Wave Broadband, an independent broadband and commercial fiber services provider in the Northwest, has filed a complaint with the Federal Communications Commission alleging that Comcast’s NBC Sports regional sports networks (part of its NBCUniversal division) are engaging in unfair business practices by forcing it to include the channels on its most basic tier.
RSNs have always been a bone of contention with smaller operators who are usually forced to pay high prices for the channels. In recent years larger providers have implemented monthly RSN surcharges to customers to offset the high cost. But that has been especially hard to do for smaller operators who are at a competitive disadvantage to larger cable, telco TV and satellite TV service providers.
Recently, some smaller operators have begun to fight back through the courts and government agencies. Earlier this month, tiny Houston-area cable operator En-Touch Communications sued AT&T in Los Angeles District Court over the high cost of its AT&T SportsNet Southwest RSN – home of Word Series champs The Houston Astros.
Wave, which is in the process of being purchased by TPG Capital and merged with the larger overbuilder RCN, offers video programming to about 130,000 customers in certain areas in the Northwest – Seattle; Portland, Ore., Sacramento, Calif.; and San Francisco. NBCUniversal’s NBC Sports offers three RSNs in those regions -- NBC Sports Northwest; NBC Sports Bay Area; and NBC Sports California. While it has concentrated more on broadband in the past few years, it offers video in two tiers – a Local Broadcast, or "Lifeline," package that includes the four major broadcasters; and Expanded Content, which includes a broad selection of cable networks. In the past, Wave has carried the NBCUniversal RSNs on the Expanded Content tier where it passes along the cost of the network directly to subscribers at no additional profit.
Wave's deal to carry the channels was up for renewal this year, but when it tried to renew its earlier carriage deal, it claims Comcast refused to change the minimum carriage numbers despite making the RSNs available on streaming services like FuboTV, Hulu, Sony PlayStation Vue and Sling TV. Wave argues that some of its customers have dropped or downgraded their video service and are accessing the RSNs through OTT providers. That has made it impossible for the overbuilder to meet the minimum carriage demands. And by forcing Local Broadcast customers to buy the RSNs, that subscriber erosion could accelerate.
“What consumers want is the ability to pay only for the content they want to watch,” Wave CEO Steve Weed said in a statement. “Comcast is trying to force their competitors like Wave to only offer a single set of bundled channels – this is the opposite of what consumers want.”
NBCU, Wave claims, also said the company breached its earlier agreement and forced the company to pay $3.5 million in penalties. Wave paid the amount but wants to be reimbursed if the FCC finds in its favor.
While Wave could just drop the RSNs all together, it claims in its complaint that the channels are “must-have” and losing them could result in its having to shutter its video offering.
NBCUniversal has argued that it granted Wave an extension as it nears completion of its acquisition by TPG Capital – expected by the end of the year – and that it has offered it the same deal as other distributors.
“We are mystified by Wave’s action,” NBCU said in a statement. “Wave’s sale to RCN and a private equity group is expected to close within a month, so NBCUniversal offered an extension until they come under new ownership and has separately offered marketplace terms to RCN for continued carriage on these systems thereafter. NBCUniversal has engaged with them fairly, on the same terms as other distributors. Their purported claim is without merit.”
Wave claims by forcing the RSNs on its Local Broadcast tier customers, it could require the company to provide other channels bundled with the sports nets, effectively raising monthly charges for all of its video subscribers by $70.
“Our goal at Wave is to provide our customers with choice and control over the content they receive,” Weed continued in his statement. “Comcast’s sports division is attempting to force all video customers to subscribe to a single bundled channel package versus the choices we now offer -- reducing consumer options and dramatically increasing costs.”
The American Cable Associaton, of which Wave Broadband is a member, came out strongly in support of the complaint.
"Comcast's behavior is outrageous," said ACA president Matt Polka. "For years, ACA has drawn the FCC's attention to the severe harms that a cable-affiliated programmer like Comcast-NBCU can cause to competitors and their subscribers. We've called on the FCC to be vigilant in protecting consumers. Just last month, ACA highlighted the unreasonable minimum-penetration requirements imposed by Comcast-NBCU's regional sports networks. These requirements prevent Comcast's competitors from broadly offering an inexpensive 'broadcast basic' service tier that viewers increasingly desire."