Transcripts For CSPAN2 The Communicators 20140331 : vimarsan

Unemployment insurance extension. The house not in session today. Members return tomorrow at noon eastern for legislative business. Among the bills being considered under suspension of the rules, one that authorizes 150 million in aid for ukraine and expands sanctions imposed this month by the Obama Administration against certain russian and ukrainian officials. This bill passed the Senate Last Week by a voice vote. Votes tomorrow are post poped until 6 30 p. M. Eastern time. You can watch live gavel to gavel coverage of the house on cspan and the senate here on cspan2. Cspan, created by americas Cable Companies 35 years ago and brought to you today as a Public Service by your television provider. Host david cohen is the executive Vice President of the comcast corporation, and hes our guest this week on the communicators. Be mr. Cohen, when it comes to the comcast Time Warner Cable proposed merger, whats the biggest hurdle that you see facing comcast . Guest so what a surprise we should start with that question. Well, obviously, were going to have a serious governmental review of the transaction. But ill be honest with you, i think the transaction is a lot less scary, its a lot less large and a lot less complicated than some people would like to make it. So when you think about it in the video space, this is not a horizontal deal. We dont compete with time warner capable anywhere. There isnt a consumer in america anywhere who has a choice between buying comcast products or Time Warner Cable products, and at the end of the day, were going to have under 30 of the market, so not particularly scary. Theres one thing that is appropriate to think about and to discuss, it is the implications on the broadband side. And i think theres a very good story there as well. Lots of procompetitive impacts, proconsumer impacts from the transaction as a result of the increased scale and the increased investment. And, again, not a very scary story when you look at market share. Something less than 40 of the wire line broadband share. But if you factor in wireless, and i just think its indisputable today that wireless is certainly beginning to be an effective competitor and substitute for at least many uses of broadband. Market share is as low as 20 . And, again, National Share and broadband, not sure what that matters. The issue is local share. And in no local market will there be be any less choice after the transaction than there is before the transaction. Host well, want to get you to respond to what david carr in the New York Times wrote after the announcement of the proposed merger. For consumers, cable is not Just Television anymore. It is where the internet comes from. And should this deal go be through, more people who want to cut the cable cord will still have to buy their broadband from a Cable Company where prices go only one way, up. Guest so a lot of respect for david carr, but a lot of mistakes in that statement. So first of all, in terms of buying broadband today, consumers are going to have the same choices after this transaction as they had before this transaction. The implication of that particular theory is that somehow this transaction is going to reduce choice for the purchase of broadband. That is just not true at all. Number two, according to the fcc 90, about 93 of americans have access to broadband, the wireline broadband today. And 97 of them have a choice of at least two broadband providers. So its not a singlechoice market, again, as mr. Carr represents. And unless the notion that prices on broadband only go one direction which is to go up is, again, true only if you look at sticker price. But with promotions, prices for broadband have been amazingly stable. And when you realize the additional speed and the additional capacity that we have built into our broadband network, today comcast consumers pay 92 less per megabit down of speed that is delivered to their homes tan they did a decade ago than they did a decade ago. So sharply declining effective prices in the broadband market. Host joining our conversation on the communicators is howd buskirk of howard bus curbing of Communications Daily where he serves as editor. You tell us what the timetable is and what seems to be taking a little time in getting that in . Guest sure. So were, the current plan, theres no definitive date for this, but the current plan is to do our filings and Public Interest statement and applications for license transfer early in april. My guess would be probably in the second week of april. Thats roughly i the time period that we always said this would take. As you know, you have covered transactions before, the Public Interest statement is a major, major filing, and it does take a considerable amount of time to prepare and to prepare thoroughly. So this is all just part of the mechanics to get the process started at both the fcc and the Justice Department. One transaction i spent a lot of time covering was at t tmobile, and i realize the fact set is totally different here, but were starting to see a lot of opposition to this. Theres social media, and im just wondering, i mean, are you concerned about the level of opposition that youre starting to see . Guest so, i mean, theres clearly been opposition expressed to the transaction, but i think it is also safe to say that in in any media transaction thats been up veiled in