September 23, 2014 VIA ELECTRONIC FILING Marlene H
Total Page:16
File Type:pdf, Size:1020Kb
REDACTED- FOR PUBLIC INSPECTION September 23, 2014 VIA ELECTRONIC FILING Marlene H. Dortch, Secretary Federal Communications Commission 445 Twelfth Street, S.W. Washington, D.C. 20544 Re: Applications of Comcast Corp., Time Warner Cable Inc., Charter Communications, Inc., and SpinCo for Consent to Assign or Transfer Control of Licenses and Authorizations, MB Docket No. 14-57 REDACTED FOR PUBLIC INSPECTION Dear Ms. Dortch: Comcast Corporation and Time Warner Cable Inc. (the "Applicants") hereby submit the fully redacted, public version of the Applicants' Opposition to Petitions to Deny and Response to Comments ("Opposition"), including eight (8) exhibits to the Opposition ("Exhibits"). The {{ }} symbols in the Opposition and Exhibits denote where Highly Confidential Information has been redacted, and the [[ ]] symbols denote where Confidential Information has been redacted. Highly Confidential versions of the Opposition and Exhibits have been filed with the Office of the Secretary under separate cover. The Confidential and Highly Confidential versions of this filing will be made available for inspection pursuant to the terms of the Joint Protective Order in this proceeding. 1 Please contact the undersigned if you have any questions regarding this submission. Respectfully submitted, Francis M. Buono Counsel for Comcast Corporation Enclosures Applications of Com cast Corp. and Time Warner Cable Inc. for Consent to Assign or Transfer Control of Licenses and Authorizations, MB Docket No. 14-57, Joint Protective Order, 29 FCC Red. 3688 (2014) ("Joint Protective Order"). REDACTED – FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Applications of ) ) Comcast Corp., ) Time Warner Cable Inc., ) MB Docket No. 14-57 Charter Communications, Inc., and ) SpinCo ) ) For Consent To Assign or ) Transfer Control of ) Licenses and Authorizations ) OPPOSITION TO PETITIONS TO DENY AND RESPONSE TO COMMENTS COMCAST CORPORATION TIME WARNER CABLE INC. 300 New Jersey Ave., N.W. 901 F Street, N.W. Suite 700 Suite 800 Washington, D.C. 20001 Washington, D.C. 20004 September 23, 2014 REDACTED – FOR PUBLIC INSPECTION TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY ............................................................................. 1 II. STANDARD OF REVIEW ............................................................................................ 25 A. Applicants Have Met Their Burden of Proof. ....................................................... 26 B. Petitioners Have Not Met Their Burden. .............................................................. 30 III. THE TRANSACTION WILL PROVIDE SUBSTANTIAL PUBLIC INTEREST BENEFITS, AND CHALLENGES TO THESE BENEFITS ARE WITHOUT MERIT. ....................................................................................................... 36 A. The Transaction Will Accelerate the Deployment of Advanced Broadband Services, Increase Broadband Competition and Innovation, and Expand Broadband Adoption. ............................................................................................ 36 1. The Transaction Will Accelerate the Deployment of Advanced Broadband Services to the Acquired Systems. ......................................... 37 2. The Transaction Will Foster Greater Broadband Competition and the Virtuous Cycle of Innovation. ............................................................. 43 3. Expansion of Internet Essentials to Many New Communities Will Increase Broadband Adoption and Reduce the Digital Divide. ................ 50 a. Commenters Overwhelmingly Endorse Internet Essentials as a Leading Program for Bridging the Digital Divide. ............................. 50 b. Petitioners’ Complaints About Internet Essentials Are Over- stated, Unfounded, and Often Self-Serving. ....................................... 54 B. The Transaction Will Acclerate the Deployment of Advanced Video Products and Services. .......................................................................................... 59 C. The Transaction Will Promote Greater Voice Competition and Services. ........... 67 D. The Transaction Will Enhance Competition and Choice for Businesses of All Sizes. ............................................................................................................... 68 E. The Transaction Will Accelerate the Deployment and Adoption of Next- Generation Cable Advertising Technologies. ....................................................... 75 F. Other Transaction Benefits ................................................................................... 80 i REDACTED – FOR PUBLIC INSPECTION 1. The Transaction Will Generate Key Efficiencies That Will Drive the Public Interest Benefits. ...................................................................... 