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Comcast/NBC-Universal Merger:
Some Observations


On Tuesday, 1/18 FCC announced approval of the multibillion dollar merger of Comcast and NBC-Universal. These companies asked FCC for this approval on January 28, 2010 and FCC asked for public comment on March 18, 2010. At total of 33,736 items were filed in the docket file, 2,066 of which were formal enough to classified by ECFS as being other than “brief comments”. While the official Commission clock, shown above, shows the issue was resolve in 234 days and only 90 days of clock running time, a neutral observer such as your blogger might say the real turnaround was 355 days from initial request to approval. In any case, a remarkably fast period for the resolution of such a complex case. Our congratulations to the OGC Transaction Team for this accomplishment!

Now some observations:

1. You blogger is aware of no statutory requirement or even Commission rule requiring the Transaction Team’s nominal 180 day goal for issuing an “Order granting applications, granting applications with conditions, or designating applications for hearing (denials without a hearing are possible only in very limited circumstances).” He is aware that Section 7 of the Communications Act is the “law of the land” and has the following provision: “The Commission shall determine whether any new technology or service proposed in a petition or application is in the public interest within one year after such petition or application is filed.” Yet the Commission under chairman after chairman has consistently ignored the provision of Section 7.

•Why don’t Section 7 deliberations get any sort of attention for timeliness?
•Why did the recent AWS-3/M2Z Networks issue drift on without resolving the technical issues for over 4 years and then ended without ANY resolution?
•What message does this send to the financial community about the financing of innovative wireless technology?
•Is it possible to ever have a successful wireless startup like Qualcomm ever again if the Commission attaches no urgency at all to resolving technical issues about the new technology?

2. As part of the merger approval, there are several “targeted conditions and commitments” as well as “voluntary commitments” that are essentially regulatory requirements for the newly merger company. Many of these deal solely with programming and are of little professional interest to this audience. But since Comcast is a major ISP, some deal with networking issues. Your blogger does not question whether these conditions are the right conditions for today’s marketplace and technology. However, the technology and marketplace for ISPs is rapidly evolving and will likely be very different 5 years from now. As a historical note and analogy, let me point out that in 1943 Western Union merged with its last significant competitor and since telegraphy was a major serve at the time, Congress reacted to with analogous conditions for Western Union in Section 222 of the Communications Act. [Note, as explained below, this Section 222 has no relationship to the current Section 222 other than sharing a common 3 digit number.]

As is obvious now the marketplace and technology for telegraphy changed greatly after 1943, yet Section 222 lingered on in the statutes until 1994! It appears that some of the provisions of the merger commitments and conditions exceed the jurisdiction of the Commission in normal rulemaking but are typical of what the Commission forces parties to do as part of mergers. But what happens if new technology and/or market conditions make these conditions and commitments as obsolete as the former Section 222? My concern is that the commitments and conditions adopted this week will need to be updated based on the inevitable marketplace and technological changes, the FCC as an institution does not recognize the need for such updates in its rapidly evolving industry, and that in this case FCC make lack the statutory authority to update the conditions and commitments.

UPDATE

The Order approving the merger has now been released and totals 279 pages, a measure of the complexity of this issue. Yet if the Commission can deal with such complex issues in less than a year, why can’t it deal with its Section 7 statutory mandate? Just sayin’.
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