Comcast Sees Time Warner Cable Deal Boosting Broadband Competition

By Gautham Nagesh

A Comcast executive said Friday the company's planned $45 billion acquisition of Time Warner Cable would create new competition in the commercial market for broadband Internet access without harming home users or content companies.

In an interview, Comcast executive vice president David L. Cohen said the combined company would be more able to compete with phone carriers like AT&T and Verizon to provide Internet access to small and medium-size businesses, for which he said broadband pricing "is still incredibly high."

Mr. Cohen's focus on the business broadband market, and the new competition he said Comcast-Time Warner would bring to it, provided a sense of the strategy Comcast will use to convince regulators that approving the deal would result in new benefits for the marketplace that couldn't be achieved outside of the acquisition.

Asked about Comcast's move into this market, Verizon spokesman Ed McFadden said: "Verizon has a history of introducing the next big thing for our video and Internet customers. This just changes the name of the competitor in some of our markets." AT&T didn't have a response.

Thus far, discussion of the Comcast-Time Warner Cable acquisition has focused on potential harms to consumers and content companies, and how Comcast could mitigate them. A combined company would control a third of the market for pay-TV and roughly 40% of households subscribing to high-speed broadbandaccess.

But regulators are likely to zero in on the deal's impact on the market for broadband, which can carry voice, data and video all on the same pipe.

Mr. Cohen played down concerns about market power, arguing that Comcast wouldn't gain significant leverage by increasing from its current 22 million subscribers to a total of 30 million if the merger is approved. (As part of the deal, Comcast has agreed to divest 3 million Time Warner Cable subscribers.) He said the deal would allow for some efficiencies but ultimately have less impact on the company than Comcast's previous acquisitions of NBCUniversal and AT&T's broadband business.

"It's not a transformative transaction for the company," Mr. Cohen said.

The Justice Department or Federal Trade Commission will review the deal for any antitrust concerns, while the Federal Communications Commission must determine if transferring the cable licenses is in the public interest. Comcast plans to file its formal submission to the Justice Department within a month, after which the DOJ has 30 days to review and make a second request for information, which would trigger a length regulatory review.

The FCC will likely focus on how the merger would affect online video providers and other companies that rely on the broadband ecosystem. Comcast expects to file its public interest statement with the FCC by the end of March, with the review expected to extend until the end of the year.

Harold Feld, senior vice president for the consumer advocacy group Public Knowledge said Comcast could use its greater share of the broadband market to force consumers into leasing its wireless routers and cable modems, rather than allowing them to purchase stand-alone equipment.

"Whatever business model Comcast establishes is going to be the business model for broadband," Mr. Feld said. "Looking at network devices, we see muchmore forced leasing rather than buying."

Brent Kendall contributed to this article

Write to Gautham Nagesh at gautham.nagesh@wsj.com

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(END) Dow Jones Newswires

February 21, 2014 18:27 ET (23:27 GMT)

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