the last 20 years, theres always been opposition. Tends to come from the same group of people whose basic argument is anytime there is any consolidation in the media or telecom space, the sky is going to fall, the end is going to the world is going to end as we know it, the internet is going to end, and those predictions have largely been discredited in multiple prior transactions. I think they are equally untrue today. And ill say, i think ive been struck by the absence of rational, knowledgeable voices in this space coming out in opposition or even raising serious questions about the transaction unlike at t tmobile where you had a really credible and serious economists and antitrust experts and antitrust lawyers saying from the outset what is at t thinking here . Its number one competitor acquiring number four if a straight, horizontal transaction, absolutely eliminating or reducing consumer choice. And never any of those voices weigh in in this transaction because of the fundamental differences in the transaction. Well, you now have the psychological problem of taking one of four National Competitors out of the market that you did with tmobile, but i think a lot of the questions have circulated around the issue of with this acquisition you would control, i think, 40 of the National Broadband market, and theres questions, i think theres starting to be questions about when is big too big. I mean, is there some limit to the size of how big one operator can get . Guest so, great questions. Let me sort of start, i mean, a lot of the opposition from this group of people, as i said, who oppose everything is based upon pig is bad big is bad. And whenever you get big, thats a bad thing. And sometimes big is bad, i will acknowledge that. But be sometimes big is really important, really necessary and really good. And that would tend to be in high Capital Expenditure industries, in industries where innovation is fast be moving and where you need a lot of investment in r and d and innovation to be able to keep pace. And thats our industry. So the size, the rationale for this transaction is all about scale. We are going to get bigger. Im not walking away from that, but that is the critical benefits from this transaction will run from that scale; the ability to invest more, to spread the investment and plant in r and d across a Larger Customer base to enable us to compete against our real competitors. Time warner cables not a competitor, charters not a competitor, cable vegas not a competitor. Cablevisions not a competitor. Dish, national company, a, the and, the, global company, verizon, global company. Increasingly, netflix, national quasiglobal company. And most of those companies are bigger than we are. They all have a larger geographic reach. Most of them are bigger by revenues, by market capitalization and or by customers. So this transactions all about increasing competition, creating more consumer benefit be as a result of gaining additional scale. That shouldnt be scary to people, and i think knowledgeable people will look at the transaction and will say, hey, this is a really good thing for consumers to create a Near National cable and broadband competitor in order to compete against the national and Global Players that are shaping this marketplace in the future. In terms of broadband market share, i want to reiterate because its just so important. If you only look at wireline broadband, then we would have a market share of something less than 40 . But as soon as you factor wireless in, its a market share of 20 . 20 is not scary. Id argue that 40 isnt scary because the relevant market here is not national. The relevant market is for you, for peter, for anyone watching in this show what are my broadband choices. What are the choices where i live in terms of broadband. And theres nothing in this transaction that is going to reduce broadband choice for any consumer in america. Host david can cohen, but when comcast bought Nbc Universal, there were conditions put on by the fcc including some Net Neutrality conditions. What conditions would comcast accept to get this deal done . [laughter] guest so other than what weve already said about extending the Nbc Universal conditions including our commitment to abide by the fccs open internet rules which makes us the only isp in the country that is legally bound by those rules today, other than extending those conditions to this transaction, we need to wait and see what the regulators say. We really dont think theres a need for additional conditions here. But we are very respectful of the process, and as howard pointed out, we havent each had a chance even had a chance to start the process yet. So when the time is right, well have discussions about that with the Justice Department and the fcc. The fcc, for example, the wireless base, there is, theres a psychological thing where theyve been pretty clear that they want to have four national carriers. Do you think that psychologically theyre going to have some kind of perspective on how big is too big and whether i know what you were saying about overall market share, but dont you think at some point that they start to draw the line . Guest so, again, i have huge respect for the fcc, for the career folks at the fcc, i have a tremendous amount of respect for tom wheeler, the current chair, and all four of the current commissioners. I think theyre going to look at in this based on the law