Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (49 page)

41.
Parsons,
Blue Skies
, 481.

42.
Behrend v. Comcast Corp.
, 264 F.R.D. 150, 156 n.8 (E.D. Pa. 2010) (describing the acquisitions and including specific subscriber counts).

43.
Reuters, “Comcast to Buy Scripps Cable Television Unit: Media: $1.6 Billion Acquisition Would Make the Firm the Third-Largest U.S. Cable Operator,”
Los Angeles Times
, October 30, 1995, available at
http://articles.latimes.com/1995-10-30/business/fi-62858_1_cable-operator
; “Comcast to Buy MacLean's Cable,”
Los Angeles Times
, June 20, 1994, available at
http://articles.latimes.com/1994-06-20/business/fi-6190_1_cable-operator
.

44.
Neel, “Life of Brian.”

45.
Keller, interview with Julian Brodsky.

46.
Leo Hindery,
The Biggest Game of All
(New York: Free Press, 2003), 73–74.

47.
Parsons,
Blue Skies
, 670, 675; Matt Carolan, “AT&T Broadband and Comcast to Merge,”
PCMag.com
, December 20, 2001,
http://www.pcmag.com/article2/0,2817,58020,00.asp
; “Comcast, AT&T Broadband in $52 Billion Deal,”
ABC News
, December 20, 2001,
http://abcnews.go.com/Business/story?id=87476&page=1#.T0PuVFHRfdk
.

48.
Parsons,
Blue Skies
, 675, quoting Rebecca Blumenstein, “Sweet Revenge: Bid for AT&T Cable,”
Wall Street Journal
, July 10, 2001.

49.
Jeremy Feiler, “RCN Out to Block Comcast,”
Philadelphia Business Review
, August 19, 2002, available at
http://www.bizjournals.com/philadelphia/stories/2002/08/19/story7.html?page=2
.

50.
Federal Communications Commission, “Memorandum Opinion and Order,” MB Docket No. 05-192, July 21, 2006.

51.
In June 2006, there were 65.3 million basic cable subscribers. Comcast had 21.7 million (33 percent) and Time Warner 11.1 million (17 percent).
In Re Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Thirteenth Ann. Rep.
, 24 F.C.C.R. 542, 555 (2009).

52.
As this book went to press, the case continued:
Behrend et al. v. Comcast et al.
, “Memorandum Opinion and Order,” CV. No. 03-6604 (E.D. Pa., April 12, 2012),
35, 58, 68 (“We find that the Class has produced evidence from which a jury could find in its favor on the [Sherman Act's] section 1 claim's requirement that Comcast conspired with competitors to allocate markets” “We find that the Class has succeeded in creating a genuine issue of material fact that Comcast acted with predatory intent regarding RCN's access to cable infrastructure installation contractors” “The Class has created a genuine issue of material fact that Comcast, a firm possessing market power, was able to lock up 70% to 77% of the potential customer base available to the new entrant. Because it possessed market power, its decision to target promotional discounts to deter a new entrant may be deemed predatory and an exercise of market power to maintain its monopoly.”)

53.
Todd Wallack, “A Father-Son Team That Usually Wins: Comcast Leaders Set Sights on Disney Co.,”
San Francisco Chronicle
, February 15, 2004, available at
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/02/15/BUGEN50OL71.DTL&ao=all
.

54.
David Murphy, “Verizon Axes FiOS Expansion,”
PCMag.com
, March 27, 2010,
http://www.pcmag.com/article2/0,2817,2361919,00.asp
.

55.
Bernstein Research, “U.S. Telecommunications and U.S. Cable & Satellite: Nature Versus Nurture,” May 2012, 133, 132; Verizon Wireless Allies with Cable in $3.6 Billion Deal,”
Bloomberg News
, December 2, 2011,
http://www.bloomberg.com/news/2011-12-02/verizon-wireless-allies-with-cable-carriers-in-3-6-billion-spectrum-deal.html
.

56.
Liberty Media Corporation, “Q1 2011 Earnings Call,” transcript, May 6, 2011,
http://www.morningstar.com/earnings/PrintTranscript.aspx?id=27506514
.

