S. HRG. 113–710 

EXAMINING THE COMCAST-TIME WARNER CABLE 

MERGER AND THE IMPACT ON CONSUMERS 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

APRIL 9, 2014 

Serial No. J–113–56 

Printed for the use of the Committee on the Judiciary 

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EXAMINING THE COMCAST-TIME WARNER CABLE MERGER 

AND THE IMPACT ON CONSUMERS 
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95–816 PDF 2016

S. HRG. 113–710 

EXAMINING THE COMCAST-TIME WARNER CABLE 

MERGER AND THE IMPACT ON CONSUMERS 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

APRIL 9, 2014 

Serial No. J–113–56 

Printed for the use of the Committee on the Judiciary 

( 
(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

MAZIE HIRONO, Hawaii 

CHUCK GRASSLEY, Iowa, Ranking Member 

ORRIN G. HATCH, Utah 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TED CRUZ, Texas 

JEFF FLAKE, Arizona 

KRISTINE LUCIUS, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 
(III) 

C O N T E N T S 

APRIL 9, 2014, 10:06 A.M. 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Grassley, Hon. Chuck, a U.S. Senator from the State of Iowa ............................ 3 

prepared statement .......................................................................................... 60 

Klobuchar, Hon. Amy, a U.S. Senator from the State of Minnesota ................... 4 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1 

prepared statement .......................................................................................... 58 

Lee, Hon. Michael S., a U.S. Senator from the State of Utah ............................. 5 

WITNESSES 

Witness List ............................................................................................................. 57 

Bosworth, Jr., James L., Chairman and Chief Executive Officer, 

Back9Network Inc., Hartford, Connecticut ........................................................ 11 

prepared statement .......................................................................................... 123 

Cohen, David L., Executive Vice President, Comcast Corporation, Philadelphia, Pennsylvania ............................................................................................... 7 

prepared statement .......................................................................................... 62 

Kimmelman, Gene, President and Chief Executive Officer, Public Knowledge, 

Washington, DC ................................................................................................... 10 

prepared statement .......................................................................................... 114 

Minson, Jr., Arthur T., Executive Vice President and Chief Financial Officer, 

Time Warner Cable Inc., New York, New York ................................................ 9 

prepared statement .......................................................................................... 62 

Sherwin, Richard J., Chief Executive Officer, Spot On Networks, LLC, New 

Haven, Connecticut .............................................................................................. 13 

prepared statement .......................................................................................... 137 

Yoo, Christopher S., John H. Chestnut Professor of Law, Communication, 

and Computer & Information Science, University of Pennsylvania Law 

School, Philadelphia, Pennsylvania .................................................................... 14 

prepared statement .......................................................................................... 140 

QUESTIONS 

Questions submitted to James L. Bosworth, Jr., by Senator Grassley ............... 162 

Questions submitted to James L. Bosworth, Jr., by Senator Hatch ................... 172 

Questions submitted to James L. Bosworth, Jr., by Senator Klobuchar ............ 147 

Questions submitted to James L. Bosworth, Jr., by Senator Lee ........................ 177 

Questions submitted to David L. Cohen by Senator Franken ............................. 152 

Questions submitted to David L. Cohen and Arthur T. Minson, Jr., by Senator 

Graham ................................................................................................................. 176 

Questions submitted to David L. Cohen by Senator Grassley ............................. 163 

Questions submitted to David L. Cohen by Senator Hatch ................................. 173 

Questions submitted to David L. Cohen by Senator Klobuchar .......................... 148 

Questions submitted to David L. Cohen by Senator Lee ..................................... 178 

Questions submitted to Gene Kimmelman by Senator Grassley ......................... 165 

Questions submitted to Gene Kimmelman by Senator Klobuchar ...................... 149 

Questions submitted to Gene Kimmelman by Senator Lee ................................. 179 

Questions submitted to Arthur T. Minson, Jr., by Senator Franken .................. 159 

Questions submitted to Arthur T. Minson, Jr., by Senator Grassley .................. 167 

Questions submitted to Arthur T. Minson, Jr., by Senator Klobuchar ............... 150 

Questions submitted to Arthur T. Minson, Jr., by Senator Lee .......................... 180 
Page

IV 

Questions submitted to Richard J. Sherwin by Senator Grassley ....................... 169 

Questions submitted to Christopher S. Yoo by Senator Grassley ....................... 170 

Questions submitted to Christopher S. Yoo by Senator Hatch ............................ 175 

Questions submitted to Christopher S. Yoo by Senator Klobuchar ..................... 151 

ANSWERS 

Responses of James L. Bosworth, Jr., to questions submitted by Senators 

Hatch, Klobuchar, Grassley, and Lee ................................................................. 181 

Responses of David L. Cohen to questions submitted by Senators Klobuchar, 

Franken, Grassley, Hatch, Graham, and Lee .................................................... 186 

Responses of Gene Kimmelman to questions submitted by Senators 

Klobuchar, Grassley, and Lee ............................................................................. 285 

Responses of Arthur T. Minson, Jr., to questions submitted by Senators 

Klobuchar, Franken, Grassley, Graham, and Lee ............................................. 292 

Responses of Richard J. Sherwin to questions submitted by Senator Grassley . 318 

Responses of Christopher S. Yoo to questions submitted by Senators 

Klobuchar, Grassley, and Hatch ......................................................................... 320 

MISCELLANEOUS SUBMISSIONS FOR THE RECORD 

American Antitrust Institute, Albert A. Foer, President, and Diana L. Moss, 

Vice President, April 4, 2014, letter ................................................................... 333 

American Cable Association and NTCA—The Rural Broadband Association, 

Matthew M. Polka, President and Chief Executive Officer, ACA, and Shirley Bloomfield, Chief Executive Officer, NTCA—The Rural Broadband Association, April 9, 2014, joint letter ....................................................................... 330 

Consumers Union, Delara Derakhshani, Telecommunications Policy Counsel, 

and George P. Slover, Senior Policy Counsel, April 8, 2014, letter ................. 337 

NAACP and NABOB, Hilary O. Shelton, Director, NAACP Washington, and 

Senior Vice President for Policy and Advocacy, and Jim Winston, NABOB 

Executive Director and General Counsel, April 7, 2014, joint letter ............... 359 

National FFA Center, W. Dwight Armstrong, Chief Executive Officer, Indianapolis, Indiana, April 7, 2014, letter .................................................................. 356 

RFD-TV, Rural Media Group, fact sheet ............................................................... 361 

United States Hispanic Chamber of Commerce, Marc Rodriguez, Chairman 

of the Board, and Javier Palomarez, President and CEO, April 9, 2014, 

letter ...................................................................................................................... 328 

Veria Living, Eric Sherman, Chief Executive Officer, New York, New York, 

April 9, 2014, testimony ...................................................................................... 353 
(1) 

EXAMINING THE COMCAST-TIME WARNER 

CABLE MERGER AND THE IMPACT ON 

CONSUMERS 

WEDNESDAY, APRIL 9, 2014 

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in Room 

SH–216, Hart Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Klobuchar, Franken, Coons, 

Blumenthal, Hirono, Grassley, Hatch, Graham, and Lee. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, 

A U.S. SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. I would like to welcome everybody here. The 

Chair and Ranking Member of the Subcommittee with jurisdiction, 

Senator Klobuchar and Senator Lee, will be taking over the hearing at some point during the morning, and I appreciate the work 

both of them have done in getting us here. 

The original business of the cable industry—delivering television 

programming—is, as we all know, migrating to the Internet, and 

the industry has been changing in response. Consumers can now 

watch what they want and when they want. And if any of us have 

any question about it, ask our children or our grandchildren, and 

they will explain it to us. 

But when companies like Comcast and Time Warner Cable were 

founded, the term ‘‘binge watching’’ was unheard of; now it describes how many Americans watch their favorite shows. Cable 

companies have moved beyond delivering television, adapting their 

networks to provide broadband. They are now the sole source of 

this service for millions of Americans. As a result, they play a dominant role in how many people in the country get their information. 

Consumers deserve to know how the combination of the two largest 

companies in the industry will impact them. Every Senator has 

heard from their constituents saying, ‘‘What is this going to do to 

me?’’ 

So we are going to cover the current state of the video and 

broadband markets. We will hear discussion of vertical integration, 

relevant markets, and public interest standards. These are important issues to consider when analyzing the merger. Consumers, 

though, do not want to hear complex legal jargon or obscure regulatory terms. They just want to know why their cable bills keep 
2 

going up. They want to know why they do not have more choice of 

providers. And consumers want to know is this merger good for 

them or not. Frankly, every one of us wants to find out the same 

things. 

In 1996, I voted against the Telecommunications Act in part because of concerns I had about the lack of competition in the cable 

TV market. And I am still concerned. Similar questions are now 

being raised about the broadband industry, where consumers feel 

like they get large bills and inadequate choices. 

In Vermont, we are deeply concerned about net neutrality, but 

we do not simply want lip service. We want meaningful rules of the 

road to protect an open Internet so that anyone with an idea can 

have a chance to succeed in the online marketplace. And 

Vermonters are not alone in this. Thousands of Americans have 

flooded the FCC in recent weeks with comments supporting the 

restoration of open Internet rules, and their voices have to be 

heard. 

I appreciate that Comcast agreed to be bound by the FCC’s Open 

Internet rules as part of the NBCUniversal transaction. This was 

an important commitment, especially now that core elements of the 

Open Internet Order have been struck down. The conditions that 

currently apply to Comcast should not be seen as the end point but, 

rather, the minimum level of protection that should apply to promote competition online. And regardless of the outcome of this latest merger, I hope that Comcast will accept an extension of these 

rules beyond 2018. Better still, I urge them to support stronger 

rules that protect consumers and drive innovation. 

The recent interconnection deal between Comcast and Netflix 

also raises important questions for advocates of net neutrality. 

When ISPs can charge tolls or block access to their networks, net 

neutrality policies alone may no longer be enough to protect consumers or promote an open Internet. If companies have to enter 

special agreements to ensure adequate quality for their streaming 

video service, I worry about the potential impact on other bandwidth-intensive services. One that I think of that I worked on for 

years is telemedicine, especially tying together medical centers in 

rural areas. It is an annoyance for consumers when they cannot 

stream the most recent season of ‘‘House of Cards’’ due to an interconnection dispute. But it is really serious if it becomes a matter 

of life or death for patients who cannot reach health care for the 

same reason. 

So the proposed transaction touches on a range of critical policy 

issues going beyond just the broadband space. There are important 

questions about diverse and independent video programming and a 

vibrant marketplace for online video. So we have to ask how this 

is going to impact consumers, and I urge the FCC and Justice Department to consider this just as carefully. 

So I thank everybody for being here. I am going to yield to Senator Grassley. Then I understand Senator Klobuchar and Senator 

Lee have brief statements. 

[The prepared statement of Senator Leahy appears as a submission for the record.] 
3 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM THE STATE OF IOWA 

Senator GRASSLEY. Well, good morning. Thanks for the witnesses 

being here. 

Our Judiciary Committee’s role is not to decide whether or on 

what conditions Comcast and Time Warner will be permitted to 

merge. The Federal Communications Commission and the Justice 

Department are responsible for determining whether there are any 

issues with this transaction. But no doubt a hearing like this, as 

we have had in this Committee on other mergers, is a very important part of the process, because it does give the Committee an opportunity to hear and to conduct proper oversight not only of this 

specific merger but also to make sure that we understand the 

issues and that the Federal Communications Commission and the 

Justice Department are carrying out the law. 

Every year we are seeing new and exciting innovations in technology and communications. When I first came to Congress, I did 

not carry a phone around in my pocket like we do now. I never 

knew that one day there would even be such a thing as Twitter 

and that I would have 75,000 followers. Innovations like these have 

radically changed how we communicate and how we interact with 

each other, how we learn, how we get news, how we conduct business, and access entertainment. 

Access to the Internet is quickly becoming an absolute necessity. 

Americans need it to compete in this fast-paced and, more importantly, the globalized economy that has developed over the last 50 

years and is going to be more important in the future. They need 

the Internet to stay in touch not only with family and friends but 

probably very much a part of their economic lifeline, and particularly when they have access to their choice, and what a wide range 

of choice now. 

Right now we are experiencing a bit of a revolution in Internet 

technology. Just some examples: Products like Verizon FiOS and 

Google Fiber are changing the Internet’s infrastructure by delivering faster access through fiber optic cables. And on the content 

side, companies like Netflix and Hulu are allowing people to ‘‘cut 

the cord’’ and access their media through the Internet and their 

handheld devices. 

Comcast and Time Warner control a significant amount of the 

cable infrastructure that Americans use to access high-speed Internet. They control the cable lines that go directly into people’s 

homes. So there is a lot of interest in what will happen if the two 

companies merge and, quite frankly, probably just stated a little bit 

differently, but I have the same interest that Chairman Leahy has 

expressed. Consumers want to know whether a combined ComcastTime Warner will be in a better position to expand high-speed 

Internet access. Will consumers have higher cable bills? Will they 

have more or less content choices? Will the merger inhibit growth 

and deployment of broadband services? Will it enhance competition 

with other companies? And what are the downstream effects of the 

merger? 

Another question is whether or not a combined Comcast-Time 

Warner will impact television or Internet content in a detrimental 

way. Will the company be able to block consumers’ access to con-
4 

tent? Or will the merger allow the company to negotiate for better 

licensing arrangements from popular broadcasters like ESPN and 

Disney? Because Comcast creates some of its own programming, 

some have suggested that this will put independent programmers 

at a disadvantage. Well, all of those things are what this hearing 

is all about. 

Today we have an opportunity to learn how these markets actually work and what a Comcast-Time Warner merger could mean to 

competition and consumers. There is no doubt that a combined 

Comcast-Time Warner could significantly affect the markets for television programming, high-speed Internet access, and program access, and there has been no shortage of opinions expressed in the 

media since the companies announced the planned merger. 

So I look forward to a very important hearing and also following 

up with how DOJ and FCC are going to respond. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Grassley appears as a submission for the record.] 

Chairman LEAHY. Thank you. 

Senator Klobuchar. 

OPENING STATEMENT OF HON. AMY KLOBUCHAR, 

A U.S. SENATOR FROM THE STATE OF MINNESOTA 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman. 

Thank you to you and Senator Grassley for holding this very important hearing. 

Competition in the cable industry is one of the most critical 

issues that this Committee faces for a very simple reason: Cable is 

the primary way Americans get pay TV and broadband Internet access. This issue literally touches people’s lives every day, and it 

touches their wallets every month. 

As Senator Lee, the Ranking Member of our Subcommittee, and 

I have said from the day the merger was announced, the proposed 

merger between Comcast and Time Warner Cable, the two largest 

cable companies in the country, presents unique issues. 

From my perspective, while the companies’ service areas do not 

overlap, this cannot be our only focus of our discussion today. The 

combined company would control about 30 percent of the pay television market and 40 percent of the wireline broadband market, 

with some estimates putting it at 50 percent. 

Its size and scope would give it the power to affect prices, service, and content offerings throughout the industry and the future 

of online video competition. 

There are a number of critical questions that we need to ask. 

First, what is in this merger for consumers? Comcast has already 

said they are not promising that their consumers will pay less or 

that their bills will increase less quickly. What benefits do consumers stand to gain that they would not have gained without the 

merger? And do they outweigh the potential harms that could result if the merger is approved? 

This merger is also relevant for consumers who are outside of 

Comcast’s and Time Warner Cable’s footprint. Competitive video 

providers to Time Warner Cable will now have to buy must-have 

NBC programming, including regional sports networks, from their 
5 

competitor. There are concerns that the merged company’s larger 

presence throughout the country, especially in major markets like 

New York and L.A., will give it even more leverage to charge competitors more for its programming—a cost that could be passed on 

to consumers. 

By combining its vertical integration of content ownership with 

an expanded share of the cable market, Comcast would also have 

greater negotiating leverage with independent programmers. We 

hear regularly from these companies, many of whom are reluctant 

to go public because of how it might affect their negotiating positions. 

They say it is increasingly hard to negotiate carriage agreements 

in a market where content providers and distributors are consolidating. A post-merger Comcast would sit on both sides of the fence. 

It would be the gatekeeper to a third of the cable market and stand 

as one of the largest content providers. Consumers should know 

whether this merger enhances or limits the diversity of programming. 

Finally, as has been noted, we need to pay special attention to 

the impact this merger will have on the Internet and online video 

distributors like Netflix, YouTube, and Hulu. During the ComcastNBC merger, the FCC highlighted that Comcast has ‘‘the incentive 

and ability to hinder the development of rival online video offerings.’’ Concerns have been raised that the merged entity would now 

have even greater ability to limit competition through data caps, 

discrimination against non-affiliated content, and charging content 

providers for access to that last mile of network. 

What will happen to the next Netflix that today is still just a 

dream in a garage? We want to make sure that the next new and 

competitive online service will be able to get their content to the 

merged company’s growing consumer base. With control of nearly 

40 percent of the national broadband market, Comcast could potentially exert undue terms, conditions, and prices on online providers 

that are trying to serve their customers. 

The lines between cable and Internet are rapidly blurring, and 

10 years from now, Americans will be consuming media in new and 

innovative ways. The question is: Who is going to be delivering that 

content? Will that content be coming from Comcast or be coming 

from an independent online distributor or some combination? Will 

it be channeled through a cable box or routed through the Internet? 

The merger has implications for how much these services will 

cost and what variety of programs and applications can be delivered into our homes. Technology and market innovation should result in Americans receiving better services and more value, not less 

service and less value. 

I look very forward to hearing from our witnesses today. 

Chairman LEAHY. Thank you very much. 

Senator Lee. 

OPENING STATEMENT OF HON. MICHAEL S. LEE, 

A U.S. SENATOR FROM THE STATE OF UTAH 

Senator LEE. Thank you, Mr. Chairman. Today’s hearing has received significant attention throughout the country, and with some 

good reason. The proposed merger between Comcast and Time 
6 

Warner has implications for two markets that affect the everyday 

lives of most Americans, certainly a majority of the people in my 

State and in the country as a whole. 

Most Americans pay a monthly bill for both video and broadband 

Internet. In fact, as recently as 2012, 90 percent of U.S. households 

with a television paid for a television subscription. And a recent 

study concluded that approximately 70 percent of U.S. adults over 

the age of 18 have broadband access within their home. 

