FCC ‘Peering’ Into Comcast-TWC

WASHINGTON — The Federal Communications Commission’s informal “shot clock” on the proposed merger of Comcast and Time Warner Cable is scheduled to restart today (Jan. 12), but many of the mega- deal’s opponents are still trying hard to stop it and the regulator is still ruminating over the hot-button issue of paid peering.

Late-filed TWC documents cited by the FCC as cause for the latest, and second, halt in the informal 180-day window for vetting the $69 billion merger, combined with ongoing litigation over third-party access to program contract documents (see Capital Watch, next page), are insuring that the merger-approval process won’t get a smooth start in the new year. It wrapped up 2014 with a flurry of comments opposing the transaction, which would combine the No. 1 and No. 2 U.S. cable operators into a mega-MSO of some 30 million subscribers.


Those comments came late last month from, among others, the Stop Mega Comcast Coalition, whose members include such advocacy groups as Consumers Union, the Future of Music Coalition, Public Knowledge and the Sports Fans Coalition, as well as rival satellite-TV provider Dish Network and a screenwriter’s union, the Writer’s Guild of America, West.

But on it’s own dime, the FCC is looking to drill down on the matter of paid peering, or instances in which online video distributors such as Netflix agree to pay for access to the networks of ISPs that own the last-mile link to subscribers.

FCC chairman Tom Wheeler may have signaled that he wanted to keep such interconnection charges out of the Internet-neutrality debate, but the same can’t be said of the battle over whether to allow Comcast and Time Warner Cable to merge.

According to various filings in the deal’s docket last week, the FCC has reached out to a host of over-the-top video edge providers — including Netflix, Hulu and HBO Go — for information on peering or interconnection deals with the top 20 ISPs and the traffic flows of that content.

It has even reached out to consumer-electronics giant Sony about its proposed over-the-top service, asking it about its plans for interconnection, whether it expects to have to pay for it and why.

Netflix has complained about having to pay Comcast to carry its video traffic and Comcast’s slowing of that traffic. It has asked the FCC to block the deal outright, and to put peering-related conditions on another proposed merger between telco AT&T and satellite-TV provider DirecTV.

Comcast has countered that it was Netflix that engineered a traffic slowdown for political purposes and that paid peering is general industry practice when the traffic exchanges are inequitable — according to a November study from research firm Sandvine, Netflix accounts for a third of all Internet traffic in prime video viewing periods.


The FCC appears to want to use the merger to help it determine whether paid peering is an anticompetitive move, as Netflix has suggested, or whether it’s part of the cost of doing businesses, as ISPs have said.

Bernstein Research equity analyst Paul De Sa has advised clients that it would be tough for the FCC to make a case that interconnection charges are anti-competitive, “as opposed to a legitimate source of returns that provide an incentive for further network investment and potentially reduce consumers’ retail rates by supplying an additional revenue stream.”

De Sa predicted the Comcast-Time Warner Cable deal would be approved, with conditions, in the second quarter.

The analyst handicapped the chances of the deal not going through at 25%, given the “vast amount of non-public information” that will go into the decision, or the possibility that Comcast could walk away from the deal, particularly if common carrier-style Title II Internet-neutrality regulations are imposed.

Information Please

WASHINGTON — As part of its review of the proposed Comcast-Time Warner Cable merger, the Federal Communications Commission has given some prominent present and would-be over-the-top video providers and edge providers until Jan. 23 to provide much information about their interconnection agreements with the top 20 ISPs.

Such data requests are not unusual, but the subject matter suggests the FCC is looking at the competitive impacts of ISP interconnection and paid-peering deals with over-the-top providers.

The requests were made of over-the-top (OTT) video providers Netflix, HBO Go, Sony and Hulu, as well as content-delivery networks Limelight, Level 3 and Akamai.

For example, the FCC wants the Netflix data drop to include:

1. The top 20 ISPs to whom the company delivered the most traffic.

2. Total volume of traffic delivered (in Gigabytes).

3. Total hours of programming delivered.

4. The company’s total cost of delivering that programming.

5. The number of subscribers, using the 20 ISPs and all others as a combined figure.

6. The average bit rate of traffic and percentage of packet loss.

7. Whether Netflix service can be delivered on reasonable terms and conditions.

8. Any firms with which it could not obtain commercially reasonable rates.

9. The interconnection capacity made available to Netflix.

10. Recurring interconnection payments to ISPs (including payments for locating Netflix equipment at ISP facilities).

11. Capacity made available in both paid and settlement-free peering agreements.

12. Discussion of the potential impact of data caps and usage-based billing.

13. The effects of an ISP’s network management practices on delivery of Netflix’s service, including Comcast’s network practices.

14. All video programming Netflix sought to distribute as part of its OVD service but was “unable to obtain rights to distribute on terms acceptable to the company,” and which it had reason to believe was “related” to “a provision in another video programming provider’s agreement with another MVPD or OVD.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.