57.
“A Decade of Innovation: The History of CableLabs, 1988–1998,” CableLabs, June 4, 1998, available at
http://www.cablelabs.com/downloads/pubs/history.pdf
.

58.
“Brian L. Roberts, Chairman & CEO, Comcast Corporation,” accessed March 9, 2012,
http://www.comcast.com/nbcutransaction/pdfs/Bios%202.13.10.pdf
.

59.
Rob Rowello, “Capturing Major Growth in Commercial Services: An Untapped Opportunity for Cable MSOs,” Cisco Internet Business Solutions Group, August 2011, 2,
http://www.cisco.com/web/about/ac79/docs/sp/Next-Generation-Access-Networks_Cable-MSOs_and_SMB_Market.pdf
. Comcast offers a broad array of promotions and bundles, and it is very difficult to discover its standard pricing for standalone high-speed Internet access. It appears that this product was about $115/month as of May 2012 for 50Mbps download service (
http://www.comcast.com/internet-service.html
, accessed May 31, 2012). This price is far higher than the prices charged for speeds that are twice as fast (or more) in other OECD countries such as the Netherlands, Sweden, Japan, Korea, and France. See OECD,
Communications Outlook
2011
, 274 (esp. fig. 7.28), accessed May 31, 2012, available at
http://www.mediatelecom.com.mx/doc_pdf/OCDE%20communications%20outlook.pdf
.

60.
Keller, interview with Julian Brodsky.

61.
Ibid.

62.
Mark Robichaux,
Cable Cowboy: John Malone and the Rise of the Modern Cable Business
(Hoboken, N.J.: Wiley, 2005), 13.

63.
Keller, interview with Julian Brodsky.

64.
Parsons,
Blue Skies
, 620–21.

65.
In the Matter of Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications
, National Telecommunications and Information Administration, U.S. Department of Commerce, Docket No. 011109273-1273-01 (Comments of Seren Innovations, Inc.), accessed March 9, 2012,
http://www.ntia.doc.gov/legacy/ntiahome/broadband/comments4/Seren.htm
.

66.
Paul R. La Monica, “Comcast Bids for Disney,”
CNN Money
, February 18, 2004,
http://money.cnn.com/2004/02/11/news/companies/comcast_disney/
.

67.
Scott W. Fitzgerald,
Corporations and Cultural Industries: Time Warner, Bertelsmann, and News Corporation
(New York: Lexington, 2011).

68.
Reinhardt Krause, “Upbeat Mood for Big Cable Show Unlike Gloom of 2009,”
Investor's Business Daily
, May 10, 2010.

69.
Bob Fernandez, “On Eve of His Departing, Comcast's Brodsky Looks Back at the Many Wins,”
Philadelphia Inquirer
, May 1, 2011, available at
http://articles.philly.com/2011-05-01/business/29493381_1_comcast-s-brodsky-comcast-board-julian-brodsky
;
Testimony of Dr. Mark Cooper on Behalf of Consumer Federation of America, Free Press, Consumers Union Before the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights Regarding “The Comcast/NBC Universal Merger: What Does the Future Hold for Competition and Consumers?”
February 4, 2010, 1, available at
http://www.freepress.net/files/Comcast_NBC_Testimony_of_Mark_Cooper_Senate_Judiciary.pdf
.

70.
Ron Chernow,
Titan: The Life of John D. Rockefeller, Sr.
(New York: Vintage, 2004), 223.

71.
Liu, “Liberty Media's John Malone Talks Communications.”

72.
Liberty Media Corporation, “Q1 2011 Earnings Call.”

Chapter 4. Going Vertical

1.
“
The Comcast/NBC Universal Merger: What Does the Future Hold for Competition and Consumers”: Hearing Before the Subcommittee on Antitrust, Competition Policy and Consumer Rights of the Committee on the Judiciary
, 111th Cong. 12 (2010) (statement of Colleen Abdoulah, President and CEO of WOW!).