The parties to this proposed merger have carefully structured 

their transaction in an apparent effort to maximize their chances 

of gaining the necessary regulatory approval. The two companies 

assure us that they do not currently compete in each other’s footprint, and the combined company would have less than 30 percent 

of the video market, a number that some have suggested as a figure within a sort of safe harbor for concentration within the relevant market. 

Comcast has vertically integrated with NBCUniversal. This is a 

complicating factor for a larger distributor of video content and 

broadband Internet that is seeking to become larger. But as the 

company points out, it remains subject to conditions stemming 

from regulatory approval of that previous transaction. 

The proposed merger has, nonetheless, raised some potentially 

very serious concerns. This transaction takes place against the 

backdrop of significant pre-existing concerns with respect to the 

competitive state of the market for video and for broadband Internet. 

I have heard concerns for some time that the effects of robust 

competition, whether experienced in terms of pricing or quality of 

service, are not currently enjoyed in these markets. It is important 

that this Committee take into account the state of competition in 

the markets for video and Internet as pre-existing issues may make 

it more likely for a large transaction to pose some kind of a competitive threat. 

At the same time, if concerns related to this transaction result 

only from issues affecting those industries as a whole, it may, arguably, be unfair to the merging parties to impose only on them conditions designed to ameliorate competition. Regardless of the outcome of the agency’s review of this transaction, I think it is important for Congress to continue to monitor the competitive state within these markets throughout the country. 

Concerns with this transaction also arise from the nature of the 

services at issue. Internet in particular is of obvious importance to 

American families and to businesses, and it is of special importance 

to an increasing degree. The combined company will potentially 

control greater than 50 percent of high-speed Internet access across 

the country. Markets do, of course, change quickly and government 

must be careful not to step in where economic forces will better direct and better incentivize future investment and development of 

new products. But where the stakes are high—and surely they are 

high with respect to Americans’ access to the Internet—any potential for anticompetitive effects or for undue control of that market 

must be scrutinized very carefully. 

It is also important to note here that this is an extremely large 

transaction affecting both the video market and the Internet mar-
7 

ket. A complicating factor arises given that Comcast owns 

NBCUniversal. Considering the significant share of the video and 

Internet market that the new Comcast would have and considering 

the well-known political leanings of NBC, I have heard concerns 

that Comcast might have the incentive and the ability to discriminate against certain political content, including, for example, conservative political content, and that that capacity could be significantly enhanced as a result of this transaction. 

Now, as with any matter before this Committee or the relevant 

enforcement agencies, it is essential that we apply proper economic 

analysis and ground our conclusions in the evidence before us by 

ensuring that we protect competition rather than trying to protect 

any individual company or competitor from competition. We can 

help create market conditions that benefit consumers and promote 

economic growth throughout the country. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you very much, and I thank you and 

Senator Klobuchar for your work on this. 

The first witness is David Cohen, executive vice president, 

Comcast Corporation. His work covers a broad range of activities, 

including corporate communications, government and regulatory affairs, public affairs, legal affairs, corporate administration, community investment. No stranger to Capitol Hill, Mr. Cohen, please go 

ahead. 

STATEMENT OF DAVID L. COHEN, EXECUTIVE VICE PRESIDENT, COMCAST CORPORATION, PHILADELPHIA, PENNSYLVANIA 

Mr. COHEN. Thank you, Mr. Chairman and Members of the Committee. I appreciate the opportunity to testify and explain the substantial benefits to consumers of the transaction between Comcast 

and Time Warner Cable. 

Traditional boundaries between media, communications, and 

technology companies are becoming obsolete. While this transaction 

will make us bigger, that is a good thing, not a problem. Most of 

our real competitors are national and global and larger than us, 

like the Bells, satellite companies, Apple, Google, Sony, and 

Netflix. In fact, the business reason for this transaction is to create 

the scale that will enable Comcast to invest more in innovation and 

infrastructure and enhance our ability to compete more effectively. 

And when we invest, our competitors invest, too. AT&T has already 

said that our transaction, and I quote here, ‘‘puts a heightened 

sense of urgency’’ on other companies to invest more in their networks and improve service, and consumers will benefit from this 

competitive investment cycle. 

Our investment will bring Time Warner Cable residential customers faster Internet speeds, more programming choices, our 

next-generation X1 entertainment operating system, and more robust WiFi. Business customers will benefit from a stronger new entrant offering more choice and better prices. 

Comcast has a record of investing in new technologies and networks. Two announcements we are making today underscore that 

commitment. 
8 

First, our XFINITY WiFi network achieved another milestone 

with the deployment of more than one million hot spots. 

And, second, we have just increased Internet speeds again. Our 

50-meg service in the Northeast will increase to 105 meg, and our 

105-meg service will increase to 150 meg at no additional charge 

to consumers. This is the 13th time we have increased Internet 

speeds in 12 years. 

This transaction will generate other substantial public interest 

benefits as well. Just two examples: 

First, we have committed to extend to the entire Time Warner 

Cable footprint our industry-leading Internet Essentials program 

that has already connected 1.2 million low-income Americans to the 

Internet. And our commitment to abide by the judicially vacated 

Open Internet rules will also extend to Time Warner Cable customers. 

More investment, faster speeds, better technology, more Americans connected—even with these compelling benefits, we understand the questions that arise any time two big companies combine. But, objectively, this is not a challenging transaction from an 

antitrust perspective. Our companies serve separate and distinct 

geographic areas. We do not compete for customers anywhere. So 

the transaction will not lead to any reduction in competition or consumer choice in any market. 

We also will not gain undue power over programmers. After 

divestitures, the combined company will manage subscribers representing less than 30 percent of the market. The FCC twice adopted a rule setting a 30-percent ownership cap to prevent a single 

cable operator from wielding bottleneck control over programmers, 

and the Federal courts twice rejected it, finding that no cable operator could exercise market power at 30 percent or even higher market shares. 

Last, American consumers will enjoy the same choice among 

broadband providers before and after this transaction. There are no 

competition issues in that market either. 

Mr. Chairman, Comcast represents the American dream. We 

were founded 50 years ago with 1,200 customers in Tupelo, Mississippi. We have always strived to invest, innovate, and lead our 

industry with a focus on the consumer. If this contract is approved, 

it will give us the scale and reach to innovate and compete against 

our national and global competitors. 

Thank you for the opportunity to testify. 

[The prepared statement of Mr. Cohen appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much. 

And as per our normal procedure, the full statements—of course, 

you have a longer statement—will be made part of the record of 

each of the witnesses. 

The next witness is Arthur Minson, executive vice president and 

chief financial officer of Time Warner Cable. He oversees all of 

Time Warner Cable’s financial functions, including its financial operations, financial planning and analysis, treasury, accounting, tax, 

mergers and acquisitions, internal audit, and investor relations. 

Please go ahead, Mr. Minson. 
9 

STATEMENT OF ARTHUR T. MINSON, JR., EXECUTIVE VICE 

PRESIDENT AND CHIEF FINANCIAL OFFICER, TIME WARNER 

CABLE INC., NEW YORK, NEW YORK 

Mr. MINSON. Mr. Chairman and Members of the Committee, 

thank you for the opportunity to speak with you today. I am 

pleased to be here to discuss the proposed transaction between 

Comcast and Time Warner Cable. 

Let me start by saying that I share David’s view that the combination of our two companies will bring substantial benefits to our 

customers, our employees, and the local communities we serve. 

Cable companies operate in an incredibly dynamic marketplace, 

and we face robust competition from a wide range of sophisticated 

national and global powerhouses. We compete to develop the most 

innovative products and services, to attract and retain both customers and employees, and to access funding for our ongoing operating and capital investments. As a result, we must adapt in order 

to succeed. 

As chief financial officer, one of my responsibilities is overseeing 

our allocation of capital, both human capital as well as investments 

in our products, services, and physical infrastructure. We have invested billions in capital expenditures and made significant strides 

in developing and offering innovative new products and services for 

our customers. 

But when the opportunity to combine with Comcast arose, we 

knew it would be a game changer. By joining our complementary 

technological strengths and creating greater scale, the transaction 

will allow the combined company to bring next-generation video, 

broadband, and voice services to customers faster than either company could do on its own. 

Let me provide some examples of the benefits our customers will 

see as a result of this transaction. 

Time Warner Cable recently announced plans to invest billions 

of dollars over the next three years to upgrade our network. 

Comcast has already completed similar upgrades to its network. As 

a combined company, our subscribers will capitalize on Comcast’s 

experience to accelerate the rollout of these consumer benefits 

across the entire Time Warner Cable footprint. 

The transaction will also benefit the business market. Greater 

scale will enable the combined company to offer more advanced 

services to our existing small and medium-sized business customers and also offer a competitive alternative to larger businesses 

in the regional and national marketplace. 

Given our limited geographic footprint, we have been hindered in 

our ability to compete with national telecom providers in serving 

multiregional and national enterprise customers. After the transaction, the greater coverage of the combined company will encompass significantly more multiregional business locations, allowing 

us to compete more aggressively and provide better alternatives for 

businesses than either Time Warner Cable or Comcast could accomplish alone. 

Let me conclude by saying that we believe this transaction will 

create a world-class provider of video, broadband, and voice products and services, resulting in greater competition and consumer 

choices in this already robust marketplace. 
10 

Thank you for the opportunity to appear before you today. I look 

forward to answering your questions. 

[The prepared statement of Mr. Minson appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much, Mr. Minson. 

Our next witness is Gene Kimmelman. He is the president and 

CEO of the Washington, DC-based Public Knowledge. He previously served as director of the Internet Freedom and Human 

Rights Project at the New America Foundation. He was Chief 

Counsel at the U.S. Department of Justice’s Antitrust Division and 

is also well known to this Committee. 

Please go ahead, Mr. Kimmelman. 

STATEMENT OF GENE KIMMELMAN, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, PUBLIC KNOWLEDGE, WASHINGTON, DC 

Mr. KIMMELMAN. Thank you, Mr. Chairman and Members of the 

Committee. I am here to represent the Internet users and the TV 

consumers on behalf of Public Knowledge, which is a nonprofit 

dedicated to an open Internet, open access to lawful content, and 

innovative technologies. 

I want to note that I worked at the Department of Justice during 

a previous Comcast transaction, so I contacted DOJ ethics officials 

who provided guidance on what kinds of information cannot in any 

way, shape, or form be used. And because I am confident that I can 

abide by those limitations, I am very comfortable being here this 

morning testifying. 

Now, after years of constant, substantial cable rate increases and 

poor service, things are finally starting to change—very slowly, a 

little bit—with new online video streaming services, new mobile devices, tablets, alternative set-top boxes. These are all beginning to 

deliver consumers innovative new services, more video choices at 

lower prices, and some new first-run programming. 

This has some cable companies starting to think about offering 

a la carte individual channels, some cable companies talking about 

going all broadband with their services, some of the top network 

programmers beginning to think about selling first-run content directly online. 

Now, as good as this sounds for consumers, these low-cost choices 

are anathema to Comcast, which maximizes revenue by keeping 

consumers in a high-priced, monthly cable bundled XFINITY service package and by charging top dollar for NBCU networks, sports, 

and cable programming, driving up traditional cable bundle prices 

for all distributors nationwide. So the transaction could fundamentally undermine these new, wonderful, innovative options consumers are seeing. 

Comcast, with its control of video and high-speed broadband, 

adding Time Warner’s systems, could lock in increased high prices 

for NBCU programming and sports and regional sports and cable 

programming; expand Comcast’s ability to press down prices for 

other quality programming below market rates, harming quality in 

the marketplace; increase Comcast’s ability to dissuade other programmers from distributing high-quality programs directly online; 

undermine innovation by controlling equipment and standards and 

apps, and many consumer interfaces that block other business 
11 

models in this marketplace; and, finally, could provide favorable 

interconnection speeds, quality, pricing for XFINITY services compared to all competitors. 

These forms of leverage would come from the combined power of 

what looks almost like a nationwide octopus with tentacles reflecting each of these leverage points, massive tentacles, each individually capable of squeezing innovation in sectors all throughout the 

distribution chain, and each tentacle able to fill in when the other 

one is removed. In other words, this proposed transaction consolidates too much power in the combined video and high-speed Internet market, giving Comcast a virtual gatekeeper role for fast Internet-delivered video and innovative new services. 

Mr. Chairman, Members of the Committee, the issue before antitrust officials and communications regulators is really very, very 

simple. If we want more innovative, low-priced, Internet-delivered 

services, this merger must be rejected. 

Thank you. 

[The prepared statement of Mr. Kimmelman appears as a submission for the record.] 

Chairman LEAHY. Thank you, Mr. Kimmelman. 

Our next witness is James Bosworth. He is the chief executive 

officer of Back9Network, a network focused on the golf lifestyle. 

Mr. Bosworth previously held high-level sales and marketing positions at a number of leading golf equipment companies, and I 

would note that in college he led the Seton Hall Pirates to a Big 

East golf championship. 

That might have been a few years ago, but we wanted to remind 

everybody of that, Mr. Bosworth. Please go ahead. 

STATEMENT OF JAMES L. BOSWORTH, JR., CHAIRMAN AND 

CHIEF EXECUTIVE OFFICER, BACK9NETWORK INC., HARTFORD, CONNECTICUT 

Mr. BOSWORTH. Thank you, Chairman. Good morning, Chairman 

Leahy, Ranking Member Grassley, and Members of the Committee. 

My name is Jamie Bosworth, and I am the chairman and CEO of 

the Back9Network, an independent and aspiring 24/7 cable network. I very much appreciate the opportunity to testify before you 

today. 

Based in Hartford, Connecticut, Back9Network is an independent network focused on providing golf lifestyle programming 

that attracts a larger, more diverse audience to the game. Americans spend $177 billion on golf lifestyle each year, and our 

programming centers on this market. We are tremendously proud 

of what we have accomplished over the past two years: state-of-theart production facilities, job creation, and the fastest-growing online audience in golf. 

But when it comes to getting on the air, our story is very similar 

to that of other truly independent networks. We are up against a 

distribution system that stifles innovation and consumer choice. It 

is dominated by a few large players. 

We are concerned that this merger may make a bad situation 

even worse. True independent networks like ours, with zero affiliation with any other channels or distributors, rely solely on advertising revenue in the early years. Therefore, there are only two re-
12 

quirements for a successful cable launch: One, the ability to 

produce or require quality programming; and, two, initial carriage 

on one of the four largest video distributors: Comcast, DIRECTV, 

DISH Network, or Time Warner Cable. They are the only distributors that have the ability to reach the viewers in the top markets 

that the advertisers want and demand. 

But it is not that simple. Satellite providers have severe bandwidth limitations and are hesitant to launch new channels. So 

today new channels need permission to compete from one of the 

two cable providers—Comcast or Time Warner Cable. And because 

of the Comcast-NBCUniversal merger, Comcast vertical integration 

makes it one of the largest content providers as well. 

Now, if you marry that vertical integration with distribution in 

10 of the top 10 markets, 23 of the top 25 markets, and 37 of the 

top 40 markets, then suddenly Comcast alone has tremendous 

power to decide what gets on the air. Let me share with you what 

that means for our channel and for other aspiring independent networks. It does not matter that our programming has been praised 

by cable executives. It does not matter that we are offering an attractive value proposition. We are competing directly with a 

Comcast-owned network, the Golf Channel, and that gives Comcast 

every incentive to keep us off the air. 

More tellingly, productive conversations that we had with Time 

Warner Cable stalled as the merger was announced. We would not 

worry about Comcast’s vertical integration if there were effective 

competition in the distribution marketplace. We would put our programming up against the Golf Channel and let the audience decide 

what is compelling. But in the real world, new, independent networks need to be in the top 10 markets, and that means you need 

to be in Comcast and Time Warner Cable. 

In conclusion, the choice to testify today was very difficult because we want nothing more than to be in business with Mr. Cohen 

and Mr. Minson. But it is important that we be here. We are fighting for the right to exist—for our investors, for our employees, and, 

most importantly, for the consumer. If this merger goes through 

without effective, enforceable conditions that force Comcast to treat 

new channels fairly, we are concerned for both channel innovation 

and consumer choice in the future. But we remain cautiously optimistic. We hope Comcast will be true to its legal obligation and not 

discriminate based upon its ownership of the Golf Channel. And we 

hope that Comcast will judge us on the merits of our content and 

on our carriage proposal. However, right now they are both judge 

and jury. 

Thank you again for the opportunity to testify. I look forward to 

your questions. 

[The prepared statement of Mr. Bosworth appears as a submission for the record.] 

Chairman LEAHY. Thank you very much, Mr. Bosworth. 

Our next witness, Richard Sherwin, is founder and CEO of Spot 

On Networks, LLC. That is a provider wireless telecommunication 

for the multifamily market. He has, as I understand, 30 years of 

experience in wireless communications, radio frequency transmissions, including significant experience with wireless and wired 

telecommunication ventures in Europe. 
13 

Mr. Sherwin, thank you for coming, and please go ahead. 

STATEMENT OF RICHARD J. SHERWIN, CHIEF EXECUTIVE 

OFFICER, SPOT ON NETWORKS, LLC, NEW HAVEN, CONNECTICUT 

Mr. SHERWIN. Thank you, Mr. Chairman, thank you, Senators, 

for the opportunity to present our experiences with both Comcast 

and Time Warner. 

Spot On has been serving the multifamily residential community 

for a decade, as you mentioned. We provide high-quality, highspeed WiFi services to buildings which otherwise would have only 

limited and more expensive choices for high-speed broadband. We 

believe in doing well by doing good. 

The multifamily residential community currently represents 

nearly 35 percent of the United States population. This segment includes a large percentage of affordable housing. The population residing in these communities uses wireless communications almost 

exclusively for all their communication needs. This is a big change 

because of the demographic in the multifamily community. 

Spot On has been in the forefront of innovative design approaches, new technologies, and more efficient ways to serve these 

multifamily communities. And although we have spent millions of 

dollars and a decade of hard work building these businesses, we 

are still a David to the Goliaths of the cable companies with whom 

we often compete. 

I am proud to say that Spot On’s services and those of our WiFi 

competitors, our brethren, are generally 30 percent less costly than 

services provided by the dominant cable providers, and Spot On 

provides unique features not otherwise found in other wired or 

wireless access technologies or provided in off-the-shelf or cable 

company-supplied wireless routers that merely redistribute a signal. 

The problem of serving multifamily communities is further exacerbated by green initiatives, energy conservation in buildings 

which dictate the choice of building materials. These materials prevent cellular signals from penetrating inside these buildings and 

decrease the effectiveness of wireless to reach this segment of the 

population. These problems even present public safety concerns because not only are normal voice calls deterred and data access limited, but 911 calls are, at best, sketchy. 

