News

Comcast Bid Sparks NECTA Debate

7/17/2001 7:50 AM Eastern

Newport, R.I. -- Comcast Corp.'s bid to form a 22 million-subscriber cable
giant by acquiring AT&T Broadband shouldn't be ruled out based on its
unprecedented size, a Cox Communications Inc. official said here Tuesday.

Vice president of development Jayson Juraska said consumer choice in the
market wouldn't change if Comcast succeeded in buying AT&T Corp.'s cable
unit for an estimated $53.1 billion.

'I think there are plenty of checks in the marketplace,' Juraska said. 'The
consumer is the ultimate hammer. There are plenty of places for the consumer to
go if they feel they are being mistreated.'

He noted that a cable-video subscriber could turn to direct-broadcast
satellite, a cable-data subscriber to digital-subscriber-line service and a
cable-telephone subscriber to the incumbent phone provider.

'I have heard that there is some concern simply about the size of AT&T
and Comcast combined. I don't think that should be a huge, huge concern,'
Juraska said at the New England Cable Television Association convention here. 'I
am not really worried about some of the market power that I have read
about.'

AT&T is reportedly entertaining offers from parties other than Comcast,
but Verizon Communications -- the dominant local phone company from Virginia to
Maine -- is not interested in acquiring cable systems.

'We have been down that path and there is little likelihood . that Verizon is
going to move into video via purchase of a cable company,' senior vice president
of public policy and external affairs Tom Tauke said.

Tauke mentioned that Bell Atlantic Corp. (which merged with Nynex Corp. and
GTE Corp. to form Verizon) sought to acquire Tele-Communications Inc. in 1993
but the deal crashed.

'That didn't happen -- I think, thankfully,' he added. 'I don't think you can
look for us to be going after a cable company.'

W. Kenneth Ferree, chief of the Federal Communications Commission's Cable
Services Bureau, said his staff is 'feverishly reworking' cable-ownership rules
that were tossed out by a panel of the U.S. Court of Appeals for the District of
Columbia Circuit March 2.

The FCC, he added, wanted to guard against one cable company becoming so
large -- attaining monopsony power -- that it could make or break cable networks
that failed to obtain carriage with that company.

'We are concerned about the extent to which a large MSO could exercise sort
of large monopsony power in the program-access markets,' Ferree said. 'It is the
extent to which an independent programming service could survive without the
theoretical large MSO buying their programming.'

With or without cable-ownership rules on the books, the commission has the
necessary authority to review a large cable merger submitted for approval, he
added.

'Even if we don't have our horizontal ownership rules promulgated by then, we
have statutory authority to do the review on a case-by-case basis, and we would
do that,' Ferree said.

The FCC rules struck down in court held one cable company to 30 percent of
all pay TV subscribers. A Comcast-AT&T Broadband combination, with 22
million cable subscribers, would equal 25 percent of all pay TV subscribers.

Randy Fisher, vice president and general counsel of Adelphia Communications
Corp., said the tax structure of the cable industry and the cost structure
associated with new technology drives MSOs to sell or get bigger. Comcast, he
added, opted to grow.

'For Comcast to say, `We want to buy AT&T,' they may be looking at an
economic model that says, `With that kind of clustering, with that kind of
environment, I can really compete better with [a local phone company],'' Fisher
said.

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