A Perfect Storm Of Comcast Unaccountability Is Brewing

If you've been napping, Comcast lobbyists recently convinced the government to kill net neutrality rules, dismantle broadband privacy protections, and bury efforts to make the cable box market more competitive. And they're just getting warmed up. Comcast lobbyists have also successfully convinced the Trump administration to eliminate nearly all state and federal oversight of large telecom monopolies. Should they be successful, consumers and innovators will face a massive new era of little to no accountability for one of the most despised, least-competitive business sectors in America.

This new wave of regulatory capture comes at an inopportune time for American consumers and the nation's startups. Comcast was already facing less broadband competition than ever in many markets thanks to incumbent telcos effectively giving up on upgrading millions of aging DSL lines. With neither government oversight nor healthy competition present to keep Comcast in check, the company's awful customer service has become legend, and the rise of arbitrary, unnecessary fees and usage caps have become the norm.

As an added bonus for Comcast, the conditions applied to the company's 2011 merger with NBC just expired over the weekend, raising additional concerns about the potential impact of an unshackled Comcast on the emerging streaming video market. Those conditions prohibited Comcast from charging streaming competitors unfair rates, or from meddling in Hulu management to prevent disruption of Comcast's own services. They also required Comcast adhere to some aspects of the FCC's 2010 net neutrality rules, even if they were dismantled in court (they were).

With the DOJ suing to block AT&T's own media megamerger, some FCC Commissioners are wondering why Comcast gets a free pass here:

Tomorrow the merger conditions preventing Comcast-NBCU from discriminating against competitors will expire. Now 7 yrs later, @TheJusticeDept is challenging ATT's merger w/ TW on the same grounds that led @FCC to impose conditions on Comcast. Has anything really changed?

- Mignon Clyburn (@MClyburnFCC) January 19, 2018

On the one hand, several of the conditions didn't mean all that much, since voluntarily proposing your own meaningless conditions is a long-standing tradition in the telecom space. And in many instances Comcast was found to have ignored them completely, a lack of trust in Comcast's word being one of the reasons that regulators blocked Comcast's attempted acquisition of Time Warner Cable. Still, some of the conditions were important, and last year analysts warned that their expiration could allow Comcast to find new, creative ways to screw over competitors and consumers:

"The conditions have served as backstop against any concern about anti-competitive behavior that would have arisen," said Craig Moffett, an analyst at MoffettNathanson LLC.. "All those concerns will be front and center again if Comcast is completely unshackled from these rules."

Comcast, for its part, unsurprisingly argues that oversight of Comcast is no longer needed because the streaming video market is just so damn competitive:

"All of the market segments in which we do business are more robust and more competitive now than they were before our NBCUniversal transaction, including the explosive growth of online video distributors," a company spokeswoman said.

But again, we're not just talking about the death of NBC merger conditions. Should Comcast's assault on net neutrality survive the courts, and should ISPs be successful in gutting FCC, FTC, and state oversight of ISPs, things could get cumulatively very stupid, very quickly. There could soon be literally almost nothing standing between Comcast and an ocean of anti-competitive possibilities, whether that's using unnecessary usage caps to make streaming video from competitors be more expensive, or using licensing restrictions to try and drive competing services out of business.

Under this new zero-oversight scenario, Comcast could easily use interconnection shenanigans to drive up rates for competing content companies. It could engage in paid prioritization, giving Comcast and Comcast's partner's content an unfair leg up in the market. Comcast could ramp up use of zero rating to penalize competitors. And, under Comcast lobbyists planned scenario, there's not much the FCC, FTC, or states could do about it.

There's still a segment of folks that believe that eliminating all regulation in the telecom sector somehow magically results in Utopia. And while this deregulatory approach may work in more functional, competitive markets, that's simply not how the telecom sector (where Comcast holds a natural monopoly over the last mile) works. You need either healthy competition or objective, sensible regulatory oversight to prevent abuse. If you hadn't noticed, we've got neither. And instead of fixing the problem, we're doubling down on letting Comcast run roughshod over an already very broken market.