Communitywide managed WiFi service can not only resolve these 

service issues but also deliver significantly larger capacity to residents inside these buildings. We bring high-speed broadband to a 

building, relying on a big broadband supplier, often a cable operator like Comcast, sometimes a fiber operator, as the source of the 

backhaul broadband. 

It is important to understand how important our service and the 

service offered by similar companies to ours is to competition. Usually the cable company that supplies us also provides retail cable 

services and content in that particular area. Frequently, the cable 

company is the only retail supplier to that area. Once we secure 

a broadband backhaul, we build our own facilities-based network 

inside the building, making use of the FCC-allocated WiFi spectrum and offer service to users. These users use our distributed 
14 

wireless network to do all sorts of things from social networking, 

video streaming, smart building applications, email, et cetera, and 

now even for voice calls. 

We need bandwidth to the buildings that come from companies 

like Time Warner, Verizon FiOS, Comcast Business, and Charter. 

If we could not acquire that broadband from a large broadband provider, for whatever the reason, we would be basically out of business. Competition would be squelched. There would be no innovation. 

Comcast has refused to sell us broadband in many areas of the 

country over the last 12 months, although prior to that they had 

continued to do so. So we think conditions need to be placed on this 

kind of a merger in which wholesale broadband is available to providers such as us. And we also believe that in certain markets, because Comcast will be the only provider of high-speed broadband 

service in the market, that they should be prohibited from using 

their financial power to exclude alternate high-speed Internet providers from offering competitive high-speed wireless Internet access 

in multifamily residential communities. 

Thank you very much for your time. 

[The prepared statement of Mr. Sherwin appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much, Mr. Sherwin. 

Christopher Yoo is the John H. Chestnut Professor of Law, Communication, and Computer & Information Science at the University 

of Pennsylvania. He is also the founding director of UPenn’s Center 

for Technology, Innovation and Competition. Professor Yoo’s research, I am told, focuses on law and technology, particularly the 

regulation of electronic communications. 

We thank you for taking the time to be here, Professor. 

Please go ahead. 

STATEMENT OF CHRISTOPHER S. YOO, JOHN H. CHESTNUT 

PROFESSOR OF LAW, COMMUNICATION, AND COMPUTER & 

INFORMATION SCIENCE, UNIVERSITY OF PENNSYLVANIA 

LAW SCHOOL, PHILADELPHIA, PENNSYLVANIA 

Mr. YOO. Thank you to you, Mr. Chairman, Ranking Member 

Grassley, and the Committee for inviting me. I am happy to have 

the opportunity to offer my views on the impact the proposed merger between Comcast and Time Warner Cable would have on consumers. My written submission contains my complete testimony. I 

would like to focus on the two issues the Committee has identified: 

the impact of the merger on the market for traditional cable channels, such as ESPN, the Disney Channel, and the like; and the impact on the market for broadband Internet access. 

First, with respect to the distribution of traditional television 

networks, established principles of antitrust and communications 

law indicate that the merger is unlikely to harm consumers. The 

lack of any overlap in the areas served by Comcast and Time Warner Cable means that the merger should not affect the prices that 

subscribers pay for cable television subscriptions. In short, consumers would have the same number of choices of multichannel 

video providers the day after the merger as they did the day before. 
15 

Two major court decisions in 2001 and 2009 also rejected arguments that companies that controlled only 30 percent of nationwide 

cable subscribers could inflict anticompetitive harm on cable networks. In light of the merging parties’ commitment to reduce their 

holdings so that they control no more than 30 percent of the national market, these court decisions represent a potentially insuperable obstacle to claims that allowing the transaction to proceed 

would adversely affect this market. 

Moreover, those court decisions were issued in a different era 

when the multichannel video market was much less competitive. 

Since 2009, the costs of program acquisition have risen substantially faster than cable rates as program providers have driven increasingly tough bargains. At the same time, the number of options 

for video distribution has continued to increase as Verizon’s FiOS 

and AT&T’s U-verse networks have expanded their customer bases 

and Internet-based systems such as Netflix, Amazon, Hulu, Google, 

Roku, and Apple have emerged as important video platforms. 

This industry is just not structured in a way that would make 

anticompetitive harm in the market for video programming likely, 

and the residual concerns may be addressed by the extensive program carriage and access rules that the FCC has developed to ensure that the entire industry has sufficient access to video content 

and distribution. The regulatory agencies have repeatedly recognized that such problems are better handled through general rules 

applicable to all industry players than through one-off conditions 

that bind only merging parties. 

Turning to the market for broadband Internet access, the lack of 

any overlap in the areas served by Comcast and Time Warner 

Cable again makes it unlikely that the merger would affect the 

prices that subscribers pay. In addition, the structure of the market for broadband Internet access makes competitive harms less 

likely than in the market for cable television. By my count, the 

merged company will control 32 percent of the nationwide 

broadband subscribers, but more importantly, the market for 

broadband Internet access is really undergoing dynamic change. 

AT&T’s Project VIP is expanding the reach of its DSL network and 

increasing download speeds to 45 megabits per second, and even to 

75 and 100 megabits per second in substantial areas of its footprint. Google is extending its fiber initiative beyond Kansas City, 

Provo, and Austin to 34 additional cities. At the same time, wireless broadband providers are racing to build out LTE, which typically delivers an average of 12 megabits per second in a world 

where viewers only need eight megabits per second to view highdefinition television. LTE Advanced promises to deliver speeds of 

150 to 300 megabits per second. 

In addition, interconnection in the Internet space is fundamentally different from interconnection in the cable television system. 

In cable television, the failure to come to an agreement means subscribers cannot receive content. With respect to the Internet, multiple ways to reach consumers always exist. In fact, Comcast maintains 40 settlement-free peering relationships and 8,000 transit relationships, which ensures that disagreements over price do not 

prevent anyone from reaching access to content. And in any event, 

Comcast will remain bound by the open Internet Order via its prior 
16 

commitments, and that commitment would be extended to Time 

Warner Cable. 

In closing, it bears keeping in mind how dynamic and unpredictable this sector has been. Consider February 29, 2000, when Time 

Warner was before this Committee to discuss its merger with 

America Online. What many predicted would be the end of history 

ended up being the end of $200 billion of Time Warner shareholder 

value. In addition, a few short years ago, many argued fiber-to-thehome would soon consign cable to the dustbin of history. These episodes underscore how easy it is to hypothesize problems that never 

materialize and how easy it is to overlook how innovation and willingness to undertake commercial risk can create greater consumer 

benefits than anyone could have anticipated. 

[The prepared statement of Mr. Yoo appears as a submission for 

the record.] 

Chairman LEAHY. Thank you very much, and your full statement 

will be part of the record. 

Mr. Cohen, obviously you have heard this, that cable and 

broadband customers, many are concerned about how the merger 

will affect what they are going to pay. That is as much as any issue 

we are hearing on the Hill. 

You said that you would be able to compete more effectively as 

a result of increased scale. You also said, ‘‘We are certainly not 

promising that customer bills are going to go down or even increase 

less rapidly.’’ So if they are not going to go down, they could increase, the merger will reduce the number of competing companies 

in both cable TV and broadband Internet, how specifically does it 

help the consumer? 

Mr. COHEN. Mr. Chairman, let me briefly address both halves of 

that question. I am very careful about what I commit to and what 

I promise. I can make you and the Members of this Committee one 

absolute commitment, which is that there is nothing in this transaction that will cause anyone’s cable bills to go up. I have a nasty 

little habit of telling the truth, and when I was asked, ‘‘Are people’s 

cable bills going to go down?’’ I said, ‘‘I cannot make that commitment.’’ But between the synergies in this deal and whatever marginal additional leverage we might have in programming and 

equipment supply purchasing, whatever economic benefits are generate will ultimately inure to the benefit of consumers. 

And let us face it. Consumers today are in the driver’s seat. Both 

for broadband and, in particular, for video, there are a vast number 

of competitive choices. And that is why the scale that we are trying 

to get here to stimulate investment to provide a better experience 

for consumers is so important to us and to the American consumer. 

So I am just going to tick off the litany of what consumers will 

get as a result of this transaction: faster broadband; greater network reliability and security; better in-home WiFi; access to a more 

ubiquitous national WiFi network; access to Comcast’s revolutionary new X1 video viewing experience; access to greater on-demand choices, 50,000 on-demand choices; access to Comcast’s industry-leading TV Everywhere experience where people can view 

video live and on-demand on portable devices inside the home and 

outside the home; the protections of the no-blocking and non-discrimination provisions of the open Internet order; and more generic 
17 

public interest benefits like extension of the Internet essential program to low-income customers of Time Warner Cable; extension of 

our diversity and community investment commitments across the 

Time Warner Cable footprint. So I think consumers are the big 

winners in this transaction. 

Chairman LEAHY. You have also said that you will apply the 

FCC’s open Internet rules to Time Warner Cable until 2018. Will 

you do it beyond 2018? 

Mr. COHEN. I think the answer to that is that we will be doing 

it beyond 2018 because Chairman Wheeler and the FCC have already started a proceeding to put in place industrywide open Internet protections. And I cannot imagine that the Commission is not 

going to have those rules in place well before 2018. 

Chairman LEAHY. Now, Mr. Minson, you must be expecting this 

question, but your CEO will get $80 million for his two months of 

work as CEO before he agreed to sell the company. You will get 

$27 million if the merger is approved for less than a year in your 

position. 

Now, do these golden parachutes help your shareholders? 

Mr. MINSON. Let me, Mr. Chairman, give you—— 

Chairman LEAHY. And you knew you would be asked that question, so go ahead. 

Mr. MINSON. Let me give you our perspective on how we make 

operating and strategic decisions at the company. For us, the North 

Star for us is what is best for the consumer, and we concluded that 

this deal is far and away the best outcome for our consumers. 

The reason for that is—in our marketplace a few things really 

matter. Products matter, innovation matters, and speed matters. 

And I think as a result of this deal, you will have positive outcomes 

in all three areas. 

Chairman LEAHY. And the golden parachutes? Not wanting to interrupt by going back to my question. 

Mr. MINSON. As it relates to the overall compensation packages, 

I would say for transactions of this size and for transactions this 

complex, I think you will find that they are in line. 

Chairman LEAHY. You may find that not all consumers agree, 

but it is what it is. 

Mr. Bosworth—if I might just take a moment for one more question. 

Senator GRASSLEY. You take as long as you want. You are Chairman. 

Chairman LEAHY. No, no. I want to give everybody else a chance. 

But—— 

Senator GRASSLEY. You are fair. 

Chairman LEAHY. Thank you. Mr. Bosworth, I am intrigued by 

what you discussed about your network. I am not a golfer, but the 

fact that you could have a 24-hour network and people want it, 

that is pretty amazing. You have worked very hard doing that. I 

understand your frustration that you cannot get carried on cable 

or satellite. 

Why is it critical for you to be carried by Comcast? Could you 

simply operate as an online video service? 

Mr. BOSWORTH. Thank you, Senator. That is actually a great 

question, and while online content and over-the-top content is in-
18 

creasing, the average American still watches 20 times more video 

content via television, and the advertising rates mirror that as 

well. 

Chairman LEAHY. Thank you very much. I will have other questions for the record. I am going to be leaving soon, but I will come 

back, and Senator Klobuchar will be chairing. We will keep this 

record open until the end of the week for others who have questions or statements. 

[The questions of Chairman Leahy appear as submissions for the 

record.] 

Chairman LEAHY. Senator Grassley. 

Senator GRASSLEY. And also after I ask my questions, Senator 

Lee is going to take over as Ranking Member of the Subcommittee. 

First of all, I thank all of you for coming here. I am going to ask 

two questions first of Mr. Cohen, but I want you others to listen 

because at the end of my questions, I will give you an opportunity 

to respond or add to, if you want to, but I am not going to call on 

you. But that is part of my program. 

Mr. Cohen, if the merger is approved, Comcast-Time Warner 

Cable would become the largest cable television and IT service provider in our country. Its size would give the company increased 

ability to demand more favorable terms and rates from content providers and equipment manufacturers. What effect will this—it is 

really three parts, so listen to all three parts. What effect will this 

have on smaller TV and Internet providers? If content providers 

are forced to charge Comcast-Time Warner significantly less, will 

they end up charging smaller providers more? And will consumers 

in places like my State of Iowa, which is not served by Comcast, 

pay higher TV and Internet prices because of the merger? 

Mr. COHEN. Okay. I think I only got two parts, but I think I can 

cover that. 

Senator GRASSLEY. Okay. 

Mr. COHEN. So let me do two parts to the answer, and I think 

I can merge them all together, which is—we currently have 22 million customers, Comcast does, and we are the largest cable company at 22 million customers. And I wish I could represent to you 

that I thought by moving to 30 million customers we would generate all this wonderful leverage and be able to really negotiate 

harsh programming deals, bring down the costs of programming, 

bring down the cost of equipment. But I do not think that is the 

reality. Programmers have inordinate market power and 

attractiveness of their content. I will just give you one statistic that 

I think drives this home. So this is for Comcast, the largest cable 

company in the country. 

Over the last decade, our programming costs have gone up 98 

percent, while our cable rates over that period of time have gone 

up basically at half that rate. So it shows you the balance of power 

in the market where programmers have so much more power at the 

negotiating table. So I do not think you are going to see dramatic 

shifts in programming costs or in equipment costs as a result of 

this transaction. And, by the way, that is one of the reasons why 

I say I just cannot guarantee that I think cable prices are going 

to go down as a result of this transaction because programming 

costs are our number one cost input in our business model. 
19 

But for whatever we are able to move the needle even marginally 

in terms of negotiating better programming rates for our company, 

better equipment costs for our company, which will inure to the 

benefit of our customers, I think any sound economic theory and 

any economist will tell you that that does not have an impact on 

what other cable companies are paying for their program or equipment. And the easiest way for me to explain this, since I am not 

an economist, but as it has been explained to me, is that if you 

posit that that is the case, that is, if we get a programmer to drop 

their costs to us by $100, that they will go out and try and collect 

that $100 from another cable provider, that means that they have 

left $100 on the table with that other cable provider; that is, they 

negotiated the deal and they said, ‘‘We do not need that last $100 

because we are getting it from Comcast.’’ And as soon as they do 

not get it from Comcast, they have to go back and say, ‘‘Oops, we 

need another $100.’’ 

In fact, programmers and equipment manufacturers will negotiate to get the last dollar that they can from everyone who they 

are negotiating against, and this is a form of what I believe is 

called ‘‘adjacent market economic theory,’’ that there is no impact 

on what a programmer or an equipment manufacturer would 

charge to another multichannel video provider based upon the negotiations that are taking place with Comcast. 

Senator GRASSLEY. Mr. Kimmelman, I see you want to respond. 

Mr. KIMMELMAN. If I may, Senator. That is a nice economic theory. I am sure programmers charge as much as they can now, but 

with an additional eight million subscribers or 10 million subscribers from Time Warner, Comcast will be in the driver’s seat. 

You are either on their system serving more than 30 million customers, or you are not. Will that impact the price? You have got 

to believe it will. If that price goes down for other programmers, 

they could reduce the quality or they could try to pass it along to 

other vendors. 

And even if Mr. Yoo has some interesting statistics about other 

players in the market, this is a highly concentrated transmission 

market. There are very few players in any community who can 

offer Internet or a big package of video programming. 

So the squeeze will come from Comcast. It is logical. They will 

want to save money. I commend them for trying to do that. The 

ramifications will cascade through the economy and could lead to 

significant price increases for others. 

Senator GRASSLEY. Professor Yoo. 

Mr. YOO. We are at a seminal moment in the history of the television industry. Looking at traditional video in some ways masks 

the fact that it is losing subscribers, and what we are seeing is a 

transformation to online video systems that is changing the economics, changing who the market leaders are, and changing what 

the future outcomes are likely to be. 

We are also fortunate to live in a world where 98 percent of 

American households have three choices in providers, which is the 

best in the world. I think we are at a moment where things are 

going to change whether the companies like it or not, and we need 

to allow them to respond to those changes in the environment. 

Senator GRASSLEY. Okay. Mr. Sherwin. 
20 

Mr. SHERWIN. Senator, you raised the issue a little while ago, the 

impact on Internet service providers, and I would like to address 

that for the moment. I mentioned to you in my opening that 

Comcast has refused to sell to us for the last year. When they are 

the only provider of high-speed broadband in a specific area, a geographic area, it makes it very difficult for us to provide services. 

In effect, then what happens is the competition is limited. 

My suggestion to you would be that we find some compromise position in which a condition is imposed where wholesale broadband 

is available to Internet service providers, which would address the 

issue you raised on the Internet service provision. 

Senator GRASSLEY. I think you go ahead, Mr. Cohen, and then 

I am not going to take time of the Committee with a second question. I will submit it for answer in writing. 

Go ahead. 

Mr. COHEN. Just a brief response to Mr. Sherwin. I actually 

think Mr. Sherwin’s testimony sets forth in a pretty compelling 

fashion why there is no need for such a condition in this transaction. He points out that he has Internet interconnection agreements with a wide variety of companies—Comcast, Time Warner 

Cable, Verizon, AT&T, Level 3, and a number of other companies. 

I know that today—and I am just not aware of any refusal on the 

part of Comcast to do business with Mr. Sherwin. I know that 

today we have about a hundred commercial agreements with Mr. 

Sherwin in a hundred different buildings in America, and that in 

all of those cases there is at least one other option that Mr. Sherwin has to obtain services. And in some of those buildings, there 

may be three or four other options for him to be able to pursue. 

So the issue of wholesale unbundling of our network is an issue 

that was vigorously raised in the NBCUniversal transaction, one 

which we vigorously fought in that transaction, and one in which 

the Department of Justice and the FCC concluded that the market 

was sufficiently dynamic and competitive that it was not going to 

compel wholesale unbundling of our Internet service. 

[The questions of Senator Grassley appear as submissions for the 

record.] 

Senator GRASSLEY. Thank you. 

Senator KLOBUCHAR [presiding]. Thank you very much. 

I know Senator Grassley is going to go and vote, and if you noticed that there are not many people left here, it is because people 

are coming in and voting. It is not like they have left for the day. 

I want to start with you, Mr. Cohen. You talked about some of 

the benefits you foresee coming from this merger. Would those 

things not happen if there was not a merger? 