and based on the facts and not on an emotional commitment to something amorphous about, you know, how big is too big. But specifically, the good news, i think, for the american consumers, the good news for this transaction is that the fcc has spent a roth of time a lot of time working on the question of how big is too big in the multichannel video marketplace. Two extended proceedings about the question how big a share can one company have in this marketplace, both times the commission concluded that they wanted to set a 30 horizontal ownership cap. Shouldnt get higher than 30 of the multichannel video marketplace. In both cases the d. C. Circuit struck down that ownership cap finding that the fccs conclusions were arbitrary and capricious, unsupported by the facts, unsupported by the law and that, in fact, a Single Company could have a much higher market share than what the fcc had determined and still not have adverse impacts on the market. Notwithstanding that ruling, which is the law of the land today, we have agreed that well divest up to about three million customers to bring us underneath the 30 be horizontal 30 horizontal ownership cap that the fcc twice tried to put into place. So i think the extent theres an emotional attachment to the question is how big is too big, i think we are coming in underneath the level at which that emotional attachment might exist. One other question, you mentioned tom wheeler. After the february fcc meeting, wheeler was asked about his meeting with the sprint officials about the possibility acquisition of tmobile, and one of the things he said was, well, at least they came in, and comcast never did before announcing its deal. Was that, was there a reason or was that a mistake not to go see the chairman before . Guest i dont think he quite said at least they came in. Well, he did say comcast guest he said we did not come in. That was a factual comcast [inaudible] [inaudible conversations] guest we dont believe that the fcc is in the business of issuing advisory provisions, and i think it was out of respect for the long history weve had with the fcc that its never in our interest to put an fcc chairman or an fcc as an institution on the spot to ask for an advisory opinion without the benefit of a filing and the full analysis and review of any transaction. So i didnt, i didnt perceive tom wheeler as being critical. I think he was making a factual observation, and as somewhat of a professional in this space, id sort of take it as a compliment. And im not sure he meant it as a compliment, but i take it as a compliment that, you know, we understood the role of the fcc and the way the process works and maybe sprint and soft of bank didnt quite understand those rules. Host david cohen, one other factor in all of this is congress can. And will you be testifying before congress when they hold some hearings on this . Guest so we already have one hearing scheduled so far when wh is the Senate Judiciary Committee Hearing which will be april 9th as currently scheduled. I will be the comcast witness at that hearing and, again, weve been to this rodeo a few times before. We toroly respect the thoroughly respect the role that congress has in its oversight role of the Justice Department and of the fcc even though theres no Decision Making role by congress. Be and, frankly, we look forward to the public hearings as an opportunity like appearing on the communicators is to make our case and to spell out in very clear terms the strong procompetitive, proconsumer benefits of this transaction and the absence of any material risk of any competitive activity as a result of it. Host so many of the articles after the merrier was announced merger was announced were about you and your political influence. What did you think about those articles . Guest im always a little humored by articles like that. Peter, youve known me for a long time, it is not my favorite thing in the morning to wake up and see an article about me. But, you know, look, i like government. I like politics. Ive been involved in politics and government for 25 years, and the old, that old classic line some of my best friends are elected officials. And they really are. I respect the work that is done, and i enjoy my relationships with them. But i, having been involved this the political arena, i know there are no quid pro quoses, there are no guarantees, there are no preset expectations. Any good elected official and id like to think that many elected officials who are my friends are all great elected officials are going to make decisions on the merits based upon what they believe is the truth based upon the facts and the law at the time that they look at it. And at the end of the day, if an elected official who we have a relationship with this thinks that this transaction is awful for consumers or doesnt agree, doesnt believe the facts that were presenting forth, theyre going to oppose this transaction, and thats their job as elected officials. And ill respect that judgment just as push as id respect the judgment just as much as id respect a judgment in favor of the transaction. I want to ask how much data you anticipate having to file with regulators to get this thing approved. Are we talking boxcarloads full of documents . Guest im sure there will be a significant amount of data. Remember, what we file at the Justice Department is not public. That is a private process. What we file at