FCC Rules Against Consumer Groups

The Federal Communications Commission will not require Comcast to publicly reveal details of its Internet service provider deal with AOL Time Warner as part of the FCC review of the proposed Comcast-AT&T Broadband merger.

ISPs and consumer groups wanted the AOL TW agreement to be opened to public comment as part of the FCC’s review of the merger. They claimed the contract is material to the merger process and may “reflect new concerns about competition and the free flow of information” on Comcast’s broadband network, as well as creating a “dangerous precedent against openness and nondiscrimination” on the Internet as a whole.

“In this case, Commission staff have reviewed certain HSR (Hart-Scott Rodino Antitrust Improvements Act) documents filed by the applicants with DOJ (Department of Justice), including the AOL ISP Agreement, and have determined that the AOL ISP Agreement is not relevant to our public interest analysis of this proposed license transfer,” the FCC stated in its order issued Wednesday. “Based on this review and determination, we agree that the AOL ISP Agreement is not relevant to our public interest analysis.”

The FCC order further ruled, “The AOL ISP agreement is not contingent on the merger. In the event that the merger with Comcast is not approved or consummated, an access agreement will be entered into between AOL and AT&T. The Applicants have certified in the record that this agreement is identical in all material respects to the agreement involving AT&T Comcast systems, except with regard to the cities in which the agreement will be implemented.”

Comcast, the nation’s third largest cable operator, and AT&T Broadband, the largest cable concern in the country, are seeking to merge in a $33.6 million deal that would create the largest cable company in America. The FCC staff has recommended approval of the deal and the commissioners are expected to rule on the agreement within days.

Last week, two consumer groups attempted to slow what appears to be the inevitable approval by questioning Comcast President Brian Roberts’ contact with FCC officials, including Chairman Michael Powell.

On Oct. 28, Comcast President Brian Roberts urged FCC Chairman Michael Powell to permit AT&T and Comcast to keep its ISP agreement with AOL TW out of public review. Roberts noted the “highly proprietary, confidential nature” of the AOL TW agreement has no “relevance to the merger review.”

The Center for Digital Democracy (CDD) and the Media Access Project (MAP), two Washington-based advocacy groups, said the contact between Roberts and the FCC “typifies the behind the scene insider lobbying of special interest national politics.”

While the terms of the agreement have not been made public, published reports claim AOL TW gives Comcast as much as $38 per subscriber and that AOL TW has agreed to not compete with Comcast in some markets.

Although opening the deal to public scrutiny wouldn’t endanger the merger, the advocacy groups had hoped to re-open the debate on ISPs access to cable companies and the power of cable companies to control the broadband market.