Mr. COHEN. So I think the answer, Senator, is that those things 

are going to happen faster and with more certainty than they 

would occur in the event there was not a merger. And I was really 

talking about the immediate consumer benefits. The reason those 

benefits have not occurred in the Time Warner Cable footprint is 

because of the difference of scale between Comcast and Time Warner Cable, and it is the scale that leads to the investment that 

leads to the rapid deployment of those benefits. 

And when we move beyond the immediate, and when we look at 

our competitors and what they are investing and innovation that 
21 

they are rolling out, we believe going forward in the future that in 

the absence of comparable scale to the national and global competitors that are our real competitors in this market, our customers 

will fall behind. We will not have the choice, the innovation, and 

the technology to be able to offer them in the future. 

Senator KLOBUCHAR. Mr. Bosworth, I know the environment for 

independent programmers is not that easy right now. I have heard 

from many of them. So what is it about this merger that you think 

will make it harder for independents? And why can’t you simply go 

to other cable providers and satellite providers to get carriage from 

them? Why would you need Comcast or Time Warner? I think I 

know the answer. 

Mr. BOSWORTH. Thank you, Senator. Like we said, the combined 

merger would put them in 27 of the top 30 markets, and young networks need to generate their revenue through advertisers, and the 

advertisers demand that we be in those large markets. 

Senator KLOBUCHAR. Well, Comcast brings up Apple and Amazon 

and Netflix as competitors and other outlets programmers can go 

to. Are these viable options for Back9Network? 

Mr. BOSWORTH. It is increasing but yet still the average American watches 20 times more video via television than they do online. 

Senator KLOBUCHAR. Mr. Cohen, what competitive pressures are 

there to keep Comcast from dictating terms and creating high hurdles for programming like Mr. Bosworth’s? 

Mr. COHEN. Okay. So three answers, if I can. 

First of all, Comcast is probably the most independent programmer-friendly multichannel video distributor in the marketplace. We carry 160 independent programmers. Six out of every 

channels that we carry are independent programmers. In the last 

three years alone, we have provided expanded carriage to 120 independent programmers, and we have launched five new, independent programming networks, including four that are minority 

owned and minority controlled. And there have been numerous 

independent networks that have publicly expressed the views that 

I am expressing here today about our independent programmer 

friendliness. 

Number two, the primary legal protection for an independent 

programmer who wants to be carried or the program carriage rules 

that the FCC has, those rules prohibit us from discriminating 

against a provider who wants carriage on our systems. So there 

is—— 

Senator KLOBUCHAR. But there have been some challenges, right, 

with—— 

Mr. COHEN. Well, there have been a handful of challenges that 

we have tended to prevail on because there is an attitude—or there 

is—look, I do not begrudge—I do not begrudge independent programmers’ efforts to get carriages. You said in your question it is 

tough to get carriage for any new networks today. By the way, 

Comcast—talk about our vertical integration—we have dropped a 

network in the last three years because we had trouble getting carriage elsewhere for that network. 

So it is tough to get carriage deals, period. The space is very populated, and it is very difficult to be able to do that. 
22 

But we are—we try as hard as we can to have reasonable and 

rational discussions with independent programmers. And by the 

way, I would include the Back9Network in that category of networks that we are talking to and that we are trying to reach arrangements with. There was a meeting just this week between our 

program affiliation group and the Back9Network, which was scheduled well before we knew that Back9Network was going to be a 

witness at this hearing. 

Senator KLOBUCHAR. Do you want to get to the third reason? 

Mr. COHEN. Right. And the third reason is that we carry these 

networks because we are always focused on the consumer. So if you 

have compelling content and you can make the case that our consumers want to watch this content, we will carry it. 

Senator KLOBUCHAR. Okay. Thank you very much. 

Mr. COHEN. Sorry. 

Senator KLOBUCHAR. I do not want to miss the paycheck fairness 

vote. 

Mr. Kimmelman, do you want to respond to that? And then I will 

be turning it over to Mr. Franken or Mr. Lee. 

Mr. KIMMELMAN. I will just say very quickly this is the real scale 

question, as the scale issue raised before about acquiring Time 

Warner. One could say with $45 billion you could do a lot of those 

other things without having to buy up the second largest company 

in the market. 

But here on the scale side you cannot launch, you cannot get out 

there, as Mr. Bosworth said, unless you have advertisers willing to 

support you. They will only support you if you have enough distribution. So it is a no-win game, and the problem particularly, 

having been involved in crafting those original provisions more 

than 20 years ago, I throw up my hands, because when you are 

vertically integrated and you have a golf channel, and someone else 

comes along, how do you judge whether it is a fair way of putting 

someone on or not, whether—we know they have a self-interest in 

their own channel. This becomes almost an impossible task. It has 

been extremely difficult for the FCC. And so I question whether 

those rules can really do the job. 

Senator KLOBUCHAR. Thank you. Do you think those rules then 

should be changed? Or do you think as the Justice Department 

considers this merger that that should be part of the consideration, 

in addition? 

Mr. KIMMELMAN. Senator Klobuchar, I think it is appropriate for 

both reviewing agencies to consider all of its existing safeguards as 

they take on a new transaction to determine whether the old ones 

work, because to just reapply them without understanding whether 

they work would make no sense whatsoever. 

Senator KLOBUCHAR. Okay. Very good. I am going to turn this 

over to Senator Lee, and then Senator Franken will be next. Thank 

you very much. 

Senator LEE [presiding]. Thank you, Madam Chair, and thanks 

to all of you for being here today. 

Mr. Cohen, why don’t I start with you? As I referenced briefly in 

my opening statement, I have heard some concerns related to content, related to the idea of one company controlling a significant 

share of both Internet and video distribution. So, you know, wheth-
23 

er with respect to politically affiliated networks or content or otherwise, I have heard some concerns expressed that the emerging 

Comcast, the post-merger Comcast, might have the incentive or 

even the predilection but certainly an enhanced capacity, due to its 

larger size, to discriminate against certain types of content, including political content. 

How would you respond to those concerns? 

Mr. COHEN. So we started talking about this just now, and I 

think the easiest way to directly respond to that question is to say 

that it is an important question, but it is a question that is probably the most litigated question in the telecom space in the past 

15 or 20 years, and I say that because the FCC went through two 

lengthy proceedings in the late 1990s and the first decade of the 

21st century to determine what level of cable ownership, horizontal 

ownership, would raise a concern that either the cable company 

could exercise monopsony power—that is, extract unfair pricing 

from a programmer—or could serve as a bottleneck to prevent a 

programmer from reaching the American consumer. And in both 

cases, the Commission established a 30-percent horizontal ownership cap saying that if you are over 30 percent, those risks were 

present; but if you were not over 30 percent, those risks were significantly mitigated. 

In both cases, the Federal courts overturned the horizontal ownership cap, concluding that the FCC record was arbitrary and capricious, that the facts did not support a 30-percent cap, and that, 

therefore, the law did not support it either; and that, in fact, the 

portion that the cable company with 30 percent does not control is 

known as the ‘‘open field’’; that is, it is known as ‘‘the rest of the 

public’’ that you can get to. And what the Federal court said was 

that a 70-percent open field was considerably larger, considerably 

greater than what a new programmer would need to be able to be 

launched and to be able to be viable. 

So in this transaction, we announced on day one that we were 

prepared to divest about three million customers to bring us underneath 30 percent of the total MVPD market. And that is even 

though by law there is no 30-percent cap, but that 30-percent number is a bit of a hot-button issue for those who watch this space. 

And by being under 30 percent, we believe that we have a compelling argument that the concerns that you are addressing in your 

question would not be significant concerns in this transaction. 

Senator LEE. Mr. Kimmelman, how do you respond to that? 

Mr. KIMMELMAN. Well, as Professor Yoo said, things have 

changed since those rulings, and those were about generic rules. 

Here we have a specific transaction with specific ownership, and 

very importantly, a company with substantial vertical integration 

in programming, with NBC network, NBC cable programming, 

sports, regional sports. So they have a variety of different forms of 

leverage here that are not simply addressed by this simple horizontal issue. And I would say that the thing that has changed the 

most since those rulings, too, is the Internet, is the growth of highspeed Internet delivery. As we have seen in most places, we do not 

get much head-to-head competition with two, three, five cable operators or multiple phone companies coming in. It just has not happened. So the Internet has become the vehicle for this new poten-
24 

tial form of competition, and with that, they have as many as 50 

percent of the really high-speed customers in the country. That 

could be a chokehold that should be looked at. 

Senator LEE. So if I understand you correctly, you are saying 

that Mr. Cohen’s response does not adequately take those two factors into account: number one, the effect of the changes in the 

Internet market; and, number two, the relationship between 

Comcast and NBC. Is that—am I—— 

Mr. KIMMELMAN. That is correct. Yes, Senator. 

Senator LEE. Okay. Professor Yoo, would you care to chime in on 

that, especially since your name was invoked there? 

Mr. YOO. Of course. Thank you. To take a historical perspective, 

people are very concerned about vertical integration. If you look at 

the facts, vertical integration has been dropping like a stone for 25 

years in the traditional cable industry. The industry has below 10 

percent vertical integration, and it continues to decrease. And the 

concerns that this is a growing problem just are not borne out by 

the facts. 

Unlike Mr. Kimmelman, I would say that the Internet cuts the 

other way. It makes it less likely that people have trouble getting 

their message out. One of the great benefits of the Internet is people who want to speak can speak, and the transformation that is 

happening on the Internet, on video, is that it is becoming a videoon-demand world, where people request content. Instead of getting 

what someone else thinks they should see, people decide for themselves, and actually that has been enriching the environment in 

ways that are transformative. If you want to see, look at our kids 

and see how they are doing it. It is just a completely different 

world. 

Senator LEE. Okay. I am sure I am going to have more questions 

later and will want to follow up on this, but my time has expired. 

We will turn the time over to Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. I want to thank 

Chairman Leahy for holding this hearing. What we are talking about today is a $45 billion deal that would 

combine the Nation’s biggest and the Nation’s second biggest cable 

companies and the Nation’s biggest and the Nation’s third biggest 

Internet service providers. 

There is no doubt that Comcast is a huge influential corporation. 

I understand there are over a hundred lobbyists making the case 

for this deal to Members of Congress and our staffs. But I have 

also heard from over 100,000 consumers who oppose this deal, and 

I think their voices need to be heard, too. 

As members of the Senate Judiciary Committee, we are here to 

question whether this deal is good for competition and whether it 

is in the public interest. I am against this deal because I believe 

it does not meet either test. I believe this deal with result in fewer 

choices, higher prices, and even worse service for my constituents. 

Comcast has argued that there is nothing to worry about here 

because it does not compete with Time Warner Cable in any zip 

code. Mr. Cohen has told reporters, ‘‘There is absolutely no competitive overlap between the two companies—none.’’ What he is 

really saying is that these two companies, each of which controls 

many of its own local markets, want to become one larger company 
25 

that controls the national market. The new Comcast would operate 

in 19 of the Nation’s 20 biggest markets, 27 of the top 30, as Mr. 

Bosworth said. 

That kind of expansion has a serious impact on competition. For 

example, when Comcast wanted to acquire NBCUniversal, 

Comcast’s CEO told this Committee not to worry about it because 

there were still other ‘‘robust distributors’’—and he specifically 

named Time Warner Cable—which would prevent Comcast from 

setting anticompetitive prices for NBC content. 

The point was that Comcast could not get away with that sort 

of behavior because the distributors, including Time Warner Cable, 

could not stand for it, and they could go to the FCC to complain 

about it, too. 

Later in the hearing, Comcast’s CEO also assured us, ‘‘We are 

not getting any larger in cable distribution here.’’ 

Well, if this deal goes through, Comcast will become larger in 

cable distribution, and if this deal goes through, Comcast never 

again will have to negotiate with Time Warner Cable when it 

comes to setting prices for NBC content. And NBC content, everyone should remember, is 20-some networks. 

Comcast cannot have it both ways. It cannot say that the existence of competition among distributors, including Time Warner 

Cable, was a reason to approve the NBC deal in 2010 and then 

turn around a few years later and say that the absence of competition with Time Warner Cable is a reason to approve this deal. 

Mr. Kimmelman, what do you make of Comcast’s argument that 

they do not compete against each other at all? Doesn’t that really 

underestimate the anticompetitive implications of this deal? 

Mr. KIMMELMAN. Absolutely, Senator Franken. It is true they do 

not overlap geographically, but that is not the entire competitive 

analysis either for the Department of Justice or for the Federal 

Communications Commission. The question here is: Are there ways 

in which they can leverage unfairly? Do they have excess market 

power? Can they drive up prices? Can they harm quality and innovation? And there are numerous ways in which they can do that? 

If Time Warner can no longer discipline their pricing for NBC 

programming, prices will go up there. They probably will go up 

across the entire distribution chain, harming consumers everywhere. 

Having the additional leverage of Time Warner as part of the 

Comcast family gives them enormous power over how the Internet 

develops the ability to offer new, innovative services. What devices, 

what consumer interfaces work? If they have almost half of the 

customers in the country, that is what manufacturers will make: 

products for that half, meet their specifications. If they continue to 

want that to be through a bundled, high-priced set of services, I am 

sure it will be. 

These are all enormous dangers that have significant competitive 

impacts and tremendous harm for consumers. 

Senator FRANKEN. Well, speaking of bundled services, we will get 

to that later. I am out of time. 

Mr. Chairman, I very much hope we will go to a second round. 

Senator LEE. I am confident we will. 

Senator FRANKEN. Great. Thank you. 
26 

Senator LEE. Thank you, Senator Franken. 

Senator Hatch. 

Senator HATCH. Well, thank you, Mr. Chairman. 

Robert Bork taught us that the overriding objective of antitrust 

law is to promote consumer welfare. Antitrust enforcement may 

seek to safeguard robust competition, but it must not become a tool 

to advantage or disadvantage particular competitors. 

I know that some of my friends here today have never met a 

merger that they liked. But too often government intervention in 

such matters risks harming consumer welfare and innovation by 

protecting insufficient competitors from market forces. 

Absent clear evidence of market failure, consumers benefit when 

the government allows free markets to allocate resources in the 

most efficient manner possible. The markets for both video services 

and broadband Internet are dynamic and innovative, with new entrants and evolving technologies. Government regulators must be 

especially careful not to intervene unwisely in such technologically 

dynamic markets. 

Still, the scope of the proposed merger between Comcast and 

Time Warner raises issues that deserve attention, and I thank all 

the witnesses for being here today to discuss this matter. 

Let me ask you this, Professor Yoo. I would like your view of 

transaction from the supervision of antitrust law. After all, although the FCC has a broader mandate to examine whether the 

merger serves the public interest, the Justice Department must 

look, in my opinion, solely at whether the transaction is consistent 

with antitrust law. According to your legal analysis, would this 

merger create for either video or broadband an industry structure 

resulting in anticompetitive harms under established antitrust or 

communications law? And, in particular, can you speak to the relevant markets at issue in that analysis? 

Some critics stress that the combined company would control 50 

percent of high-speed Internet access, a majority of cable subscribers, and 30 percent of—no, MVPD customers. But are those 

the markets relevant to antitrust analysis in a video space that includes satellite providers and Internet video platforms, or in a rapidly evolving broadband space that includes enhanced DSL fiber, 

DSL fiber and advanced LTE services? 

Now, that is a lot of questions for you, but I just thought I would 

ask them anyway. 

Mr. YOO. Well, they are insightful questions, so I thank you for 

them. 

The people who have cited a number of close to 50 percent market share for the merged entity have not taken into account the latest technological advances that are going on right now. DSL is rapidly improving and deploying a vast array of new technologies, including IP DSLAMS and vectoring and a bunch of technical jargon 

which I will not bother the Committee with. But what is happening 

is AT&T is rolling out a new 45-meg service across 80 percent of 

its footprint and enhanced to 10-meg in some areas, and we are not 

the only country. The U.K., Germany, a lot of different countries 

are on this strategy. 

And when you start to see that, you see that DSL is actually 

coming back from the dead, and the facts say that where DSL has 
27 

not enhanced itself, yes, it is losing market share to cable. But in 

the areas where AT&T has upgraded its network, it is actually taking subscribers from cable. 

And so we see a market where the only way you can get the 50 

percent number is if you pretend that DSL is not a competitor. The 

cable companies who are losing customers to DSL right now would 

beg to differ because the fact for them is they are competing. This 

is the exact kind of dynamic competition which we want, which is 

cable got better, but even as of today, the markets are not structured in a way that any anticompetitive effects are likely under 

conventional antitrust analysis. But what antitrust law will also 

tell you is what matters is not what is happening today, but it is 

what is going to happen in the future that really should drive the 

analysis, and that world is going to become even more competitive 

than the facts today would lead you to believe. 

Senator HATCH. Well, thank you. 

Now, Mr. Cohen or Mr. Minson, whoever wants to answer it, we 

all know the broadband marketplace is dynamic. Five years ago, 

many believed that no one could compete effectively against the 

Bells. Today some suggest that no one will be able to compete effectively against cable in providing broadband. 

What are the competitive conditions you now face? And how do 

you see the broadband marketplace evolving in the near future? Either or both. 

Mr. COHEN. I will go first, Artie. 

So thank you, Senator, and I think we see a fiercely competitive 

broadband marketplace across our entire footprint. In each of the 

top MSAs in the country, there are double-digit broadband competitors in that space, and I will give you—just to look at the combined 

footprint of Comcast and Time Warner Cable, in 98.4 percent of 

that footprint, the consumers have a choice between Comcast, Time 

Warner—Comcast or Time Warner Cable and at least one top-10 

ILEC. So that is in 98.4 percent of our combined footprint. 

As Professor Yoo just pointed out, there is a virtuous investment 

cycle that is occurring here. We started—we launched, the cable industry launched cable model service. That stimulated the Bells to 

take DSL off the shelves. It existed for more—they invested in it 

and launched that product. We invested more in cable modem service and made cable speeds much faster. That led the Bells ultimately to move to fiber-based, fiber to the home, fiber to the neighborhood, FiOS or U-Verse or other Bell products that are like UVerse. 

That led us to invest more and increase speeds. Those new speed 

announcements that I announced today, 13 speed increases in 12 

years, are competitive responses to the Bells offering faster and 

faster Internet service. 

As Professor Yoo pointed out, that led the Bells to put to the side 

old DSL and invest in modern DSL technology to have more 

speeds. We announced this transaction, and the CEO of AT&T immediately said that this is going to create a heightened sense of urgency for us to invest even more in being able to respond to this 

particular transaction. 
28 

So in the end, consumers are the big winners. In the broadband 

space or in the video space, it is really good to be a consumer today 

because of this investment cycle. 

