May has been a busy month for Washington handwringers seeking to exert ever-more government authority over the Internet and telecom industries lest the rest of us forget who actually controls the pipes and bytes comprising the nation’s sixth-largest economic engine. According to Sen. Al Franken, final control belongs to big government, baby. The legislative enforcer recently came out swinging his rhetorical baseball bat in full force—all in the name of competition, natch.
Franken, a Minnesota Democrat, chairman of the Senate Judiciary Subcommittee on Privacy, Technology, and the Law, and member of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, was a staunch opponent of last year’s merger between Comcast and NBC-Universal. Once again, Franken has Comcast in his sights, complaining about favoritism toward XBox.
The merger, you may recall, should’ve been a no-brainer, but the Federal Communications Commission dithered and fretted for a year before approving it, and only after exacting several outrageous demands from Comcast. Franken fears those extorted demands aren’t being met.
As one condition to approve the merger, the FCC and Department of Justice forced Comcast to concede the carrier’s management of Hulu, a video-sharing site it co-owns, to ensure competition in the on-demand video service market. Franken now is crying foul after Comcast recently announced it would exempt its Xfinity online-video-distribution (OVD) service for the Xbox 360 from the company’s broadband data cap but won’t do the same for some competitors’ OVDs.
Franken, who has made network neutrality his personal hobbyhorse, wrote a five-page letter to the FCC and DOJ in which he vexed, “Comcast’s actions will almost certainly drive consumers to Comcast’s Xfinity Streampix, rather than other Internet video streaming services, which I fear will thwart your agencies’ efforts to create an open and level playing field for current and future competitors of Comcast.”
In his whine, however, Franken applied egg to his face with a garden trowel. The FCC’s Open Internet Rules—the net neutrality regulations illegally adopted by a 3–2 vote in December 2010 and currently challenged by Verizon and Metro PCS in U.S. District Court—don’t apply to cable service. When Comcast streams video over the Internet, it adheres to the FCC’s net neutrality standards, but the X-Box application employs Title VI cable service rather than the open Internet, rendering Franken’s apples to oranges alchemy moot.
As a broken analog clock gets it right twice a day, Franken does make at least one good point in his screed, and that’s the ridiculously long time it takes the FCC to rule on matters before it. It took 10 months for the agency to rule against Comcast in favor of Bloomberg, the company that wanted the government to force Comcast to cluster its news channel closer to other 24-hour news channels. Franken applauds that ruling, but not the amount of time it took to reach it.
As it happens, Comcast is appealing the FCC’s decision on that matter while also fighting the commission on its insistence Comcast offer the Tennis Channel as part of the same broadly distributed tier package that includes NBCU-owned sports channels Versus and Golf Channel. The latter case already has resulted in a $375,000 fine against Comcast.
The months of FCC dillydallying taken to draw the wrong conclusions on such simple matters hits taxpayers the hardest: We pay the costs of the FCC’s investigations plus the costs of the industry’s defense against them in higher prices. The high cost of doing business during the intrusive Obama administration ultimately falls on consumers.
In Franken’s and the FCC’s world, forcing customers to pay more is the price of ensuring their version of market competition. But the oft-repeated competition canard is just a fig leaf meant to hide increasing government control of yet another major chunk of the U.S. economy.