Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age

by Susan P. Crawford J. D.

  25. “Phila. Fundraiser Set for Hillary Clinton Bailout [Compliments of Comcast CEO],” Philadelphia Daily News, December 31, 2008, available at http://www.freerepublic.com/focus/f-news/2156877/posts. Cohen gave $2,300 to Clinton's campaign in 2007, according to CampaignMoney.com, accessed March 4, 2012, http://www.campaignmoney.com/political/contributions/david-cohen.asp?cycle=08. “Rendell claims now that if Hillary Clinton had been elected president, he would have called her up the next day and told her, ‘I know you don't know David as well as you'd like to know a chief of staff—you should bring him on as a deputy.’ Chiefs of staff, Rendell says, always leave after a few months, and then Cohen could have stepped right on up” (Huber, “David L., Explained”).

  26. Peter Nicholas and Josh Drobnyk, “Obama Supporting Specter in Primary Battle,” Los Angeles Times, September 15, 2009, available at http://articles.latimes.com/2009/sep/15/nation/na-obama-specter15; “Fundraisers Mobilize for Specter; Obama to Come,” Philadelphia Inquirer, June 8, 2009, available at http://www.philly.com/philly/blogs/harrisburg_politics/Fundraisers_Mobilize_for_Specter_Obama_to_come.html.

  27. Before leaving office, Specter set up meetings between senators and Comcast's Brian Roberts, according to a Hill staffer I interviewed on August 23, 2010; Hearing Before the Subcommittee on Antitrust, Competition Policy and Consumer Rights, 5 (Statement of Senator Arlen Specter).

  28. Charles B. Goldfarb, Public, Educational, and Governmental (PEG) Access Cable Television Channels: Issues for Congress (Washington, D.C.: Congressional Research Service, September 5, 2008), 11–12 (citing Herb Kirchhoff, “U.S., Michigan Courts Block Comcast Plan to Move Public Access Channels,” Communications Daily, January 16, 2008); “Public, Educational, and Governmental (PEG) Services in the Digital TV Age”: Hearing Before the Subcommittee on Telecommunications and the Internet, 110th Cong., 2d sess., January 29, 2008, transcript available at https://house.resource.org/110/org.c-span.203829-1.raw.txt.

  29. “Public, Educational, and Governmental Services in the Digital TV Age”: Hearing Before the Subcomm. on Telecommunications and the Internet of the H. Comm. on Energy and Commerce, 110th Cong. (2008), 30 (Statement of Congressman John D. Dingell) and 2 (Testimony of David L. Cohen).

  30. Digital Television Transition: Implementation of the Converter Box Subsidy Program Is Under Way, but Preparedness to Manage an Increase in Subsidy Demand Is Unclear (Washington, D.C.: United States Government Accountability Office, September 2008), 7.

  31. Cynthia Littleton, “Big Agenda for FCC Chief,” Variety, April 14, 2010, available at http://www.variety.com/article/VR1118017701?refcatid=14.

  32. Hill staffer, interview with the author, August 23, 2010.

  33. Huber, “David L., Explained.”

  34. “Competition in the Media and Entertainment Distribution Market”: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 144 (February 25, 2010). The Waters-Zucker colloquy is at 111–14, Lee at 107, Gutierrez at 142–43, Roberts at 145.

  35. Maxine Waters to Julius Genachowski, April 12, 2010, available at http://www.freepress.net/files/Rep.Waters_Letter_to_FCC_on_Extending_Comment_Period_in_Comcast-NBC_Merger.pdf; Waters and other members of Congress to Genachowski, May 7, 2010, available at http://waters.house.gov/UploadedFiles/FCC_Letter_on_Hearings_and_Questions.pdf; Waters to Mignon Clyburn, May 23, 2010, available at http://apps.fcc.gov/ecfs//document/view.action?id=7020550283.

  36. “Proposed Combination of Comcast and NBC-Universal”: Field Hearing Before the H. Comm. on the Judiciary, 111th Cong. 189 (June 7, 2010) (Statement of Rep. Maxine Waters).

  37. Ibid., 101 (Testimony of Stanley E. Washington, Chairman and CEO, National Coalition of African American Owned Media).

  38. Ibid., 102, 101.

  39. Ibid., 184.

  40. Ibid., 5 (Statement of Rep. Maxine Waters).

  41. “Queen Latifah Tackles NBC's Lack of Diversity on ‘30 Rock,’” Huffington Post, October 8, 2010, http://www.huffingtonpost.com/2010/10/08/queen-latifah-tackles-nbc_n_755666.html.

  42. “Proposed Combination of Comcast and NBC-Universal,” 189.

