Washington— Comcast Corp. is under fire from a U.S. senator and two consumer groups for its practice of charging customers more for high-speed Internet service if they aren't subscribers to its cable TV service.
As is common among telecommunications companies, Comcast offers its new customers discounted bundled packages of Internet and TV service. But it's also warning existing data subscribers that their monthly rates will increase by up to $15 if they don't start subscribing to Comcast's cable-TV service.
Sen. Barbara Boxer (D-Calif.), the Consumer Federation of America and the Consumers Union said on March 28 that they have asked federal regulators to investigate whether the pricing scheme constitutes an illegal effort to thwart competition from satellite-TV providers.
Writing to Federal Communications Commission chairman Michael Powell, Boxer called Comcast's Internet price scheme "monopolistic."
"Leveraging a cable-modem monopoly in multiple markets could constitute a troubling threat to the burgeoning competition for cable TV service from satellite providers," Boxer wrote.
In letters to the Justice Department and Federal Trade Commission, the consumer groups said that "when such discounts constitute short-term efforts to eliminate competitors from the market, they harm consumers by denying them the long-term benefits of expanded choices and lower prices."
Comcast spokesman Tim Fitzpatrick said such bundling practices are "a standard and well-established business practice."
Even with the price hike, Fitzpatrick said, Comcast's Internet rates remain competitive with alternative high-speed-data providers.
At the end of 2002, Comcast had approximately 3.6 million high-speed Internet customers, most of whom also subscribed to cable TV. But the consumer groups said Comcast has used a predatory pricing scheme to undermine DBS competition.
Although such bundling practices are common, Consumers Union spokesman David Butler said, Comcast is the only cable company the groups have identified that has hiked rates for existing customers who won't add another service.
Legg Mason analyst Blair Levin said he doesn't think the consumer groups' letters "will result in government intervention in the market."
But if the Justice Department or FTC decides to launch an investigation, he added, the antitrust regulators aren't legally obliged to announce it publicly.
States News Service