2.
WOW! was the fifteenth-largest multichannel video programming distributor in America as of September 2011 with 432,000 video subscribers. “Top 25 Multichannel Video Programming Distributors as of Sept. 2011,” National Cable & Telecommunications Association, accessed February 28, 2012,
http://www.ncta.com/Stats/TopMSOs.aspx
. WOW! has received wide recognition for its customer service, not only from
Consumer Reports
but in the J.D. Power and Associates Internet Service Provider Residential Customer Satisfaction Study. “Save a Bundle: How To Piece Together a Great Deal for TV, Phone, and Internet Service,”
Consumer Reports
, February 2010, available at
http://www.consumerreports.org/cro/magazine-archive/2010/february/electronics-and-computers/bundling/overview/bundling-ov.htm
;
J.D. Power and Associates Reports, “Press Release: Internet Service Provider Residential Customer Satisfaction Study: Customer Satisfaction with Residential High-Speed Internet Service Declines Slightly from 2009,” October 28, 2010,
http://www.jdpower.com/content/pressrelease/CiPf4Zw/internet-service-provider-residential-customer-satisfaction-study.htm
. Colleen Abdoulah made clear in her written testimony that smaller cable systems pay more for programming than large systems; programming entities justify this discrimination by claiming it is based on volume-rated cost differentials, and arbitration proceedings concerning this discrimination are prohibitively expensive (“
Comcast/NBC Universal Merger
,” 8).

3.
“
Comcast/NBC Universal Merger
,” 12, 18.

4.
Ibid., 34.

5.
Tamber Christian, “The Financial Interest and Syndication Rules—Take Two,”
Commlaw Conspectus
3 (1995): 107.

6.
“
Comcast/NBC Universal Merger,”
6.

7.
Ibid., 20.

8.
Michael Riordan and Steven Salop, “Evaluating Vertical Mergers: A Post-Chicago Approach,”
Antitrust Law Journal
63 (1995): 522.

9.
Gregory Rosston,
Benefits Report: An Economic Analysis of Competitive Benefits from the Comcast-NBCU Transaction
, Comcast Corp., General Electric and NBC Universal, Inc., May 24, 2010, 44.

10.
Mike Farrell, “Agencies Approves [
sic
] Time Warner Cable Split,”
Multichannel News
, February 16, 2009,
http://www.multichannel.com/article/174237-Agencies_Approves_Time_Warner_Cable_Split.php
.

11.
David Lieberman, “Deal Would Give Liberty Reins of DirecTV,”
USA Today
, December 7, 2006.

12.
James Quinn, “AOL Officially Splits from Time Warner After 10 Years,”
The Telegraph
, December 9, 2009.

13.
Richard A. Epstein, “The Dogmatic Posture of a Consumer Advocate: A Second Response to Mark Cooper,”
The Free State Foundation: Perspectives from FSF Scholars
5, no. 6 (March 10, 2010): 1–6, 5–6, on file in
“Comcast/NBC Universal Merger
, available at
http://www.gpo.gov/fdsys/pkg/CHRG-111shrg66290/pdf/CHRG-111shrg66290.pdf
.

14.
Holly Becker,
America Online
, Lehman Brothers, June 29, 2000.

15.
Andy Kessler, “The Sinking Case of AOL Time Warner,”
Wall Street Journal
, October 8, 2002.

16.
“AOL-Time Warner Merger: 10 Years Later,”
CNBC
video, January 4, 2010.
http://video.cnbc.com/gallery/?video=1376488035
.

17.
Amendments of Part
69
of the Commission's Rules Relating to Enhanced Service Providers: Notice of Proposed Rulemaking
, 2 F.C.C.R. 4305 (July 17, 1987).

18.
Karyl Scott, “Foes of FCC Plan Cry Foul,”
Network World
, October 5, 1987.

19.
Mary Sit, “Data Industry Threatened by Phone Fees, Hearing Told,”
Boston Globe
, October 3, 1987.

20.
Deborah Mesce, “Computer Users Criticize Plan to Hike Phone Fees,” Associated Press, October 3, 1987.

21.
“FCC Chief Defends Data Plans,” Associated Press, October 3, 1987.

22.
Representative Ed Markey, interview with the author, January 2011.

23.
Amendments of Part
69
of the Commission's Rules Relating to Enhanced Service Providers: Order
, 3 F.C.C.R. 2631 (April 27, 1988).

24.
Markey, interview with the author, January 2011.