  43. Joe Flint, “Comcast-Universal Merger Attacked,” Los Angeles Times, June 8, 2010, available at http://articles.latimes.com/2010/jun/08/business/la-fi-ct-comcast-20100608; “Proposed Combination of Comcast and NBC-Universal,” 3.

  44. “Comcast and NBC Universal: Who Benefits?”: Field Hearing Before the Subcomm. on Communications, Technology, and the Internet of the H. Comm. on Energy and Commerce, 111th Cong. 49 (July 8, 2010) (Testimony of Joseph Waz, Jr., Senior Vice President, External Affairs and Public Policy Counsel, Comcast Corporation) (preliminary transcript).

  45. Ibid., 23 (Testimony of Jonathan Jackson, Rainbow PUSH Coalition, on behalf of Rev. Jesse Jackson).

  46. Joe Flint, “Comcast Promises to Add Latino to Board of Directors as Part of Outreach Effort,” Los Angeles Times, June 30, 2010, available at http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/06/comcast-promies-to-add-latino-to-board-of-directors-as-part-of-outreach-effort.html; “Comcast and NBC Universal: Who Benefits?” 11 (Testimony of Joseph Waz, Jr.); Bob Fernandez, “Comcast Adding Networks Owned by African Americans and Asian Americans,” Philadelphia Inquirer, December 17, 2010, available at http://articles.philly.com/2010-12-17/business/25293404_1_comcast-nbc-universal-comcast-lineup-comcast-corp; William Crowder, “Minority Entrepreneur Accelerator Program Kicks Off in Philadelphia,” Comcast Voices (blog), September 21, 2011, http://blog.comcast.com/2011/09/minority-entrepreneur-accelerator-program-kicks-off-in-philadelphia.html.

  47. Bill Allison, “Net Neutrality: Do Campaign Contributions Tell the Whole Story?” Sunlight Foundation Reporting Group (blog), June 2, 2010, http://reporting.sunlightfoundation.com/2010/Net-neutrality-contribs/; Hon. Bobby L. Rush to Hon. Julius Genachowski et al., October 21, 2010 (“For the reasons set forth below, I would urge the Commission to approve this proposed joint venture”); “Comcast has the best Infrastructure of Inclusion to build upon in the media industry”(“Proposed Combination of Comcast and NBC-Universal,” 114 (Testimony of Will Griffin, Chairman and Chief Executive Officer, Hip Hop on Demand).

  48. “Comcast and NBC Universal: Who Benefits?” 55, 56.

  49. Ibid., 69.

  50. Maxine Waters to Julius Genachowski, October 22, 2010, available at http://apps.fcc.gov/ecfs//document/view.action?id=7020918846.

  51. Eric Lipton, “House Inquiry Tied to Bank,” New York Times, July 31, 2010, available at http://www.nytimes.com/2010/08/01/us/politics/01ethics.html; Ashley Parker, “New E-Mails Delay Ethics Trial of Lawmaker,” New York Times, November 19, 2010, available at http://www.nytimes.com/2010/11/20/us/politics/20waters.html?_r=1&ref—axinewaters; Larry Margasak, “Maxine Waters Ethics Probe: Six out of Ten Committee Members Recuse Themselves,” Huffington Post, February 17 2012, http://www.huffingtonpost.com/2012/02/17/maxine-waters-ethics-investigation-recusal_n_1285286.html.

  52. Hill staffer, interview with the author, August 23, 2010.

  53. “Competition in the Media and Entertainment Distribution Market,” 1, 6 (Testimony of Jean Prewitt, President and CEO, Independent Film & Television Alliance).

  54. Independent Film & Television Alliance, “Independent Film & Television Alliance Reaches Television, New Media Agreement with Comcast and NBC Universal,” news release, July 12, 2010, http://www.ifta-online.org/independent-film-television-alliance-reaches-television-new-media-agreement-comcast-and-nbc-universa.

  55. “I have heard that network affiliates have some concerns about the merger, including the fear that NBC will move its most popular programming from broadcast television to cable, which would decrease viewers and revenues and thus could severely impact the ability of these local stations to deliver local news and information” (“Competition in the Media and Entertainment Distribution Market,” 101 [Questioning of Jeff Zucker, President and Chief Executive Officer, NBC Universal, by Rep. Bob Goodlatte]). “Some observers, noting that broadcast networks traditionally have had only a single
revenue source—advertising—that currently is facing serious cyclical and structural challenges, have predicted that Comcast might convert NBC to a cable network, abandoning its local affiliated broadcast stations and their local programming,” reported Charles B. Goldfarb, The Proposed Comcast-NBC Universal Combination: How It Might Affect the Video Market, Congressional Research Service, February 2, 2010, 24 (citing Andrew Vanacore, “Broadcasters’ Woes Could Spell Trouble for Free TV,” Yahoo! News, December 29, 2009, http://www.lubbockonline.com/stories/122909/bus_540670417.shtml).