the fcc is largely public although confidential and proprietary data may be redacted, and there may be certain things, certain elements that are filed that are not part of the Public Record. So, you know, in connection with our Public Interest statement we with will be filing applications for license transfer, and there are hundreds of licenses involved here. So that will be, those will be voluminous. Therell be the Public Interest statement itself, there will be several affidavits that are attached to the Public Interest statement and on which the Public Interest statement relies. So youll have, you know, hundreds of pages of public filings right on day one. In terms of what follows, that really goes to what the Commission Asks us to file in supplement which will come a little bit further in the process than with the filing of the Public Interest statement. Guest and sometimes in cases like this the fcc will seek information from competitors, they want to do sort of a market snapshot. Do you anticipate thats likely in this case . Guest yeah. So i, again, the Justice Department i think the Justice Department clearly will talk to competitors, programmers, others in the ecosystem. With the fcc process, what will happen is well make our, well file our applications and Public Interest statement, and then this if some amount of time, a week, two weeks, three weeks the commission will issue an order which puts that Public Interest statement on whats called Public Notice. And then well set a schedule, and therell be some amount of time for people to file at the fcc and then some amount of time for people to reply to those filings. So youll actually see the positions, and people will come in and meet with fcc staff and with individual fcc commissioners, and therell be exaround today ex parte letters filed that disclose the existence of those letters and roughly speaking what was said in those meetings. So all of that becomes part right. But sometimes they go be beyond that, and theyre trying to build more of an Industry Snapshot because they want to see thats where the questions about how pig is too big in the guest again, i maybe, but not and, remember, a lot of entities, the fcc doesnt even have jurisdiction over to. So most of what happens at the fcc is going to build off of the record that is created as a result of putting the Public Interest statement on Public Notice and creating a process for anyone when has any interest in the for anyone who has enter in the transaction. Im not saying theyre not going to solicit additional comments, but the fcc process so public, its very unlike the doj process that almost anything they do they will want to make part of the Public Record of this proceeding. Host david cohen is the executive Vice President of the comcast corporate. He also serves as chair of the trustees of the United States of pennsylvania where he the university of pennsylvania where he graduated from law school. He also serves on the National Boards of the urban league and la raza. How long has comcast had its eye on Time Warner Cable, is that something youd answer . Guest well, you know, its interesting, its pretty easy because we did file our s4 with a proxy, and so i think it is safe to say that we always are interested in looking at possible attractive acquisition opportunities and for probably a year or two before this was announced there were off and on, you know, Light Conversations about whether it made sense for comcast and Time Warner Cable to be put together. And, you know, over the course of a year there were discussions among multiple players in the industry with comcast and with others about cable consolidation, most particularly conversations between charter and comcast, between charter and Time Warner Cable, between charter, Time Warner Cable and comcast. And then ultimately, the deal was struck between Time Warner Cable and comcast. So were very disciplined. In the way in which we think about, the way if which we think about financial transactions. We want to make sure anything we do is digestible from ab operational an operational perspective. Comcast cable is functioning at the highest level that it ever has and really in a distinctionive way from the rest of the distinctive way from the rest of the cable industry, and we would never want to take away from the Operational Excellence that we have at comcast cable. But with us focused on the future of the company and our Balance Sheet and, you know, brian loves to ask can the question were very can comfortable with where we are today, but five years from now, the enyears from now, what is this Competitive Landscape going to look like . As i said, the additional scale that comes from this transaction gives us the ability to continue to invest in innovation and r d to insure that we remain at the head of the class in terms of delivering high quality, very attractive and appropriately priced video, highspeed data and Telephone Services to residential customers and to business customers. And, you know, brian keeps all of our eyes focused on that ball in a great way, and its that frame of how do we continue to be competitive and impactful in the space with a Balance Sheet and financial discipline that michael brungs to the table brings to the table and the optional compleans that a neil schmidt and a steve burke at Nbc Universal bring to the table. Host in the few minutes we have remaining, i want to ask