Senator HATCH. Well, thank you. 

Mr. MINSON. What I would add is that in my opening remarks 

I noted that we have spent billions of dollars over the last several 

years in capital expenditures, and a very high percentage of that 

goes to increasing capacity in our broadband plant. We have increased speeds from 3 Mbps to 100 Mbps across our footprint, and 

we have pockets of our footprint we offer a 300 Mbps service. So 

obviously on a price-per-meg basis, we offer much more value to 

consumers today than we did 10 years ago. 

In addition, that investment has allowed us to offer different 

tiers of service. We offer over six different tiers of service. For example, earlier this year, we offered an everyday low price offer of 

$14.95 so that customers, for that part of the population, was 

priced very effectively. All in response to a very competitive marketplace. 

Senator HATCH. Thanks, Mr. Chairman. Thank you. Thank you 

for your testimony. 

Senator KLOBUCHAR [presiding]. Senator Hirono. 

Senator HIRONO. Thank you, Madam Chair. 

Thank you for all of your testimony. I realize that following some 

of the line of questioning of my colleagues, I think it is difficult to 

apply traditional antitrust analysis to a market where so much is 

changing so fast. And, Professor Yoo, you said that what the antitrust law should look to is what happens not today but in the future, which brings me to Mr. Kimmelman’s suggestion, I think it 

was—no, Mr. Bosworth’s suggestion that perhaps what should be 

happening is that the DOJ and the FCC should engage in basically 

continuing oversight to make sure that new, independent networks, 

others who want to come into the marketplace to provide choices 

for consumers will have a fair opportunity to compete. 

Would you agree that that would be something to consider in this 

market that is changing so rapidly? 

Mr. YOO. I would agree entirely. The FCC should engage in ongoing oversight, and, in fact, it does. There is a very well-developed 

set of program access rules and carriage access rules to make sure 

that independent programmers have the ability to be carried and 

to make sure that people who have content must share it with 

other cable operators and other satellite operators. 

There are some complaints. As always, there are people who do 

not get what they want out of the process, and the FCC has consistently said the correct solution is to fix that process so it is available for everyone, instead of using a merger to do a company-specific solution that will only affect the merging party. 

Senator HIRONO. For Mr. Cohen, your basic cable package is 

about $75 a month. Is that about right? 

Mr. COHEN. Senator, we actually have many basic cable packages, so we would start with a lifeline-type service, which would be, 

you know, broadcast channels and a few other channels that more 

typically would be around $20 a month. We have a digital economy 

package which—— 
29 

Senator HIRONO. What is kind of your median amount that your 

subscribers pay for your services? 

Mr. COHEN. So median, I am not sure I know that. I can provide 

that to the Committee. And, remember, it is hard because we 

have—half of our customers are in bundles and are getting a bundle of services for $99 a month or $129 a month, and that includes 

video, high-speed data, and telephone. 

Senator HIRONO. It is that group that I want to address, the people who have the bundled package. 

Mr. COHEN. Okay. 

Senator HIRONO. And there are consumers who might want to 

have more of a say in what kind of programming they want to pay 

for. So do you have any—in the group that gets the bundled product, do you have any initiatives in mind that would create more of 

a choice, provide more of a choice for consumers to get the kind of 

programming they actually want and not have to pay for—in my 

case, for example, it would be, no offense, some sports programming. 

Mr. COHEN. Right. So the answer is we do offer a variety of video 

bundles, all of which or most of which are available in bundles with 

high-speed data and with telephone service. The whole issue of socalled a la carte programs where people can assemble their own 

packages is a very complicated question, and I would note that in 

every independent study that has ever been done of a la carte programming, the study has concluded that the result of an a la carte 

regime would be less choice for consumers and higher costs. And 

the reason for that is that the economics of cable programming involves both advertising and affiliation fees. 

Senator HIRONO. I think, Mr. Cohen—I hate to interrupt you. My 

time is running out. I think it just illustrates how dynamic this 

marketplace is and—— 

Mr. COHEN. I would agree with that. 

Senator HIRONO [continuing]. How many different offerings and 

why perhaps the DOJ and FCC should continue to monitor to make 

sure that competition is actually occurring. 

I have a question about Hawaii. Now, Hawaii is not served by 

Comcast at all, and Oceanic has about 90 percent of all the cable 

subscribers, and they have Internet service where they have a particular Internet address. Should this merger occur, my specific 

question: Would they be able to continue to use their same Internet 

address? Or do they have to completely change what is happening 

with them? 

Mr. COHEN. So we have not gotten to that level of detail on transition planning. When we have done other transitions relating to 

other transactions, we have tended to have a long phase-in period 

for changes of Internet addresses. And I think some people are still 

using their AT&T Internet addresses which was a transaction that 

was done in 2001. But we really have not gotten to that level of 

transition planning yet. 

Senator HIRONO. So I take it the idea would be to be as accommodating to your customers all across the country. 

Mr. COHEN. We are totally focused on the customer experience 

and have a lot of experience in doing these types of transitions, and 
30 

that is exactly what the concern is and what the planning process 

would be. 

Senator HIRONO. Thank you. I have run out of time. 

Thank you, Madam Chair. 

Senator KLOBUCHAR. Thank you very much. 

Senator Graham. 

Senator GRAHAM. Thank you, Madam Chairman. 

Mr. Cohen, how would this potential merger affect the South 

Carolina market? 

Mr. COHEN. So, Senator, good morning. South Carolina is one of 

the States actually where Comcast and Time Warner Cable both 

have a presence. It is a State that actually demonstrates the lack 

of competitive overlap between the two. Although we are both in 

the State, we are in different parts of the State. So I think that 

South Carolinians would gain the benefits of the transaction that 

I had a chance to run through before: more investment, faster 

Internet, better video experience, roll out of the X1 platform, better 

TV Everywhere experience. And I think South Carolina is a State 

where bringing the two cable operators together will provide a 

more unified experience in the State, although we will continue to 

compete—and you know the State well. We will continue to compete with DIRECTV, DISH, and AT&T as major wireline providers 

in the State of South Carolina. 

Senator GRAHAM. Mr. Minson, you do not compete with Comcast 

in South Carolina. Is that correct? 

Mr. MINSON. That is correct. 

Senator GRAHAM. Do you agree with what he just said about the 

potential merger affecting South Carolina? 

Mr. MINSON. I do. 

Senator GRAHAM. Okay. Now, I am a DIRECTV subscriber, so— 

I had problems with cable. 

[Laughter.] 

Mr. COHEN. If I can say, you are proof of the point that I am 

making. 

Senator GRAHAM. And I have got problems with DIRECTV when 

the weather is bad, so I am trying to revisit this. I really am. I do 

not know what to do. I am trying to figure out what is the best— 

I think most consumers want as much as they can get as cheap as 

they can get it, right? At least I do. And the details kind of cloud 

us over. 

So the bottom line is this merger, you are not taking two people 

who compete in the same marketplace. Am I right about that? 

Mr. COHEN. That is correct. 

Senator GRAHAM. So my choices would be, if the merger comes 

about, to stay with DIRECTV, go with DISH, go with you all. Who 

else could I choose from? 

Mr. COHEN. You could go with AT&T as a wireline competitor. 

Senator GRAHAM. So I have got four choices? 

Mr. COHEN. You have got four choices, and, again, depending on 

where you live, other wireline competitors in broadband and cable 

are Charter, Cogeco Cable, Home Telecom, and WOW in various 

places in South Carolina. 

Senator GRAHAM. So it could be up to seven or eight to ten 

choices, depending on where you live. 
31 

Mr. COHEN. Right, on a statewide basis. But to be fair, so Mr. 

Kimmelman does not jump in and correct me, just like we do not 

compete with Time Warner Cable, we do not compete with Charter 

either. So it really depends where you live as to whether one of 

those cable competitors—— 

Senator GRAHAM. So basically cable companies do not compete 

with each other, generally speaking? Is that what we are saying? 

Mr. COHEN. Right, that is a result—that is correct, and it is really because of the way in which cable grew up as a matter of local 

franchising, that local franchises were granted—originally when 

Congress authorized them, they actually were exclusive. Ultimately 

Congress got rid of exclusive franchises, but the cable business 

grew up community by community by community. 

Senator GRAHAM. So in my case, I would not be losing a choice. 

The theory would be I could have a new choice with more services 

through the merger. Is that correct? 

Mr. COHEN. I should let you take the witness seat. That is exactly what I have been trying to say. 

Senator GRAHAM. Okay. So somebody can sell me a product at 

this hearing, because I am really—does anybody represent 

DIRECTV? 

[Laughter.] 

Senator GRAHAM. Because I really do not know—you know, I am 

thinking about changing because I have had the satellite signal 

knocked out twice. I have had to move the satellite twice. But before that, the cable went out right in the fourth quarter of a ball 

game. 

[Laughter.] 

Senator GRAHAM. So from a content provider’s point of view, if 

I am a content provider, am I at a disadvantage from this merger, 

in your view? 

Mr. COHEN. So I believe that you are not. As a combined company, we would have under 30 percent of the market. And I do not 

think that that is a sufficient share of the market to create problems for programmers. And maybe more importantly than my opinion, the Federal courts and the DC Circuit have ruled on two occasions that having under 30 percent of the market does not create 

an undue risk of monopsony power or bottleneck authority. And I 

will agree with something Mr. Kimmelman said beforehand. That 

was a different time when the court made those rulings, but the 

way in which I think it is different is that the multichannel video 

marketplace today is even more competitive than it was in 2001 

and 2009 when the DC Circuit made those decisions. 

Senator GRAHAM. In 20 seconds, tell me why I should switch 

back to cable. 

Mr. COHEN. So I am going to give you the Comcast pitch, even 

though we are not there yet. I think Comcast provides the best-inclass video viewing experience in the country. Our X1 operating 

system changes the way people watch TV—better search, voice control, disabilities access, and our TV Everywhere experience; 50,000 

choices on demand, which nobody comes close to; and TV Everywhere gives you the ability to watch 50 live channels anywhere, inside or outside the home now, and tens of thousands of video 

choices on demand. 
32 

Senator KLOBUCHAR. Thank you very much. 

Senator Blumenthal. 

Senator BLUMENTHAL. Thanks, Madam Chairwoman, and thank 

you for your leadership in the antitrust area and for participating 

and leading on this hearing. 

First, let me say how delighted I am to see two Connecticut residents here, the morning after another great triumph by our team. 

And if you are around long enough, you will see me present to Senator Rand Paul my Huskies tie because he is obligated to wear it 

as part of the bet we made. So that may be the best entertainment 

of the whole day in Washington, DC—not to take away anything 

from this panel. 

And let me just say how much respect I have for Mr. Cohen and 

Mr. Minson—thank you for being here—and for your companies, 

who do so much to enrich and enliven our lives. And to all of our 

witnesses, thank you on this very, very consequential, even historic 

issue that is before us. 

And let me just say that I think what we have heard among 

some of our colleagues is a general sense of skepticism, which is 

reflected in the general public about how this deal will really help 

consumers. Prices will not go down. We have already heard that 

from the proponents. So where is the beef? Where is the ‘‘there’’ 

there for consumers? And apart from the fairly vague potential 

promises of good things happening, I think the case has yet to be 

made that consumers will really benefit in a tangible, real, substantial way. 

In my experience as Attorney General and here in Washington, 

I have witnessed how excessive consolidation in any market can 

sharply increase prices and reduce consumer choices in the markets for broadband and pay-TV services. I am especially concerned 

that the bulwarks of a competitive marketplace—choice and aggressive rivalry, not just competition but aggressive head-to-head 

rivalry—have been diminished over the years, and these markets 

are plagued with anticompetitive conduct, industry agreements to 

limit consumer choice, and skyrocketing monthly bills at triple the 

rate of inflation. That is the reason why I think you are hearing 

a high degree of skepticism here. 

So I think the Department of Justice has to conduct a very comprehensive and thorough review of this merger, paying careful attention to the potential abuse of power. And since I opened about 

sports, let me focus for the moment on regional sports networks, 

also known as RSNs. 

The most recent information I have details Comcast owning 11 

RSNs in the country’s largest markets and Time Warner Cable 

owning five RSNs, along with 16 local sports channels. Combined, 

the merged entity would own the rights to a very formidable 

amount of local sports programming in the largest media markets 

in the country. These are unique products of tremendous value. Access to them is crucial to a pay-TV provider’s ability to remain competitive. And the cost of sports programming continues to rise with 

no end in sight. The L.A. Times reported last week that cable bills 

are expected to rise to $125 a month from $90 a month in the next 

few years, almost entirely due to sports programming. 
33 

Any competitors that will not pay your increased costs for sports 

programming get denied access. And that has led to some serious, 

high-profile disputes, as you well know, between Comcast, Time 

Warner, and your satellite and telco companies. In fact, I think 

there are still several outstanding disputes right now where regional sports programs continues to be withheld from competitors 

by both Comcast- and Time Warner-owned RSNs. 

So I am really concerned that the increased ownership of highvalue programming like regional sports networks will give your 

companies, soon to be one company, both the means and incentive 

to overcharge your rivals. I think that is a practical, hard fact of 

life—means and incentive to overcharge for an economically crucial 

element of programming involving sports. 

So, Mr. Cohen and Mr. Minson, I wonder if you would address 

these concerns. 

Mr. MINSON. Do you want to go first and I will go second? 

Mr. COHEN. I will go first. Good morning, Senator. I was wondering, when you did not come in here, if you were still celebrating 

from last night. Actually, I will say I think everyone in the country 

shares your joy, and particularly if I can say there is something 

unique about women’s basketball, and the sheer joy of the end of 

the game was last night something I think everyone in America 

can get a lot of pleasure out of. 

I will point out, by the way, that in the diversity of programming 

and the way in which we are bringing this, that, of course, the 

men’s championship was on CBS or broadcast network, and the 

women’s was on ESPN, a cable network, and that is part of what 

cable has been able to enable in America to be able to have these 

diversity of outlets to show really exciting and incredible content 

like that. 

So in the RSN world, my numbers are a little different than 

yours, but I think the point is essentially well taken. I had said 

earlier that one of the reasons why I could not make a commitment 

that cable pricing was going to go down as a result of this transaction was because the number one driver of our cost structure is 

programming costs, and the biggest factor in programming costs is 

sports programming. So we are in total agreement on that. 

In the RSN context, though, RSNs are not national networks. 

And as you point out, they are regional; they are offered in a particular market. And so there is really nothing in this transaction 

that changes the competitive dynamic in any market in the country. 

So we already own, as you said, a bunch of regional sports networks. Time Warner Cable has a few. But let us take the L.A. 

Lakers regional sports network in Los Angeles. Comcast is not in 

Los Angeles. Time Warner Cable is. Whatever the competitive dynamic is today, for Time Warner Cable negotiating regional sports 

network deals for multichannel video distributors in the L.A. market for the Lakers regional sports net will be exactly the same. We 

are not going to have any more power in the L.A. market to negotiate different deals because we also own regional sports nets in 

Chicago and Philadelphia and the Washington area. 

So those markets, the impact of regional sports net bargaining 

power is tied to the structure of the local markets where the re-
34 

gional sports nets are offered, and there is nothing in this transaction that changes the competitive balance or competitive equilibrium in those particular markets. 

Senator BLUMENTHAL. There may be nothing in this deal that 

changes the configuration locally, but it increases the bargaining 

power on one side. 

Mr. COHEN. The bargaining power for who? I mean, I am trying 

to figure out—— 

Senator BLUMENTHAL. The bargaining power for the entity that 

controls the programming. It is a bigger entity with more economic 

power and potentially more power over other programming in other 

markets and increases its strength, its ability to withstand potential hostile negotiations. I think that—— 

Mr. COHEN. So it is the collection—— 

Senator BLUMENTHAL [continuing]. You are right if you view it 

only through the prism of the local configuration. But even there 

it may have an impact. 

Mr. COHEN. So I will just end with really short—and I apologize—to say that in the Comcast case, of course, under the 

NBCUniversal conditions, multichannel video distributors actually 

have the right to demand arbitration for regional sports nets on a 

stand-alone basis, along with no other channels, just the sports net. 

Now, no one has done that. No one has availed themselves of the 

arbitration rights because we have been able to reach deals with 

people without the need for arbitration. But there is that extra protection that is present in the NBCUniversal order. 

Senator BLUMENTHAL. Why not—— 

Senator KLOBUCHAR. Senator Blumenthal, do you want to go on 

a second round? Because—— 

Senator BLUMENTHAL. Okay. I apologize, Madam Chair. 

Senator KLOBUCHAR. Senator Coons. Thank you. 

Senator COONS. Thank you, Senator Klobuchar. Thank you to 

our entire panel and to the Members of the Committee who have 

dedicated significant time today to reviewing this substantial 

transaction. 

Mr. Cohen, if I might, I would just like to start with a few questions about service, employment, and diversity. First, the main concerns I have heard from my constituents in Delaware have to do 

with customer service, future price and employment. Comcast is a 

major employer in the Philadelphia region, and there are some real 

concerns among my constituents that this merger, if it goes forward, will not achieve significant improvement in customer service 

levels, may lead to increase in price, and may lead to a loss of jobs. 

Are there any assurances that you could give us today about how 

the significant benefits that you have described, both in writing 

and in testimony, to this merger will inure in some ways not just 

to shareholders but also to customers who, frankly, more than not 

have contacted me with concerns about price and customer service? 

Mr. COHEN. So let me do—service, price, and jobs. Let me do 

price first because I have already addressed that. I am not sure you 

were here. I will make—again, you know how careful I am. I will 

make my one firm commitment that there is absolutely nothing in 

this transaction that will result in an increase in prices for 

Comcast customers. Nothing. Whatever economic benefits we can 
35 

derive, whether it is through synergies or whatever marginal additional leverage we might receive for programming negotiations and 

equipment negotiations, ultimately those inure to the benefit of 

consumers. So that is my response on price. 

On service, so service, I am glad you raised the question. Senator 

Franken has talked about this, and, you know, Senator Franken, 

I actually appreciate what you have said about service, because I 

want to tell you, at our company this is—we have an incredible 

focus on this, and it bothers us that we have so much trouble delivering a really high-quality service level to our customers on a consistent basis. It is not something we are ignoring. It is not something that we are not serious about. 

