FCC: Comcast To ‘Unbundle’ Broadband

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Washington — Comcast will be forced to “unbundle”
and offer standalone broadband service at
competitive prices for three years under conditions
proposed before the final approval of its proposed
NBC Universal content joint venture, according to
sources familiar with the Federal Communications
Commission’s draft approval.

The conditions delve specifically into price, suggesting
a price cap of $49.95 and downstream speeds of at
least 6 Megabits per second.

PRICE CAP CONCERN

While Comcast appears to be OK with the condition
— it was part of the original draft the company said
it could live with — setting a price cap as a condition
is unusual, and would be an unwelcome precedent,
said one veteran communications attorney speaking
on background.

It’s no surprise that Comcast can live with the
condition, since it would essentially enshrine service
the nation’s largest MSO already offers for a set
speed and price point. In addition, Comcast has the
opportunity to petition the FCC to lift that and other
conditions if marketplace forces warrant it — if
$49.95 was no longer a competitive price point, for
instance.

Critics of the deal — which would combine Comcast’s
national programming assets with the current
NBCU, a General Electric subsidiary, in a new joint
venture the cable company would control — likened
the condition to a mandate that a vest not have sleeves.

“Only in Comcast’s mind would offering slower
speeds at a higher price than its current offerings, and
those of its competitors, be considered a public-interest
commitment,” said Corie Wright, policy counsel
at Washington, D.C.-based media-reform advocacy
group Free Press.

But while Comcast might be able to live with the
condition, a price cap could prove a troubling precedent.
The value of the NBCU asset has increased since
Comcast set the deal’s price at $13.75 billion in December
of 2009. That gives the company some flexibility to
accept a price cap condition, or to spend on voluntary
public-interest pledges.

INCENTIVE TO AGREE

Comcast is accepting a raft of conditions because
it wants to get the deal done, the veteran attorney
said. But the attorney noted that lower-priced service
is always deemed to be in the public interest.
Comcast has also pledged a $9.95 broadband price
point for low-income families, which will also be
“enshrined” in the deal if the first draft remains relatively
unchanged.

“From an investor standpoint, there is always a
concern if the government caps prices.” Stifel Nicolaus
analyst Rebecca Arbogast said. Her company
issued an advisory to clients about the price-cap
condition.

FCC commissioners continued to vet the deal last
week. It was still possible some might vote on it by
week’s end, but all the commissioners are not expected
to weigh in until this week at the earliest.

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