What we can learn from a close look at Comcast’s troubling past
Most of the coverage of Comcast’s audacious acquisition bid for Time Warner Cable has glossed over its record of flouting the public interest in its quest for influence and profit.
Given the control the merger would give Comcast over the nation’s essential information and telecommunications infrastructure, that record now cries out for a closer look.
What it reveals is a company that has shown little regard for the fundamental principles of the open Internet. It’s a record of broken commitments to customers and regulators, and of corporate deception.
The Federal Communications Commission and Department of Justice, which will rule on the proposed merger, should examine this record very carefully, and judge whether it disqualifies Comcast to hold the power it’s seeking.
Let’s start with the BitTorrent Affair.
In 2007, numerous customers reported having trouble using popular file-sharing services such as BitTorrent and Gnutella on their Comcast Internet connections. They suspected that Comcast was deliberately interfering with those services.
The reasons weren’t hard to guess: BitTorrent, for one thing, had contracts to distribute licensed content from Hollywood studios and served as a distributor of content licensed by others; as the Electronic Frontier Foundation observed at the time, these services could compete directly with Comcast’s own pay-TV products.
Comcast flatly denied that it was blocking or targeting any specific application or service--it said it was merely performing “network management,” mostly during periods of peak traffic and network congestion. That might result in “delaying” some communications for customers, it claimed, but only occasionally.
The EFF and the Associated Press later demonstrated that this was a lie. Following their findings, the FCC later observed, Comcast “admitted that it did target its subscribers’ peer-to-peer traffic for interference” and that it did so regardless of the time of day or the level of network congestion. “Comcast’s interference is far more invasive and widespread than the company first conceded,” the FCC stated.
In fact, Comcast’s activities had far greater ramifications than its effect on its own subscribers. Essentially, the EFF said, the company was injecting forged data packets into the Internet in a way that caused users’ connection programs to fail.
Comcast was “essentially deploying against their own customers techniques more typically used by malicious hackers,” the EFF found. “Comcast is essentially behaving like a telephone operator that interrupts a phone conversation, impersonating the voice of each party to tell the other that ‘this call is over, I’m hanging up.’”
And it did so in a way that made it almost impossible to know Comcast was to blame. Its actions undermined the core principles of the Internet, threatening innovation and hurting potential competitors.
Ask yourself: How much control over the Internet do you want to give a company that acts this way?
The FCC in 2008 concluded that Comcast had “unduly interfered with Internet users’ right to access the lawful Internet content and to use the applications of their choice.” In essence, it found, “Comcast opens its customers’ mail because it wants to deliver mail not based on the address on the envelope but on the type of letter contained.” The company may have interfered with up to three-quarters of all peer-to-peer connections in certain communities--and it did so secretly.
But because Comcast had already agreed to use other means of “network management,” the FCC barely slapped it on the wrist. There was no fine, only an order that Comcast stop its old “discriminatory” ways and disclose how it intended to act in the future.
Comcast showed no gratitude for the FCC’s indulgence. Instead, it sued in federal court to challenge the agency’s authority in the case--and won. As a result, the FCC is still trying to figure out how to reestablish its authority to oversee Internet providers’ network-interfering behavior. In the meantime, however, users had filed a class-action suit against Comcast, which settled the case in 2010 by establishing a $16-million compensation fund. That came to $16 for every affected subscriber.
After the BitTorrent affair, Comcast appeared to be on its best behavior. In part this may have been because it needed the FCC’s approval for its massive acquisition of NBCUniversal, which came in 2011.
Because the FCC feared that the merger would give Comcast more incentive to steer customers toward “bundled” video and Internet services even if they didn’t want the package, it required Comcast to “actively market” standalone Internet services for no more than $49.95 a month (adjusted for inflation) until February 2014.
Comcast appears to have reneged. The FCC, after spending more than a year chasing down the facts, concluded in 2012 that the company hadn’t lived up to its commitment. The punishment? It extended the standalone Internet requirement by a year and assessed the firm an $800,000 penalty, described as a “voluntary contribution” to the U.S. Treasury. Based on its 2012 profit of $6.2 billion, that was a tad more than Comcast earned over a single hour that year.
There’s no reason to think that Comcast has fundamentally changed its operating philosophy, much less its approach to the Internet. These cases all unfolded under the management of Brian L. Roberts, who has been the company’s CEO since 2002 and chairman since 2004. His father, Ralph, is the company’s founder.
Under the terms of the NBCUniversal deal, Comcast is committed to upholding the principles of the open Internet until January 2018--that is, not to “block our customers’ ability to access lawful Internet content, applications, or services,” as the company reiterated in a statement last month. “Comcast’s customers want an open and vibrant Internet, and we are absolutely committed to deliver that experience.”
Can it be trusted to stick to that commitment until 2018? Let’s give it the benefit of the doubt and say yes. But after that, nothing will prevent Comcast from returning to its own ways. The FCC’s authority is under a cloud, and the financial incentives for misbehavior are enormous. They’ll only be greater if Comcast is bigger. Its record speaks for itself.