Dish Calls Comcast-TWC Merger ‘Eerily Similar’ to Primestar
[Via Satellite 08-28-2014] Satellite pay-TV provider Dish Network has filed a petition to the U.S. Federal Communications Commission (FCC) against the proposed $45.2 billion merger of Comcast and Time Warner Cable, arguing that the combined cable company would irreparably hinder competition for video. The petition, which spans more than 200 pages, claims the merger bears strong resemblance to Primestar, a former cable television-owned Direct Broadcast Satellite (DBS) company accused of attempting “to restrain competition by blocking other firms from entering the DBS business.”
Dish mentions in its report that Comcast was one of the cable companies involved in the Primestar joint venture that tried to stifle DBS competition in the late ‘90s. At the time Primestar attempted to purchase rights to an orbital slot at 110 degrees west, one of only three high-powered satellite TV locations capable of reaching all of the United States. The U.S. government prevented the purchase, which would have limited the competitive ability of satellite companies.
“The [Comcast-TWC] instant transaction is a virtual facsimile of the Primestar transaction, which was stopped by the Department of Justice in 1998,” Dish wrote in its petition. “The Commission should reject this transaction for the same reasons the Justice Department stopped Primestar.”
According to Dish, the high-speed broadband pipes owned by cable companies are essential for Over-The-Top (OTT) content. Dish does not see its satellites as capable of delivering OTT content by themselves, necessitating third party Internet Service Providers (ISPs) to fulfill the service. For example, Dish World, an international TV service, receives the majority of its foreign programming streams by satellite downlink. Content is then encoded, cashed and transported over the Internet as an OTT service.
Dish said the Comcast-TWC merger threatens its burgeoning entrance into OTT by the sheer number of broadband pipes the combined company would own.
“The services provided by DISH and other OTT video providers optimally require a household to have actual and consistent download speeds of at least 25 Megabits per second (Mbps). If approved, the combined Comcast/TWC would control 50 percent of the broadband pipes in the United States that have speeds of at least 25 Mbps. Most households will have no alternative to the combined company’s high-speed broadband pipe,” Dish wrote.
With control over half of the broadband pipes, Dish estimates this would equate to nearly two thirds of U.S. households. Lowering the target for OTT to 10 Mbps, Dish calculates the combined cable company would control more than 42 percent of the market. Comcast and TWC disagree, saying they would have less than 30 percent of U.S. subscribers.
Dish openly admits that OTT is forcing the video industry to change. The company fears that together Comcast and TWC could harm OTT competitors at three choke points. The first would be “discriminatory peering and interconnection terms on online video traffic,” second would be intentional degradation of “traffic from competing [Online Video Distributors] OVDs on the public Internet portion of Comcast/TWC’s broadband pipe,” and third would be “starving” the public Internet portion of the last-mile portion of the broadband pipe in order to increase capacity for its own vertically integrated “managed services.”
Many of the satellite services Dish provides are increasingly reliant on terrestrial connectivity to function. Netflix, the Consumers Union and several others have filed petitions as well to terminate the merger. Dish’s OTT service Dish World has outpaced the growth of its traditional satellite TV service. Should the merger go through, the company could lose a major new revenue source.
“The broadband-enabled services play a direct role in reducing subscriber churn to other pay-TV providers and maintaining the competitiveness of the Dish satellite service,” wrote Dish. “We see an increasingly challenging path for stand-alone satellite TV to maintain competitiveness and market share, and as a result, we are investing heavily in OTT video services.”