  56. Appendix F of the FCC's approval of the merger set out the “Agreements Between Applicants and Network Affiliate Organizations.” See In the Matter of Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc. for Consent to Assign Licenses and Transfer Control of Licenses, 26 F.C.C.R. 4238, 4430 (2011), Appendix F.

  57. Sen. Bernie Sanders, “NBC-Comcast Merger Not in the Public Interest,” Huffington Post, December 6, 2010, http://www.huffingtonpost.com/rep-bernie-sanders/nbc-comcast-merger-not-in_b_792858.html; “Comcast-NBC Merger: Read the FCC Approval Letter,” Wall Street Journal, Deal Journal (blog), January 18, 2011, http://blogs.wsj.com/deals/2011/01/18/comcast-nbc-merger-read-the-fcc-approval-letter/. Numerous form letters from individuals were filed with the FCC, which can be found through the FCC's Electronic Comment Filing System, available at http://apps.fcc.gov/ecfs//fulltext/form.jsp.

  58. The numerous letters filed in favor of the merger can also be found through the FCC's Electronic Comment Filing System.

  59. John Eggerton, “Waters: Commissioner-Lite Chicago Forum ‘Unacceptable,’” Broadcasting & Cable, July 11, 2010, http://www.broadcastingcable.com/article/454666-Waters_Commissioner_Lite_Chicago_Forum_Unacceptable_.php; “An open-mic session at a Chicago field hearing on the merger, held by the FCC's Media Bureau, was almost completely dominated by nonprofit organizations for everything from companion animals to the elderly testifying as to Comcast's goodwill and constant support” (Susan Crawford, “Comcast-NBC Merger Is All About Money, Politics,” Sacramento Bee, September 15, 2010, available at http://gfem.org/node/1051).

  60. Comcast Corporation, Corporate Responsibility Report, accessed March 4, 2012, available at http://www.cmcsk.com/documentdisplay.cfm?documentid=6024øp.

  61. “Money Politics; Rep. Bachmann in Overdrive; Predicting a GOP Wave; Craigslist ‘Censored,’” transcript of Anderson Cooper 360, aired on CNN on September 6, 2010, http://transcripts.cnn.com/TRANSCRIPTS/1009/06/acd.02.html.

  62. Gov. Arnold Schwarzenegger, Gov. David Paterson, Gov. Ed Rendell to Hon. Julius Genachowski et al., May 25, 2010, available at http://transition.fcc.gov/transaction/comcast-nbcu-cgo.html.

  63. “Confirmation of Elena Kagan to Be a Supreme Court Justice”: Hearing Before the Senate Judiciary Committee, 111th Cong., 2d sess. (2010) (Statement of Senator Al Franken).

  64. Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, 2008), 207.

  65. “Herb Kohl for Senate 1988—‘Nobody's Senator but Yours,’” YouTube video, 0:27, posted by “AlmostOnTheLake,” November 5, 2010, http://www.youtube.com/watch?v=cZQgY7Plobc. On industry consolidation and antitrust exemptions for the airline industry, see Senator Herb Kohl, “Kohl Announces Antitrust Subcommittee Agenda for the 112th Congress,” news release, March 10, 2011, available at http://www.kohl.senate.gov/newsroom/pressrelease.cfm?customel_dataPageID_1464=4332. On antitrust exemptions for the railroad industry, see Senator Herb Kohl, “Kohl Discusses Railroad Antitrust Amendment on the Senate Floor,” news release, February 29, 2012, available at http://www.kohl.senate.gov/newsroom/pressrelease.cfm?customel_dataPageID_1464=4928. On the Sirius–XM satellite radio merger, see “Kohl Says ‘No’ to Sirius-XM Merger,” Wall Street Journal, Washington Wire (blog), May 23, 2007, http://blogs.wsj.com/washwire/2007/05/23/kohl-says-%E2%80%98no%E2%80%99-to-sirius-xm-merger/. On the Comcast/NBCU merger, see “Kohl Wants Conditions on Comcast/NBC Deal, Weighs in With DOJ & FCC,” news release, May 26, 2010, available at http://www.kohl.senate.gov/newsroom/comcast-nbc-letter.cfm.

  66. Kohl, “Kohl Wants Conditions on Comcast/NBC Deal” Senator Bernie Sanders, “Sanders Statement on FCC and Comcast,” news release, December 23, 2010, available at http://www.sanders.senate.gov/newsroom/news/?id=a9d88ea4-4c3c-45f2-ac70-016493cc40ef.

