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New York State Drills Down Into Comcast-TWC Merger

WASHINGTON — The proposed Comcast-Time Warner Cable deal will have to pass Federal Communications Commission muster to be approved, but that is not the only regulator set to weigh in on the deal.

The New York State Public Service Commission has wrapped up three days of hearings into the proposed merger of the first- and second-largest U.S. cable companies, armed with a new, tougher standard for the deal to meet in terms of transferring No. 2 TWC’s systems to No. 1 Comcast in New York City, the nation’s largest market.

The PUC must approve the transfer of any cable-system franchise in New York State.

Last month, New York Gov. Andrew Cuomo, a Democrat, said the commission would “use its new regulatory powers” to conduct a thorough examination into whether the transfer of Time Warner Cable’s New York systems to Comcast was “in the best interest of Time Warner’s New York customers and the State as a whole.”

According to a PSC source speaking on background, that “new power” reference was to the change in the burden-of-proof standard. Formerly, the public service laws required the commission to approve a deal unless it found a violation of law or some other reason it was not in the public interest.

But in April, the law was changed to put the burden of proof on Comcast and Time Warner Cable to prove the merger is in the public interest. That standard is similar to those applied to the state’s telephone companies and electric and gas utilities.

The three hearings were in Buff alo, Albany (the state’s capital) and New York, before a PSC administrative law judge.

According to local news channel Time Warner Cable News, which covered the Buffalo hearing, Administrative Law Judge David Prestemon said the commission’s goal was to ensure that the transaction is in the public interest.

National Black Chamber of Commerce president and CEO Harry Alford praised Comcast, and said if the companies did not merge with someone. they were going to “fall out or die.”

But TWC News also reported that a member of the “Stop the Cap” coalition criticized Comcast’s broadband-usage policies and did not want them extended to current Time Warner Cable properties.

One issue raised by a pair of legislators, said TWC News, was ensuring that Comcast builds out broadband service, particularly in rural areas. They also offered the novel suggestion that a “government representative” be given a seat on the Comcast board.

A spokesperson for the commission said it would “consider and weigh very carefully the comments it receives from the public at public statement hearings.”

Comcast spokeswoman Sena Fitzmaurice said the MSO planned to work with state officials on the review process.

“We believe there are significant benefits to New York customers for this deal, and there’s no reduction in competition,” she said. “[Consumers will have the same number of choices before the deal as after it. Consumers will get faster Internet speeds and a more advanced video product than they have today — for example, we have 300,000 video choices online and via our apps that TWC customers would have available — TWC has about half of the number of on-demand [selections] on TVs today that we do. These are real, tangible consumer benefits.”

Fitzmaurice also said Comcast would be bringing its low-cost “Internet Essentials” product to New York, Buffalo, Albany and other New York cities without a similar program.

The merger would also boost business services, Fitzmaurice added, which could lower costs and increase competition.