you about other issues comcast is working on right now, peering agreements. Is that the wave of the future . Guest well, i dont know if its the wave of the future, but its the wave of the past. Peer agreements and interconnection agreements have been in existence since the birth of the internet. It is how the internet was built, it is how the internet functions. Comcast currently there are 40 traffic provider, content Delivery Networks that are out in the marketplace very aggressively competing to sell access to the comcast network. We have over 8,000 internet edge providers who access our internet through a variety of interconnection and peering agreements mostly derivative through those 40 effectively wholesalers of access to our internet. So internet interconnection and peering agreements, the vast majority of which, by the way, are settlementfree; that is, they are free connections to the internet. It is how the internet was built up, and it is absolutely impossible to imagine an interwith net that does not continue to rely deny internet that does not continue to rely upon that web of of agreements in a very competitive market and one that is working extremely well from a competitive and a financial perspective. Somewhat famously, netflixs Ceo Reed Hastings was very critical recently of these agreements, and he said this kind of leverage is effective against netflix which is pretty large, imagine the plight of Smaller Services today and in the future. And my two questions about that are, one, do you expect the fcc to look more closely at this issue and, second, how do you respond to mr. Hastings . Guest so the first questions easy, i do expect the fcc to look at this. I think they were looking at it before Reed Hastings spoke and, again, i have tremendous confidence in the fcc and in the current leadership of the fcc, and i think well be able to make a case along the lines that i just made in response to peters question that this is not a place where Government Intervention is helpful or necessary. In terms of mr. Hastings, i have a huge amount of respect for him. Hes built an amazing business. Hes a great partner of comcast, and by the way, i think hed say comcast is a great partner of his because if it wasnt for comcast and the cable industry and the investments weve made in broadband, netflix would not be as successful as it is, and netflix has clearly enabled us to sell more broadband subscriptions. But his argument, with all due respect, on this issue is essentially hogwash. [laughter] it has nothing to do with access to the internet. That has nothing to do with Net Neutrality, its not a matter of stronger Net Neutrality which is what he talked about. The transit market is intensely competitive. As i said, there are 40 companies who are out there selling access to our pipe and to our broadband, and the history if it ever becomes known will be that it was netflix that was the moving party in terms of making in this deal with comcast. And the reason why was because they wanted to cut out the wholesaler, deal directly with us controlling more than 30 of the traffic on the internet. Why do we have to pay a wholesaler . We can get a better deal by going and dealing directly with comcast, and thats exactly what they did. Host and finally, mr. Cohen, recently the wall street journal had a headline that apple ask comcast are exploring a tv deal. Didnt see you quoted in this article. Whats your response to that headline, and whats the advantage of working with apple . Guest well, you didnt see anyone from comcast or apple quoted in that story, and im going to just say, you know, we talk to people all the time, and im not going to have anything specific to say about the discussions with apple. Other than to point out that there is another example of how intensely competitive and fastevolving the entire multichannel video space is. Here you have a company, theyre the most valuable company in the world by market capitalization, a company that generates 40 50 billion a year in cash flow, and theyre working as hard as they can to figure out an entry into this market which will be a new competitor that isnt there now, and its further underscores why there shouldnt be any material concern about comcast Time Warner Cable transaction, because theres nothing but more, different and more interesting competition that is coming in this space down the road. Host david cohen, executive Vice President of comcast, and Howard Buskirk of Communications Daily. Cspan, created by americas Cable Companies 35 years ago and brought to you today as a Public Service by your television provider. Coming up next, eps administrator gina mccarthy, she testified on her agencys 2015 epa budget request. After that, air force secretary Deborah Lee James addresses the women and International Security organization. And later the Senate Returns at 2 00 eastern time for a debate on the socalled doc fix legislation involving how much the government pays doctors who treat medicare patients. Last year Virginia State senator kay deeds suffered a personal tragedy when he was stabbed by his mentally ill son. Before the incident a judge had issued an involuntary commitment order for senator deeds son to receive treatment but no beds were available. Today at the National Press club, senator deeds will talk about his efforts to change the Mental Health system in his state. You can watch his remarks live starting at