  67. “Oversight of the U.S. Department of Justice”: Hearing Before the S. Comm. on the Judiciary, 111th Cong., 36–37 (2010) available at http://www.gpo.gov/fdsys/pkg/CHRG-111shrg63323/pdf/CHRG-111shrg63323.pdf; Senator Al Franken, “Sen. Franken's Speech to Free Press Group in Minneapolis,” news release, August 19, 2010, available at http://www.franken.senate.gov/?p=news&id=1044 [brackets in the original].

  68. “Bottom Line,” TheHill, available at October 4, 2010, http://thehill.com/business-a-lobbying/lobbying-hires/122495-bottom-line.

  69. Sen. Al Franken, interview with the author, September 30, 2010.

  Chapter 11. The FCC Approves

  1. Media executive, interview with the author, August 6, 2010.

  2. In the Matter of Application of EchoStar Communications Corporation, General Motors Corporation, and Hughes Electronics Corporation and EchoStar Communications Corporation, 17 F.C.C.R. 20559 (October 18, 2002); In the Matter of Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Assign or Transfer Control of Licenses and Authorizations, Federal Communications Commission, WT Docket No. 11-65 (November 29, 2011).

  3. In the Matter of Applications for Consent to the Transfer of Control of Licenses XM Satellite Radio Holdings Inc. to Sirius Satellite Radio, Inc., 23 F.C.C.R. 12348 (August 5, 2008).

  4. Ibid., 12375 (“the price cap condition ameliorates possible harm to consumers, and the new programming packages offer consumers more pricing choices”).

  5. Media executive, interview with the author, August 6, 2010.

  6. In the Matter of SBC Communications Inc. and AT&T Corp. Applications for Approval of Transfer of Control, 20 F.C.C.R. 18290, 18392 (November 17, 2005); In the Matter of Verizon Communications Inc. and MCI, Inc. Applications for Approval of Transfer of Control, 20 F.C.C.R. 18433, 18537 (November 17, 2005); “Consumers are entitled to access the lawful Internet content of their choice … to run applications and use services of their choice … to connect their choice of legal devices … [and] consumers are entitled to competition among network providers, application and service providers, and content providers” (In the Matters of Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, et al., 20 F.C.C.R. 14853, 14988 [September 23, 2005]).

  7. In the Matter of Verizon Communications, 20 F.C.C.R. at 18573 (Statement of Comm. Kathleen Q. Abernathy).

  8. Thomas M. Koutsky and Lawrence J. Spiwak, “Separating Politics from Policy in FCC Merger Reviews: A Basic Legal Primer of the ‘Public Interest’ Standard,” Phoenix Center Policy Bulletin no. 18 (May 2007): 14.

  9. “[W]e refer to ‘intermodal competition’ as the competing provision of services over alternative technological platforms” (In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Deployment of Wireline Services Offering Advanced Telecommunications Capability, 16 F.C.C.R. 22794 note 73 [December 20, 2001]).

  10. Stuart M. Chemtob, “The Role of Competition Agencies in Regulated Sectors,” Fifth International Symposium on Competition Policy and Law, Chinese Academy of Social Sciences, Beijing, May 11–12, 2007, 5, available at http://www.justice.gov/atr/public/speeches/225219.htm#N_1_.

  11. In Re Applications of Ameritech Corp. and SBC Communications Inc., for Consent to Transfer Control of Corporations Holding Licenses and Lines Pursuant to Section 251 and 310(d) of the Communications Act and Parts 5, 22, 24, 25, 63, 90, 95 and 101 of the Commission's Rules, 14 F.C.C.R. 14712, 14887 (October 8, 1999). “While the SBC-Ameritech merger was consummated in October 1999, SBC has yet to compete in those markets outside o
f its region. Under the merger conditions placed on SBC by the FCC, it is liable for voluntary penalties for failure to enter the 30 out of region markets” (ALTS [Association for Local Telecommunications Service] Response to NTIA [National Telecommunications and Information Administration] Request for Comment on Deployment of Broadband Networks and Advanced Telecommunications Services, December 19, 2001, available at http://www.ntia.doc.gov/legacy/ntiahome/broadband/comments3/ALTS.htm).

  12. “Most importantly, all of the commitments we have made, and conditions that we have agreed to, are wholly consistent with the manner in which we have always intended to conduct the Comcast and NBC Universal businesses. None of them will prevent us from executing on our business plans or will impair the competitiveness of any of our businesses.” (David L. Cohen, “Regulatory Approval Received for Comcast/GE Joint Venture for NBC Universal,” Comcast Voices (blog), January 18, 2011, http://blog.comcast.com/2011/01/regulatory-approval-received-for-comcastge-joint-venture-for-nbc-universal.html).