We have spent billions of dollars over the past five years improving our networks to try and make them more reliable, on additional 

training for technicians and for our call center employees. We have 

created new call center Centers of Excellence, one of which is in 

Delaware, where we have specially trained call center representatives, with a design of trying to enhance the level of customer service. 

We have focused on a whole host of customer service improvements, including creating one- and two-hour appointment windows 

across most of our footprint, which we actually meet now 97 percent of the time statistically. And we are not happy that we do not 

meet it three percent of the time. 

So this is a place where we are having issues, and we are—I can 

just tell you that as a company we are laser focused on trying to 

improve the customer experience and do the very best we can to 

be the best—to offer the best customer service and best customer 

experience in the country, internally and externally. And there are 

a lot of surveys around, and some of them are very difficult for us 

to read. But I will tell you that over the last three years in J.D. 

Power and Associates, which I think is viewed as the Cadillac survey of customer attitudes and customer value, Comcast’s service, 

Comcast’s score in J.D. Power has gone up about 100 points in 

video and about 80 points in broadband, and those are the largest 

increases for anyone in our industry. So the investments that we 

are making and the commitment that we have internally to improving the customer experience are beginning to bear fruits. But 

we are deeply disappointed as to where we are, and all I can tell 

you is that the scores that we receive, the comments that people 

like Senator Franken have made, the conversations that I have had 

with you, they just spur us to do even better and to really try and 

enhance the customer experience. 

In terms of jobs—— 

Senator FRANKEN. You are welcome. 

Mr. COHEN. I really mean that. It is a good way to focus us, and 

we are totally open to the fact that sometimes we need a kick in 

the butt to focus us on things that are important, and this is a 

place where external voices have absolutely had that impact. And 

we think in the end we are going to be a better company as a result of it. So thank you. 

In terms of jobs, obviously unlike the NBCUniversal transaction, 

where we could stand up and say this is a vertical transaction and 

there is not any overlap in jobs and we are not going to be laying 
36 

people off, in fact, we expect to grow jobs, this is a transaction 

where there is some overlap of jobs, but it is headquarters and 

shared services jobs. It is not the basic operations of the cable system. And so, you know, the State of Delaware, we do not have 

headquarters or shared services jobs in the State of Delaware. We 

do not have them in the State of Connecticut. We do not have them 

in the State of Minnesota. And we do not have them in the State 

of Utah. So for the Members of the Committee who are here now, 

I can comment on that. We have not gotten deeply enough into 

looking at where the potential overlap is for me to be more specific 

than that. But cable, because cable is such a local business, most 

of our jobs are the customer-facing jobs of technicians and call centers and local management of our systems, and we do not anticipate any reductions in those jobs. 

Senator COONS. Thank you. I see I am about to run out of time. 

Let me ask one more question, if I might, about sort of terms and 

conditions as you have referenced in the previous merger with 

NBCUniversal. 

Some commitments were made, and there has been a significant 

rollout of the Internet Essentials program, which is a very promising program to provide low-cost, high-speed Internet access for 

low-income households to help address the achievement gap, to 

help improve access and deal with the digital divide. There were 

also commitments made about diversity of programming, and I am 

interested in both diversity in the work force and diversity in programming and the accessibility of your service platform to a wide 

variety of content providers. 

Let me focus you as an example on TV One, an African American-focused channel, if you would speak briefly in closing to both 

of those. And then, Mr. Kimmelman, if you might on whether 

terms and conditions really are the appropriate way to address concerns that some might have about this merger. 

So, Mr. Cohen, if you would, on your progress toward delivery of 

Internet Essentials, your progress toward meeting commitments 

made about diversity and programming, and then Mr. Kimmelman. 

Mr. COHEN. So Internet Essentials, at the time we proposed it 

in 2010, was an experiment. We had no idea if it would work. We 

had a concept for a program based on research, and as we have 

rolled it out, it is now the most important community investment 

initiative of Comcast Corporation, and it is a program that I think 

not only the executives in the company but rank-and-file employees 

have an enormous amount of pride in. In 30 months, we have successfully connected about 300,000 families, 1.2 million low-income 

Americans to the Internet, most of them for the first time in their 

lives. Eighty percent of those families are minority, and when we 

survey those customers and say, ‘‘What do you do with the Internet?’’ the number one answer is, ‘‘Our kids do homework on it.’’ 

Ninety-four percent of the families say that their kids do homework 

on it, and of those 94 percent of the families, 90 percent of them 

say they think their kids are doing better in school as a result of 

having the Internet at home. 

So it is a program that is an amazing success. We, together with 

thousands of community partners—it is not just us—are really 

making a difference in closing the digital divide, and we are incred-
37 

ibly proud and enthusiastic of being able to extend that program 

throughout the Time Warner Cable footprint. 

So there have been multiple references to the size of this company being in 19 of the 20 largest cities in America and 37 of 40 

and whatever all the numbers are. I look at those numbers, and 

when I think about Internet Essentials, I am excited, because we 

are bringing the Nation’s largest and most comprehensive 

broadband adoption program for low-income Americans to 19 of the 

20 largest cities in America, 37 of the 40 largest cities, and I really 

think we are going to make a difference in moving the needle. 

In terms of diversity of programming, we are very proud of our 

record there, too. We agreed to launch 10 new, independent networks, at least eight of which would be minority owned and controlled, on a schedule. Consistent with that schedule, we have 

launched five, including four networks that are minority owned and 

controlled. TV One, by the way, which we referenced, was a network that we originally helped to launch after the TV One transaction, being an investor, and giving it its first carriage deal. And 

so we are enormously proud of our record for enhancing minorityowned and minority-focused networks, both in terms of creating 

wealth creation opportunities for minority entrepreneurs and in 

terms of making sure that we have programming that is being designed by and run by diverse ownership and management teams to 

be able to provide that type of programming to the particular ethnic communities and diverse communities that are represented. 

Senator COONS. Thank you, Mr. Cohen. 

Could Mr. Kimmelman comment as well. 

Mr. KIMMELMAN. Thank you, Senator Klobuchar. I will try to be 

very brief, Senator Coons. I will only address the competitive kinds 

of conditions that I think are important here to customers, users, 

consumers. 

In the kinds of regulations that have been cited in this hearing 

and the kinds of benchmarks that have been there and used in the 

past that some are trying to rely on, the difficulty here is none of 

them are absolute. None of them are ‘‘you may absolutely do X and 

you may absolutely not do Y.’’ They all have to rely upon reasonable business practices, common practices of the lead companies in 

the industry. And the difficulty here is with the size of Comcast 

combined with Time Warner. They could drive what those practices 

are. And it becomes a bit of a circular reasoning of what is reasonable is what they do, what is acceptable in the industry is what 

they decide. The standards are determined by them. So that is the 

concern. 

My suggestion, Senator, would be that for all conditions in a 

transaction like this, the oversight agency should go back and review whether they work and have worked in the past and whether 

they can work given the factors involved in the transaction. 

Senator COONS. Thank you. Thank you for your testimony. 

Thank you, Madam Chair. 

Senator KLOBUCHAR. Thank you. 

Senator Lee. 

Senator LEE. Thank you, Madam Chair. 

Professor Yoo, I would like to get back to you to follow up on a 

question that Senator Blumenthal asked earlier about regional 
38 

sports networks. How do you respond to this question, this concern 

that has been expressed about the RSNs that the merged entity 

may own and the potential for this ownership to be used in an anticompetitive manner? Do you see a risk of this? 

Mr. YOO. I do not, for the most part. For example, to use the L.A. 

Lakers, right now the fact that previously Time Warner had owned 

the L.A. original sports network and they are bargaining with 

other L.A.-oriented video providers, and that company is now coowned by Comcast, it does not really change the bargaining leverage of the L.A. Lakers network against any of those other L.A.- 

based video distributors. 

And so this is, again, because L.A. programming is only primarily of interest to people in L.A., the fact that it is now co-owned 

by a person who also owns a regional sports network in Philadelphia does not really change their bargaining power in the L.A. 

market. 

On a broader scale—— 

Senator LEE. I suppose you are presupposing that most or all 

RSNs would have a regional fan base—— 

Mr. YOO. That is correct, because—— 

Senator LEE [continuing]. And that will not always be the case. 

Mr. YOO. For the most part it is, because if they do not, the programming tends to migrate to the national sports networks as opposed to the regionals, and that, in fact, companies have a choice 

about where they are going to place that programming. 

Senator LEE. Okay. 

Mr. YOO. On a much broader level, we have been fighting about 

RSNs before this transaction. We are going to be fighting about it 

after this transaction. And this is a classic example of a problem 

that I believe is not merger specific, which is why we are working 

on a dispute resolution mechanism as part of the program access 

provisions that is overseen by the FCC and has been around for a 

very long time, and that, in fact, is believed to be a reasonably effective means for resolving disputes that have been very high profile. And if there is a problem, the real solution lies in fixing that 

process, because then all programmers, regardless of whether they 

are operating in areas currently served by Time Warner Cable or 

Comcast will gain the benefit of it, because this is a bigger problem 

that precedes and goes beyond what the merger requires. 

Senator LEE. Okay. Thank you. 

Mr. Kimmelman, shifting gears, I want to talk for a minute 

about the advertising spot market. I understand that Comcast has 

been saying that its acquisition will provide something of a onestop shop for cable advertising. Do you have any concerns with regard to the market for cable advertising and how the merger might 

impact that market? 

Mr. KIMMELMAN. Yes, Senator Lee. I think it is a very important 

area to look at because this, after all, is all about eyeballs and all 

about viewership. And I think it ought to be looked at very carefully through antitrust review as to whether this consolidates. Onestop shopping is great on one level. On the other level, if it leads 

to market power and the ability to dominate in the market, it may 

strip off advertising opportunities for potential competitors to 

Comcast, particularly on the programming side. 
39 

Senator LEE. Okay. And is this concern higher with regard to 

local advertising? Is that the concern? 

Mr. KIMMELMAN. I think a lot of the local advertising is very, 

very important. I would have to think more about how much national—I mean, the importance here is that for every one of— 

whether it is regional sports or you are talking local advertising 

and local cable systems, keep in mind that the kind of competitors 

we are talking about on some level are satellite companies that are 

nationwide competitors. Or if we are talking about Internet-provided services, those may also be increasingly marketed nationwide. And so there are some national implications here, but it 

would all be driven by the levels of concentration and looking at 

those specific markets. 

Senator LEE. Levels of concentration which could lead some to 

have fewer options for local advertising—— 

Mr. KIMMELMAN. Correct, Senator, yes. 

Senator LEE. Professor Yoo, let us get back to you on a different 

issue. As you note in your testimony, markets related to cable and 

the Internet have tended to change rapidly, particularly in recent 

years, as a result of changes in technology. And at the same time, 

I think history has shown that large incumbents will at times take 

actions that are designed to protect their incumbency and sometimes when they do that, that tends to prevent or slow rapid 

changes in technology that might otherwise bring about a more robust competitive environment. 

There are those who have expressed concerns that this merger 

might have that effect, and some of those who make this point will 

point to relatively new offerings such as Netflix, Roku, Amazon 

Fire TV. These are products that compete, arguably, with 

Comcast’s cable video offering. And those who have expressed this 

concern have been concerned that perhaps, you know, because 

some of these services that I just mentioned can be accessed only 

through high-speed Internet, they are worried about the fact that 

that market, the market for high-speed Internet, is a market in 

which the merged company would have a very significant share. So 

does that cause you any concern? 

Mr. YOO. It does not, for reasons I will explain. I did want to 

make one comment about local advertising. Cable represents seven 

percent of the local advertising market. It is a relatively small part, 

and the level of concentration there really is not a material impact. 

In response to your specific question—— 

Senator LEE. Seven percent of the local—— 

Mr. YOO. Advertising revenue is on cable. If you are a local advertiser, 93 percent of your money is going elsewhere, and a seven 

percent concentration level under any antitrust standard is irrelevant. 

Senator LEE. Okay. Got you. 

Mr. YOO. There is a tendency to think about the Internet-based 

video distribution world as just an extension of the cable world and 

that we take the intuitions and the knowledge we have from cable 

and just move them over. It is just not true. 

In the cable world, the kinds of carriage agreements that the 

independent cable networks are trying to cut, well, if they cannot 
40 

come to an agreement with a cable provider, that is it; they do not 

get carriage. 

That is just not the case with the Internet. One of the realities 

is every Internet provider maintains thousands of connections. 

There are thousands of ways in. Comcast itself has 40 settlementfree and 8,000 transit arrangements, and if one of those connections does not negotiate well on terms, there is actually a multitude of options elsewhere, and the leverage is not yes or no. The 

leverage is the difference of the price I get through this connection 

versus my next best connection. And when you start to look at it 

that way, the amount of leverage that they have over individual 

providers becomes very, very narrow. 

The only way they could stop that is by monitoring all 8,000 of 

their connections and with thousands of different kinds of streams, 

and I am going to pick out this content provider’s stream out of 

that stream, and discriminate against that. 

Senator LEE. You are saying that would not make sense as a 

business proposition and would be technologically difficult—— 

Mr. YOO. And barred by law under Comcast agreement under the 

NBC—— 

Senator LEE. Yes, there is that. 

Mr. YOO [continuing]. NBC merger. But, yes, absolutely. Technically very hard to do, really bad idea from the business sense, 

and, in fact, Cablevision said publicly in the Wall Street Journal 

they may get out of the programming business and just carry overthe-top players because the program costs are so high, why should 

they be squeezed in the middle? Why not allow over-the-top providers to negotiate on a much broader basis? That is part of the 

dynamic changing world we are living in. 

Senator LEE. Okay. Thank you. My time has expired. 

Thank you, Madam Chair. 

Senator KLOBUCHAR. Thank you. 

Senator Blumenthal had one follow-up question, and then Senator Franken, and I will leave my questions to the end. Senator 

Blumenthal. 

Senator BLUMENTHAL. I very much appreciate that, Madam 

Chairman, and thanks also to Senator Franken. 

Just a quick question for Mr. Kimmelman. As you heard, Mr. 

Cohen and I agree that the costs of sports programming are rising. 

In fact, they are rising astronomically and should better reflect consumer demand. So my question to you is: Really aren’t consumers 

the best judge of what a fair price for programming should be? And 

wouldn’t prices come down if they had more choice? Specifically the 

way to break this cycle of ever increasing costs for sports programming is to give consumers some more choice through a la carte programming. And I wonder if you could comment on the potential effects of disciplining the market and bringing down the costs of 

cable as a result of a la carte? 

Mr. KIMMELMAN. Senator Blumenthal, thank you. I truly believe 

you are correct. I think one of the concerns that was not addressed 

earlier was that we have numerous studies that show with vertical 

integration we end up with higher prices on the regional sports 

channels that are integrated than on the ones that are independent. And one of the related concerns there is that competitors 
41 

who want sports programming in that market have had a very difficult time negotiating a reasonable price for that, even if the price 

is higher than it should be. 

So it seems to me one of the things to look at, as you have recommended legislatively, more broadly is to offer channels a la 

carte, offer more programs a la carte, give consumers the choice as 

to whether they really want to pay the price that is being passed 

through. 

Senator BLUMENTHAL. Thank you, Madam Chairman. 

Senator KLOBUCHAR. Thank you very much. 

Senator Franken. 

Senator FRANKEN. Thank you, Madam Chair, and I have three 

questions to get through, and I know you are chairing. I have been 

in that position, and is it okay if I go over a little bit? Okay. 

Senator KLOBUCHAR. You would not be alone. 

Senator FRANKEN. Mr. Cohen, I am worried that this deal simply 

continues a trend of media consolidation, a trend that has led to 

increasing prices for consumers who have seen their bills go up at 

more than twice the rate of inflation since the mid-1990s. Earlier 

this week, news broke out about a JPMorgan report in which Wall 

Street analysts apparently recommended that cable companies continue to raise prices on consumers. And as you have admitted, 

prices might go up even faster, and we have talked about your comment. 

Mr. Cohen, don’t your investors, people who invest in Comcast, 

expect Comcast to leverage its market share by getting as much 

money as it can out of consumers? 

Mr. COHEN. I think our investors want us to have the best multichannel video and broadband business in the country, and I think 

that includes getting whatever prices the market will bear, but it 

also includes providing an extraordinarily high-quality video and 

broadband experience. And I think we have made—and you can 

look at our analyst calls. We have made it a point of significant discussion not only for us but for the entire cable industry about our 

need to continue to invest to be able to compete better against national and global competitors who are increasingly coming into this 

space. 

So yes to your question, but I think also to be fair, yes to the 

business reasoning underlying this transaction, which is to provide 

us with the opportunity to create a better experience for consumers. 

Senator FRANKEN. Well, my concern is that as Comcast continues 

to get bigger, it will have even more power to exercise that leverage, to squeeze consumers. And part of the reason I am concerned 

about this is because Comcast’s own CFO has pretty much told 

Wall Street that that is what Comcast does. 

During a fall 2012 conference call, an analyst from Goldman 

Sachs noted that cable had a big share of the broadband market 

and asked Comcast CFO, ‘‘Is there a way to exercise pricing leverage to a greater extent?’’ And Comcast’s CFO said, ‘‘I think that we 

have actually exercised some pricing leverage. We have increased 

the cost of the service by roughly $4 to $5 per customer per month 

over the last few years.’’ 
42 

It is understandable that Comcast has a responsibility to look 

out for its investors. But I am concerned that the bigger and more 

dominant the company becomes, the less incentive they have to 

look out for consumers, and the more power they have to squeeze 

them. 

Mr. Kimmelman—and I think this goes to bundling, too, because 

I know that in some of those talks, right after the talk of this acquisition, there were pledges to push bundling, to upsell your product. 

Mr. Kimmelman, won’t this give Comcast more leverage? 

Mr. KIMMELMAN. Absolutely, Senator Franken. Even though who 

are arguing about these other competitors, mostly they are giving 

us examples of things either that just show the market is highly 

concentrated but not monopolistic, or they are quite futuristic and 

we did use the Huberis numbers, Professor Yoo, in our analysis. 

There is enormous market power here that could be leveraged, and 

on top of that, there is the very popular NBCU programming that 

could be leveraged. And that understandably maximizes profits for 

Comcast to keep it in a big bundle, to charge as much as possible, 

and the increasing trend for consumers is to buy at least two services, broadband and video, if not three. And so they know that they 

can drive up prices to competitors and benefit from raising their rivals’ costs, and if some people want to drop those rival services, it 

is most likely going to be business going to them. That is where 

their financial incentive lies, and then we would expect them to follow through on that. Those are the kinds of concerns that on the 

public record were in the FCC ruling on NBCU and Comcast and 

in the DOJ, and I imagine they will be relevant here as well. 