80 2. The Extension of Commitments and Conditions from the Comcast- NBCUniversal Order Will Further Enhance the Public Interest. ............. 83 3. The Transaction Will Extend Comcast’s Leading Accessibility Initiatives and Innovations to the Acquired Systems. ............................. 106 4. The Transaction Will Produce Other Consumer and Competition Benefits by Increasing the Contiguous Service Areas of Systems Owned by Comcast, Charter, and GreatLand Connections. ................... 108 5. The Transaction Will Create a More Reliable and More Secure Network for More Homes and Businesses. ............................................. 111 IV. THE TRANSACTION WILL NOT HARM COMPETITION OR THE PUBLIC INTEREST. ................................................................................................... 113 A. Petitioners Erroneously Define Certain “Relevant Markets.” ............................ 114 1. Broadband Market Definition ................................................................. 115 a. The Broadband Market Is Local, Not National. ............................... 116 b. The Relevant Broadband Product Market Must Consider DSL, Wireless, and Other Technologies. ................................................... 122 2. MVPD Market Definition ....................................................................... 137 3. “Homes Passed” Is Not a Relevant Metric for Any Service. .................. 143 B. No Horizontal Harms: The Transaction Presents No Threat of Horizontal Harm in Any Relevant Market. ........................................................................... 144 1. No Harm to Broadband Services Competition ....................................... 145 a. National “Market” Share Figures Are a Red Herring. ...................... 145 b. There Will Be No Anticompetitive Concentration of Internet Backbone Services. ........................................................................... 148 2. No Harm to Video Programming ............................................................ 149 a. Comcast’s Increased Scale as a Buyer of Programming Will Not Give Rise to Any Competitive Harm. ........................................ 149 ii REDACTED – FOR PUBLIC INSPECTION b. Comcast’s Increased Programming Assets Will Be Minimal and Will Not Give Rise to Any Competitive Harm with RSNs or Local News. .................................................................................. 172 3. No Harm to Video Distribution Services ................................................ 176 4. No Harm to the Equipment Marketplace ................................................ 178 a. The Transaction Will Not Limit the Device Options for Other MVPDs. ............................................................................................ 179 b. Comcast Is Increasing, Not Restricting, Customer Access to TVE Services On Retail Devices. ..................................................... 183 c. Contrary to Commenters’ Claims, Comcast Is an Industry Leader in Enabling Consumers to Access Cable Services on Retail Devices. .................................................................................. 186 d. The X1 Platform Will Not Impede Customer Access to Over- The-Top Video. ................................................................................. 189 5. No Harm to Voice Services .................................................................... 191 6. No Harm to Business Services ................................................................ 193 7. No Harm from Loss of “Benchmark” Competition ................................ 194 C. No Vertical Harms: The Transaction Will Not Facilitate Anticompetitive Foreclosure or Other Exclusionary Conduct. ...................................................... 195 1. No Vertical Foreclosure of OVDs on the Broadband Network .............. 196 a. Broadband Foreclosure Claims Are Not Transaction-Specific. ....... 197 b. The Combined Company Will Have No Enhanced Incentive to Foreclose OVDs. ............................................................................... 198 c. The Combined Company Will Have No Enhanced Ability to Foreclose OVDs. ............................................................................... 208 d. Usage-Based Billing Does Not Give Rise to Public Interest Harms. ............................................................................................... 235 2. No Vertical Foreclosure in the Sale of Programming to Rival MVPDs or Unaffiliated OVDs ................................................................ 239 a. Comcast’s Video Programming Ownership Will Not Substantially Increase. ...................................................................... 240 iii REDACTED