities from building their own broadband services.
Comcast would likely argue that encouraging these competitive alternatives to grow would not measurably speed its own deployment of new services and upgrades nearly as quickly as letting the Time Warner Cable merger through. But nurturing those alternatives capitalizes on the market's competitive incentives. Granting the merger does nothing to change Comcast's existing disincentives to upgrade. To let Comcast have its way is to trust that the company will follow through.
Senators spent much of their allotted time Wednesday asking for assurances that consumers would not be harmed by the merger. But maybe the operative question is what regulators can best do to speed Comcast's continued upgrades — merger or no merger.