Mr. BOSWORTH. Senator Franken, could I jump in on that? 

Senator FRANKEN. Sure. 

Mr. BOSWORTH. Thank you. Understandably, this is a really complicated matter, but I think if we boil it down, the folks at home 

that bills keep going up are expecting more, and they are not getting more channels, and they are not getting more choice. And so, 

you know, Mr. Cohen pointed out that, you know, content costs are 

up 98 percent while the subscription fees are only up 50. Well, that 

is an extreme pressure on their gross margins, and any business 

owner would know that why would—what is the incentive to add 

more product when it is your highest gross margin product and it 

is your number one cost? 

So I think there have to be effective ways to encourage new competition in the marketplace. I mean, the marketplace that we are 

going into is a $170 billion marketplace. It is larger than all four 

major sports combined. There are 60 networks that are fighting 

over that space in the sports area. Your lifestyle, golf lifestyle market has won, and the only channel is that of Golf Channel, which 

is owned by Mr. Cohen. 

Now, a good real-world example that I think everybody ought to 

know how hard it is for original programmers is that we understood that Golf Channel was owned by Comcast, so we did not start 

there. You know, they did not have a huge incentive to launch us. 

But what we did is we started with Time Warner Cable and some 

other folks, and Time Warner Cable from the CEO to the program-
43 

ming people could not have been more constructive in their help to 

help us get our programming on the air. 

As soon as this merger was announced, that definitely softened 

quite a bit, and, you know, I am here to say that there are—Time 

Warner Cable did a wonderful job trying to get more product to the 

consumer, and since that time, when this was announced, it has 

become a lot more difficult for us. And the only thing I can think 

about is because they own the only competitor in the space. 

Senator FRANKEN. And thank you for your indulgence, Madam 

Chair. 

You looked surprised, Mr. Cohen, when I talked about upselling 

and bundling. Neil Smit, an executive at Comcast who went on the 

phone call with Wall Street analysts, said this: ‘‘As I said, I think 

the revenue synergies are greater than the cost synergies. On the 

revenue synergy side, the first would be in the residential area 

where we would seek to bundle more, and that is call center training. That is teaching people to sell another RTU on a call, on a 

service call, fix the billing problem, upsell a third product.’’ 

So just bundling better. That is what I was talking about. You 

looked kind of puzzled when I brought it up. 

Mr. COHEN. I am sorry. I was not sure what you were referring 

to. But I think that obviously for us and for others in the cable industry, it has been a very effective strategy and one that consumers like, to purchase multiple products from a single provider, 

getting a single bill. 

Senator FRANKEN. You were told by the FCC to actually stop 

that and to stop pushing bundles. But I have got other questions. 

Mr. COHEN. Okay. Well, I want to be very short, and I know 

sometimes I am too long. But all I will say is the FCC did not tell 

us to stop bundling and pushing bundles. They simply asked us to 

have a stand-alone broadband offering, which we did have and 

which we continue to have. 

Senator FRANKEN. The FCC sent you a letter saying that, ‘‘A consent decree imposes a detailed compliance plan requiring Comcast 

to undertake numerous activities, training its customer service representatives and retail sales personnel to reinforce their awareness 

and familiarity with the performance starter service.’’ 

Mr. COHEN. That is the single—the deal was that we would create a new broadband service which was a stand-alone service, 6 

meg down, for $49.95 a month. And we did create that tier, and 

the Commission raised concerns about how we were marketing the 

tier, whether our call center employees knew about it. We quickly 

resolved the matter. We may have had a difference of opinion. We 

quickly resolved the matter—— 

Senator FRANKEN. You paid a fine. 

Mr. COHEN [continuing]. Extended the commitment for another 

year, so—— 

Senator FRANKEN. You paid a fine. 

Mr. COHEN. We did. We did make—we did pay a fine. But all I 

am saying is there was no prohibition—— 

Senator FRANKEN. And then you were told—— 

Mr. COHEN. No prohibition against—— 

Senator FRANKEN [continuing]. To tell your—— 

Mr. COHEN [continuing]. Bundling. 
44 

Senator FRANKEN [continuing]. Tell your call center people to emphasize these stand-alone, not to upsell. 

Mr. COHEN. Not to emphasize it—— 

Senator FRANKEN. Not to push upselling, which is very different—— 

Mr. COHEN [continuing]. To offer it. 

Senator FRANKEN [continuing]. Than the condition—— 

Mr. COHEN. To offer it. We were not—there is nothing in the 

FCC order to prevent us from bundling. I just want to say that. We 

agreed in addition to our bundling strategy for somebody who 

called and said, ‘‘I only want to buy broadband,’’ to have an option, 

a stand-alone broadband option. 

Senator FRANKEN. When you train people to upsell, you are not 

training them to make people want to go for the stand-alone 

broadband, something that you were fined for not doing. 

Mr. COHEN. We are allowed to train people to upsell. All we have 

to do is when somebody says, ‘‘I want to buy broadband alone,’’ that 

our call center employees have to be aware of the stand-alone product and sell it to people. 

Senator FRANKEN. Okay. You seem like a pretty good salesman. 

I know how people in call centers can emphasize certain things 

over others. And I think that is my fear here. 

I want to talk about two other things. I am so sorry, Madam 

Chair, but, Mr. Kimmelman, Comcast has argued that this deal 

will not jeopardize the open nature of the Internet. In the public 

interest statement that it filed with the FCC yesterday, Comcast 

promised regulators that it has no incentive to interfere with Internet traffic. I am not convinced. If this deal goes through, Comcast 

will control about 40 percent or more of the broadband market. 

And it will not just own all those pipes. It will also own a bunch 

of content, because it bought NBCUniversal a few years ago and 

the 20 or so cable networks that came with it. 

Mr. Kimmelman, doesn’t that give Comcast both the power and 

the incentive to manipulate Internet traffic in its favor? And didn’t 

we see a preview of that with the recent deal Comcast struck with 

Netflix? 

Mr. KIMMELMAN. Senator Franken, if you go back to all the big 

numbers Mr. Cohen had and Professor Yoo had about the many 

myriad interconnections of the Internet all around, all accurate in 

that space. But when you get close to the home, to the customer, 

the last mile, the ports that have to bring in the video traffic, one 

player, two players; sometimes more, hardly ever; and one of them 

is Comcast combining with Time Warner. So that part of the market is quite concentrated. 

There are, as Professor Yoo says, a lot of changes going on in the 

Internet. There are a lot of different kind of interconnection relationships. What we also see is a lot more proposals for usage-based 

pricing that was not there before, data caps. 

Senator FRANKEN. Can you explain what those are? 

Mr. KIMMELMAN. Just that instead of getting a flat fee for eat as 

much as you want for your Internet usage, that above a certain 

level your prices go up, or that you pay per certain amount of 

usage, and there is no flat—— 

Senator FRANKEN. Unless it is a Comcast product, like XFINITY. 
45 

Mr. KIMMELMAN. So there are some products that are dealt differently with by cable companies, and under a different set of 

standards and, arguably, preferential to what a competitor has. So 

there are dangers when the market is concentrated at that point 

of interconnection of ways to manipulate. And this is where I go 

back to my analogy of an octopus that has all these tentacles out 

there. There is net neutrality. There is the last-mile connection. 

But then there are the different pricing schemes, and then there 

are the different interconnection and peering arrangements. There 

are many ways in which a number of tentacles could be used to 

favor one product over another if it is financially advantageous to 

that broadband provider with market power, which would be 

Comcast-Time Warner. 

Senator FRANKEN. Thank you. I have one last question, and it is 

going to be short, I think. 

Mr. Cohen, on page 34 of your testimony, you have a section 

called ‘‘Promises Made and Promises Kept—Our Record.’’ And you 

say, ‘‘When Comcast makes promises, it keeps them.’’ Then you 

talk about the conditions that the FCC imposed on Comcast when 

it acquired NBCUniversal, and here is what I found puzzling. You 

say, ‘‘Out of these conditions, the FCC has only found it necessary 

to look at one issue,’’ and that was the issue we just talked about, 

on stand-alone broadband. But isn’t it true that the FCC had to 

look at the neighborhooding condition? That is the condition that 

prohibited you from favoring NBC content. CNBC is 

neighborhooded. You were neighborhooding it with all the other 24- 

hour cable news channels with CNBC—or CNBC with MSNBC, 

with Fox, with CNN, but you put Bloomberg way out in the nosebleed seats so people could not find Bloomberg. And because they 

could not find Bloomberg, they would not go to Bloomberg, and 

Bloomberg could charge less for its advertising. And NBC would 

get more eyeballs for people who were interested in 24-hour business news, and you could charge more. Isn’t that another condition 

that they looked at? 

Mr. COHEN. So, generally speaking, that characterization is just 

not accurate. What we had in the Bloomberg neighborhooding area 

were interpretive differences between Bloomberg and Comcast as to 

what the condition met. And I do not—I can go through as much 

detail as you want, but—— 

Senator FRANKEN. The FCC certainly looked at it, didn’t it? 

Mr. COHEN. Ultimately there was a complaint filed, and when we 

lost the complaint at the FCC, we have resolved the matter with 

Bloomberg. We are in compliance with that condition. 

Senator FRANKEN. Okay. But let me ask you: Is this true, then, 

that out of these conditions, the FCC has only found it necessary 

to look at one issue? Is that still true? 

Mr. COHEN. It is. What is true is that we were—we only had a 

compliance issue with one condition. That Bloomberg issue was not 

a compliance issue. It was an interpretive issue. And when the interpretation was resolved, we were able to resolve our differences 

and our partnership with Bloomberg. We remain Bloomberg’s largest distributor, and we have an excellent relationship—— 

Senator FRANKEN. Here is the FCC’s order: ‘‘In this Memorandum Opinion and Order, we affirm Media Bureau orders that 
46 

direct Comcast to place Bloomberg Television in news neighborhoods, consistent with a condition of the Comcast-NBCUniversal 

order.’’ That is looking at that, and you right here in your testimony, and you are sworn under oath here, you say, ‘‘Out of 

these’’—and then brackets ‘‘conditions’’—that is what we are referring to—‘‘the FCC has only found it necessary to look at one issue.’’ 

And you are saying they did not look at this issue? 

Mr. COHEN. What I am saying is it was not a compliance issue. 

It was in interpretation issue. 

Senator FRANKEN. Okay. Well, I—— 

Mr. COHEN. You have to go back to the Media Bureau order because—let me just—I will give you an example, because the ultimate order of the Media Bureau was that we had to neighborhood 

Bloomberg where, I believe, it was five or—either four or more or 

five or more other news channels. The FCC order did not have that 

definitional issue. We did not know what a news neighborhood was. 

And we tend not to neighborhood our news channels the way you 

described in your question where all the news channels are together. 

So one of the interpretive issues that we needed to have resolved 

was what was a news neighborhood, and that is what the dispute 

in front of the Commission was. 

Senator FRANKEN. I think—and, Madam Chair, this is the end, 

my friend. 

Senator KLOBUCHAR. And, by the way, if any of the witnesses 

have to use the restroom, you really can come back, and we will 

take you back. I know it has been going on a couple hours. 

Senator FRANKEN. You really undercut my big conclusion. 

[Laughter.] 

Senator FRANKEN. I was going to—— 

Senator KLOBUCHAR. Senator Franken, please continue. I really 

meant that. I was just going to let them know. 

Senator FRANKEN. I was going to say that I think the interpretation here is on what the word ‘‘look’’ means. And I think everyone 

knows what the word ‘‘look’’ means. 

Thank you. 

Mr. COHEN. And, Madam Chair, if I can, I will acknowledge that 

the word ‘‘look’’ may not have been the best-chosen word. But the 

point I was trying to get at was whether there were compliance 

issues. And I do not think that was a compliance issue. So I will 

acknowledge that we should have had a better use of words in the 

written testimony, and I apologize for that. 

Senator FRANKEN. Accepted. 

Mr. COHEN. Thank you. 

Senator KLOBUCHAR. Okay. Well, I have a few more questions. 

I wanted to follow up on what some of the other Senators have 

asked about, and the first thing was about what Senator Graham 

was asking about, about the wireless competition. And I guess I 

will start with you on this, Mr. Kimmelman. 

You know, in the Antitrust Subcommittee hearing that Senator 

Lee and I recently had on wireless competition, witnesses agreed 

that wireless is out there, but it is not yet a substitute for wireline. 

So when there was discussion about, well, you can have these alternatives with wireless, do you think that is really true in a big way? 
47 

Mr. KIMMELMAN. I would like that to be the case, Senator 

Klobuchar. I do not see it now. Professor Yoo has indicated that the 

speeds are increasing, the service is better. The technology is better, but when you look at the price for the major wireless providers 

with their data cap for wireless compared to a Comcast price, for 

example, the price for the same amount is about 10 times higher. 

That is not what I would usually think of as a good consumer—— 

Senator KLOBUCHAR. You mean to get that kind of high speed 

with that kind of data? 

Mr. KIMMELMAN. Yes, to get that—yes, exactly. So we are hopeful, and maybe that will be the future. But, again, as Professor Yoo 

has admonished us to be more careful about what conditions we 

put in transactions with predictions of the future, I will just say 

that we have to also be careful about Pollyannaish predictions 

about levels of competition. Fifteen years ago, we all thought there 

would be video over energy company wires, and we have a few of 

them—there is RCN out there—but not very much. 

So some of the predictions can be wrong going the other way as 

well, and maybe this is the kind of thing where, for wireless to be 

a real competitor, we ought to wait a few years and see if it really 

develops that way. 

Senator KLOBUCHAR. Mr. Sherwin, you have not been able to talk 

very much here. You look like you want to say something. 

Mr. SHERWIN. I do. First of all, most of the discussion has been 

about programming, and that is out of my bailiwick. But when it 

comes to wireless, that is in my bailiwick. And the technology is 

such today that if fiber—if any kind of fiber or some kind of 

backhaul is brought to a building, especially a multifamily building, then the resident can have speeds of in excess of 100 megabits 

per second wirelessly. And I think that is a very important point, 

because what that says is that the technology has caught up. It is 

not the cellular wireless as you know it, and that I think is what 

Professor Yoo was referring to. It is WiFi wireless, and that is a 

big difference. And—— 

Senator KLOBUCHAR. So it would not be capable of carrying the— 

or it would cost more? I am trying to figure out—I understand the 

difference between WiFi and cellular, but are you saying that it 

would not have the same capabilities as the cable? 

Mr. SHERWIN. I am sorry. 

Senator KLOBUCHAR. I am asking, are you saying one of the 

points that Mr. Kimmelman made was that it is a lot more expensive if you are going to get that kind of data coverage and you—— 

Mr. SHERWIN. That is actually not the case. In most cases, wireless is 30 percent less than wired. In most cases. If the backhaul 

is reasonably priced to the building in a multifamily residential situation, wireless is 30 percent less expensive than wired. That is 

number one. 

Number two, it offers much more capability, much more 

functionality. So not only is it less expensive, it has greater 

functionality, and there is no need for cap if the backhaul is done 

correctly. 

Senator KLOBUCHAR. Mr. Kimmelman, do you want to respond. 

Mr. KIMMELMAN. I cannot disagree with Mr. Sherwin for a specific set of circumstances he is describing. And he is also describing 
48 

circumstances where he faces a bottleneck of being able to get the 

wholesale product so that he can deliver that service at a lower 

cost. Also a lot—— 

Mr. SHERWIN. Only in Comcast areas. 

Mr. KIMMELMAN. The other interesting issue, if you go down this 

path, with all the increased need for WiFi downloading because of 

limits of spectrum, all the wireless carriers also ultimately very 

much need a wired service to connect themselves to get closer to 

the customer. Many of those are owned by Comcast and Time Warner or by some of the phone companies. And so there are other 

choke points here that need to be looked at in terms of cost. 

Mr. SHERWIN. I agree with that. 

Senator KLOBUCHAR. All right. One follow-up on the advertising 

questions that were asked, because I know that Professor Yoo 

talked about, what, you said eight percent? 

Mr. YOO. Seven percent. 

Senator KLOBUCHAR. Seven percent of the market was cable. And 

so there was a Wall Street Journal article, I am quoting, on SNL 

Kagan Comcast—SNL Kagan, and they said that small local advertisers are worried about facing higher prices because they would 

have roughly—Comcast would have roughly half of the local ad 

sales market. So what is this about, half compared to eight percent? Is it just a different market you are looking at? Are you including everything? 

Mr. YOO. I am looking at the FCC’s video competition report 

where they do an assessment of the different sectors, both on a national level and a local level. And they have nationwide numbers. 

What they are looking at is that the total local advertising budget 

for cable is seven percent. 

Now, I do not know where this SNL Kagan number comes from, 

and as you know, with advertising, different advertisers want different segments because they want different characteristics, and 

there are possibilities of submarkets where they do not have as 

much choice. 

Senator KLOBUCHAR. Okay. 

Mr. YOO. If I can add one fact—— 

Senator KLOBUCHAR. Did everyone agree with that? I will get 

back to you. 

Mr. MINSON. All I would add is that the revenue breakdown in 

our ad sales business tends to be about a third local, a third regional, and a third national in terms of how we sell. And clearly 

on the national front there are a number of competitors, and on the 

local and regional front, we have actually been the competitors who 

have gone in and competed against broadcast stations, et cetera. 

There are also additional competitors online given the online companies’ ability to target. So, to be clear, there are lots of different 

avenues to reach customers from an advertising perspective. 

Senator KLOBUCHAR. Okay. Mr. Kimmelman? 

Mr. BOSWORTH. It makes—I am sorry. 

Senator KLOBUCHAR. Yes. 

Mr. BOSWORTH. It makes it difficult when the quasi-public utility 

also has 50 percent of the ad market space and also controls the 

content. 

Senator KLOBUCHAR. So that will make for higher prices and—— 
49 

Mr. BOSWORTH. Higher prices, less competition, less choice. 

Senator KLOBUCHAR. Okay. One thing that is a little off on this, 

Professor Yoo, a different topic, but in your testimony you talk 

about how the merger does not pose competitive concerns because 

there is no geographic overlap—there has been a lot of discussion 

about this—between the two cable systems. Under this theory, 

would consolidating all—all-nonoverlapping cable systems into only 

one or two companies be of concern to you if that happened in the 

country? 

Mr. YOO. To be specific in the testimony, cable operators basically serve three purposes: They sign up subscribers and deliver 

programs to individual households; they contract with cable networks; and they sell advertising. The point about the lack of overlap refers to the transactions between cable companies and users, 

and in that sense, mergers in different areas do not have an impact. 

You do have to do the separate analysis of the markets in which 

you do local advertising, which is the same, from these with respect 

to programming. If you did merge to monopoly, you would see an 

adverse competitive impact in that market, there is no question. 

Then you have to do the antitrust analysis to look at the various 

concentration levels. 

To pick up the conversation before, one of the interesting questions is: What is a real competitor to cable broadband? And we 

have heard this defined different ways. One of the interesting 

things is Mr. Kimmelman says we should not speculate too much 

about the future, let us think about facts. One of the interesting 

facts is 10 percent of American citizens now rely entirely on their 

wireless connection for broadband. What you are seeing is, in fact, 

in other countries they now regard wireless and fixed line as the 

same market for antitrust purposes, because there is so much substitution. And if you look at the direction where all these are going 

and the bets that companies and countries are making, it is quite 

likely that wireless is, for an increasing number of Americans every 

year, a real substitute for fixed-line broadband. 

Senator KLOBUCHAR. Okay. Now I have a few specific questions 

here. Comcast has experimented with data caps and usage-based 

pricing for its broadband service and is reportedly testing new 

usage-based pricing in a few markets. And this is for you, Mr. 

Minson. Time Warner Cable tried using similar caps but quickly 

abandoned them. Why? 

Mr. MINSON. The approach we have taken as it relates to usagebased pricing actually gives people the ability to reduce their bill 

if they will agree to a cap. So we actually took the approach that 

it is an unlimited service unless you would like to reduce your bill 

by $5 a month if you agree to a cap. 

I think what is—and I will let Mr. Cohen jump in, but I think, 

you know, the market is very much a test-and-learn mentality 

right now. We have had our usage-based caps out there for a while. 

We have seen some uptake in them, but where we have landed is 

the unlimited tier, giving people the ability to have an unlimited 

tier, with a right to reduce the bill if they agree to a cap. 

Senator KLOBUCHAR. Okay. Prior to the merger, Time Warner 

Cable also spoke positively about giving its consumers complete ac-
50 

cess to their channel line-up without requiring a set-top box rental. 

Consumers would then have their choice to watch all the channels 

using either Apple TV, Xbox, or any of the other Internet-connected 

devices, and it would create a far more competitive system. 

In contrast, Comcast’s new Internet-connected X1 set-top box 

seems to create a more closed ecosystem where only Comcast-approved apps and content are allowed in. 

I thought it was interesting that you guys were willing to give 

up that cable box, and what motivated it? How does the decision 

benefit consumers, and what is going to happen if the merger is approved? 

Mr. MINSON. Sure. I think what you are seeing in the marketplace are lots of different approaches to delivering the video experience in the home. I think you will always have the set-top box experience for that portion of the population who likes to have the 

two-way interactivity of the set-top box, and there are certain features, like the next generation guides, et cetera, that work best or 

only work, in some instances, on the new set-top box. 

That being said, we do recognize as you get—— 

Senator KLOBUCHAR. But you did not require—you announced 

you were not going to require it. 

Mr. MINSON. Well, as the home evolves and there are often multiple TV rooms in a home, what we have been comfortable with is 

allowing our customers to bring their own device, whether it be, to 

your point, a Roku or a similar device, and let them consume their 

content on that device. What we have found is often what you have 

is one room in the house has a set-top box, two-way interactivity, 

and then you may have another room where people are running the 

video experience, for example, off a Roku. Again, this is a portion 

of the market that continues to evolve with really new devices coming out, it feels, almost monthly at this point. 

Mr. COHEN. Senator, if I could say two sentences, just to be clear, 

Comcast is offering the same experience, maybe on different devices. So part of the excellent platform is the ability to watch in 

the home the content that is available—the content that is available, all the live channels, anywhere in the home, on an iPad—— 

Senator KLOBUCHAR. Is it more of a closed system with just the 

common—— 

Mr. COHEN. I think it is the same system, and a lot of this is 

programming rights issues. 

Senator KLOBUCHAR. Okay. Well, we will do some follow-up questions on it. 

Mr. COHEN. So I think we are actually doing the same thing, just 

on different devices. 

Senator KLOBUCHAR. We are going to have some follow-up questions on it on the record later on. 

Comcast and Netflix, Mr. Cohen, reportedly announced a paid 

peering agreement earlier this year where, for the first time, 

Netflix will pay for a direct connection to Comcast’s network that 

provides more reliable delivery of Netflix content to Comcast subscribers. I know Netflix’s CEO called this an ‘‘arbitrary toll’’ that 

his company was forced to pay. Comcast called it a 11commercially 

necessary agreement.’’ Why charge both Netflix and your con-
51 

sumers for this service? And then I want to ask Mr. Kimmelman 

about this paid peering. 

Mr. COHEN. Okay. So your statement is 100 percent correct. For 

the first time, Netflix is paying for connection to our Internet backbone directly to us. But Netflix has always paid for connection to 

our Internet backbone. All edge providers pay for connection to the 

backbone. This is not net neutrality. It does not deal with the part 

of our service that goes to the last mile. This is how Internet edge 

providers connect to the Internet backbones of ISPs. And since the 

Internet was born, those are paid transit relationships. And as Professor Yoo said, in the Comcast case, Comcast has 40—has agreements with 40 companies for settlement-free peering. They, by the 

way, go out and sell access to their networks to connect to the 

Internet. So even though they are not paying us anything, they are 

charging Internet edge providers to be able to connect to our ISP 

as well as everyone else’s. 

We have over 8,000 free peering and paid arrangements, and 

that market is intensely, intensely competitive. In the Netflix case, 

this was—I hate to say this. This was Netflix’s idea. Netflix is responsible for 32 percent of the traffic on the Internet, and they 

woke up one day and they said, ‘‘Wait a minute. We have 32 percent of the traffic on the Internet. Why do we have to pay a middleman to get access to Comcast, Time Warner Cable, AT&T, Verizon? 

Why don’t we cut out the middleman, have a direct relationship, 

and potentially save ourselves some money?’’ 

That is where that agreement came from: That is, the Netflix desire to pay us directly and cut out a middle man. 

Now, as it turns out, that was a smart thing, I think, for Netflix 

to do and for us, because having the direct relationship gives us a 

better ability to work together to manage the traffic and make sure 

that Netflix customers who are our customers are getting an optimal viewing experience. 

So once again, the customers are the winners here, because you 

have got this intensely competitive backbone market. We talked 

about price a lot. Pricing in that market, which, again, has existed 

since the birth of the Internet, pricing has dropped 99 percent in 

the last 15 years. 

So this is a market that is working. It is not a market that is 

dysfunctional. It is not a market that is impacted by this transaction. And I think consumers end up being the big winners when 

we let markets like this function the way they were intended to do. 

Senator KLOBUCHAR. Well, whoever’s idea it was, Mr. 

Kimmelman, does this kind of paid peering exist in other parts of 

the world? And how do you think it could impact innovation? 

Mr. KIMMELMAN. Well, it certainly has—peering is a form of 

interconnection, and it is a barter exchange. So these are forms of 

interconnection, and it is absolutely right, some have been paid, 

some have been just a barter because of traffic arrangements. And 

the world is changing as more video streaming is occurring. What 

happened with Netflix was an enormous success for them. As they 

went to original programming, it became increasingly popular. 

But without getting into—they do not seem to be too happy in 

the way Mr. Cohen is, but leaving aside the companies, here is the 

point that I think is important related to the transaction and for 
52 

the Committee to consider longer term. As you have vertically integrated companies that have their own programming and have their 

own desire to bundle the channels and charge as much as possible, 

as others come in with Internet-delivered programming that could 

compete, what are the ways in which they might want to advantage their own versus their competitors, drive up their competitors’ 

costs, make it more complicated and reduce quality for their competitors? 

I am not saying any one arrangement necessarily does it, but 

these are the kinds of competitive concerns we think oversight officials should look at. 

Senator KLOBUCHAR. You are talking about what I referred to 

earlier as the next Netflix, which is still a dream in a garage, and 

just that we have a structure that works to promote this kind of 

innovation. 

Mr. KIMMELMAN. Exactly, Senator. 

Senator KLOBUCHAR. One last thing. Mr. Minson, I understand 

that Time Warner Cable has a business service called ‘‘Ethernet’’— 

is that right?—for which it offers wholesale access to its competitors. Competition like this is critical. I know we have said this 

many times up here just because we believe it creates a market 

that provides best prices and best services. High-quality and competitive Internet services are especially important for small businesses in our economy. Can you explain why offering wholesale access is good for Time Warner and good for consumers? And I guess 

I would ask you if Comcast has a similar offering, and would the 

combined company continue to offer this? 

Mr. MINSON. Our Ethernet service is part of our overall business 

services offering. To date, our business services get the vast majority of its revenue from small businesses with less than 25 employees. As we have expanded in the marketplace, we have entered the 

mid-market and enterprise market where you will see these wholesale arrangements happening more. Our entry allows competitors 

and peers to come into the marketplace. And it is certainly something that we find provides a return for our investors and something we continue to plan on doing. 

Senator KLOBUCHAR. Thank you. 

Mr. COHEN. So, Senator, we—actually, if I can, a few sentences 

just to say it is the first time small and medium-sized businesses 

have come up in this hearing, and when you talk about the benefits 

of competition—or the benefits of this transaction, the scale and 

the investment, as Mr. Minson said in his opening statement, the 

impact on the market for small and medium-sized businesses to get 

telephone and high-speed data services will be substantial as a result of this transaction. It is one of the big procompetitive benefits 

that I just want to underline and put a yellow highlighting 

through. 

In terms of Ethernet, we have a product we call ‘‘Metro Ethernet,’’ which we have also started to roll out. Again, it is a product 

we market to larger, medium-sized businesses. We also have within 

that product a managed service which does permit wholesaling of 

that service, and we have got a few dozen customers in that space. 

Frankly, it is a service that we talked to Spot On about about a 

year ago and never reached an agreement with them to be able to 
53 

offer that service. So it is a market that we are just beginning to 

be in. I do not know that we have as fully developed an opinion 

as Time Warner Cable might have about that. And this is not 

something we discuss during the pendency of the transaction, so I 

think my answer to your question is that we do not have an answer yet about how extensive we think a managed—what we would 

call a managed service under our Metro Ethernet service would be 

something that we would make available on the market. 

Senator KLOBUCHAR. Okay. Mr. Sherwin. 

Mr. SHERWIN. We are a customer of Time Warner’s Metro Ethernet service as well as their cable service. We buy a lot of services 

from Time Warner Telecom. We buy it wholesale, and we buy almost all of our services from Time Warner wholesale. I think that 

may be largely due to the conditions that were placed on the AOLTime Warner merger by the Federal Trade Commission and the 

Federal Communications Commission back when that occurred. 

Our big concern is that that has been very advantageous for us, 

and we think it has been advantageous for Time Warner. We are 

hopeful that when this merger occurs that there is a condition 

placed that the conditions will continue to be enforced and monitored because it is helpful for us to provide a competitive service 

in buildings where the bigger providers are. 

Senator KLOBUCHAR. Thank you. I was thinking, when Mr. 

Cohen was referring to small businesses, you probably consider 

yourself not a huge business there, Mr. Bosworth. 

Mr. BOSWORTH. No, we are not. 

Senator KLOBUCHAR. There are a lot of independent programmers that are a focus of this hearing as well. Do you want to respond? 

Mr. BOSWORTH. Yes, thank you. We have raised $30 million from 

individuals, a little bit over that, and one of our only remedies 

right now is to go out and try to raise another $30 million to litigate. And that just should not be the avenue in order to provide 

consumers with a choice. And I have heard litigation mentioned a 

bunch, and I have heard a lot of—and I am not an attorney, but 

that does not seem like a fair and competitive marketplace. 

Another thing I wanted to address is in the NBCUniversal merger, none of the independent networks that were launched—and we 

applaud the diversity angle. Back9 is bringing many more people 

into the game, people that have been excluded in the past. So we 

want to bring them into the game. So we applaud that. However, 

none of the channels, independent channels that were launched 

were in direct competition with any of the channels that they own. 

The last point I wanted to make is that the 160 independent networks that they referenced, if you strip away all the different networks that either have affiliations with distributors, channels, indoor media conglomerates, it is less than 20. So truly—— 

Mr. COHEN. That is simply untrue, Senator. 

Senator KLOBUCHAR. Okay. Let us—Mr. Cohen and Mr. Minson, 

if you could have a chance to respond when you are done. 

Mr. BOSWORTH. Thank you. 

Senator KLOBUCHAR. Okay. And then we are going to turn over 

to Senator Lee for some closing—— 
54 

Mr. BOSWORTH. Thank you. In the productive meeting that Mr. 

Cohen referenced that we had two days ago, we were given nothing, with zero promises, and the only thing that went on was they 

said, ‘‘We would like to keep an eye on you for the next 24 months.’’ 

Now, potentially that may be our fault. Maybe we did not do a 

good job. But the constructive conversations that we have had with 

other distributors that give you specific feedback, when you are 

market maker and you own the toll, you give zero feedback as to 

how to be successful, and then you say, ‘‘Let us keep an eye on 

you.’’ 

When you know for a fact there is what was called, I guess, in 

the last hearing a ‘‘ripple effect,’’ they are essentially market makers. So people look at you to see where the market leader goes. And 

so when you are given zero feedback and perhaps, you know, ‘‘Let 

us just keep an eye on you,’’ for a small business that has raised 

independent dollars, it puts you in a very tough spot. 

Senator KLOBUCHAR. Okay. Mr. Cohen. 

Mr. COHEN. I think, look, all I would say is the statistic of 160 

independent networks is 160 channels that are unaffiliated with 

any of the broadcasters, major media companies, et cetera. And, 

again, I am going to stand by our record of support of independent 

programmers because I do not think there is a company—I do not 

think there is a distributor in the industry that has done more to 

support the launch and ultimate growth of independent programmers than Comcast has. As I mentioned, we have increased distribution for 120 independent programmers in the last three years 

alone. 

And, by the way, I am very proud of our networks, and I have 

a lot of respect for Mr. Bosworth. And, frankly, my—I do not participate in program affiliation negotiations, you will all be pleased 

to hear. But my folks are telling me these are productive discussions. This is a network we might end up wanting to launch and 

might want to be part of our system. They, however, are not in 

competition with the Golf Channel. 

Senator KLOBUCHAR. Okay. I am going to let you guys negotiate 

after the hearing. 

Mr. BOSWORTH. Can I just mention one important thing? 

Senator KLOBUCHAR. I am going to just finish up here with Mr. 

Minson, and I really appreciate your testimony, and I think that 

if, in fact, the negotiations are productive or not, we will see if we 

can get the channel. Right, Mr. Lee? And I think you two should 

talk about it later. 

Mr. Minson. 

Mr. MINSON. Thank you. I just wanted to respond to a couple of 

comments made by Mr. Sherwin and Mr. Bosworth. In terms of us 

providing services to Mr. Sherwin’s company, that does not have to 

do with any terms and conditions from the AOL-Time Warner 

merger. If it makes business sense for us to do it, we have done 

it, provided they are in compliance with our overall terms and conditions as a reseller. 

One point I just wanted to address as well is Mr. Sherwin’s reference to buying services from Time Warner Telecom. Not to overly 

complicate things, but Time Warner Telecom is actually a separate 

publicly traded company headquartered in Denver. 
55 

As it relates to the Back9Network, a couple things I just want 

to address. Previously Mr. Bosworth had indicated that conversations with us stalled—with ‘‘us’’ being Time Warner Cable—as a result of the Comcast transaction, and I can tell you that could not 

be further from the truth. Between signing and ultimate closing of 

the transaction, we are obviously acting on our own to make all of 

those such decisions. It would be inappropriate for us to be consulting at all with Comcast. So any decisions we make, we will 

make on our own, and it will be made on a price/value relationship 

for our customers, taking into consideration things like overall programming costs and bandwidth constraints that we have. 

Senator KLOBUCHAR. All right. I am going to let Senator—I am 

sure we are going to have more questions here for the record, but 

I am going to let Senator Lee say some closing comments. 

Senator LEE. I have got about 30 or 40 questions that I would 

like to ask. 

[Laughter.] 

Senator LEE. But given that the Eighth Amendment does have 

some application here—— 

[Laughter.] 

Senator LEE [continuing]. I am going to forgo those. 

I want to thank our witnesses for coming today. Neither Chairwoman Klobuchar nor I had any expectation that by the end of this 

hearing we would have everyone singing on the same page, and so 

that part is not surprising. But your testimony has been helpful, 

and I appreciate your willingness to be here and to endure our 

questions. 

Thank you very much, and thank you, Madam Chair. 

Senator KLOBUCHAR. Well, thank you. And I think as all of the 

questions and the testimony has shown us, there are a lot of very 

important issues here: the issue of consumers and how they will be 

protected going forward. We have the issue clearly of independent 

programmers, and as the merger is considered and if it is considered for approval, what kind of conditions would be placed on that? 

And I think while this is one specific example, I think both Senator 

Lee and I are aware of other examples of people that would not go 

public but are concerned about that. And it is not just about the 

independent programmers. It is about what the price then is and 

what that does to the market, whether we are talking about that, 

whether we are talking about advertising, whether we are talking 

about the wholesale pricing that Mr. Sherwin has mentioned. And 

then, finally, of course, the issue of the Internet and making sure 

that that is done in a fair way so it is available to everyone. 

We are looking forward to getting more information. I know that, 

Mr. Cohen and Mr. Minson, your companies filed their—was it 180 

pages?—report yesterday so we will be reviewing that. And I just 

want to thank the witnesses. 

The Committee has received a number of letters from parties 

raising concerns about the merger, including Consumers Union, the 

American Antitrust Institute, and others, which I will be placing 

in the record. 

[The information referred to appears as a submission for the 

record.] 
56 

Senator KLOBUCHAR. The hearing record will remain open for 

one week for any additional submissions and questions from Senators. 

Thank you. You can go get some lunch. The hearing is adjourned. 

[Whereupon, at 1:08 p.m., the Committee was adjourned.] 
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A P P E N D I X 

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PREPARED STATEMENT OF CHAIRMAN PATRICK LEAHY
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QUESTIONS SUBMITTED TO ARTHUR T. MINSON, JR., BY SENATOR LEE
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