Comcast Exec Says FCC Still Can’t Enforce Net Neutrality If It Reclassifies Internet

Comcast EVP David Cohen just made the comment in a remarkably thorough and thoughtful discussion of his company’s views about Internet policy and media consolidation at the first MoffettNathanson Media & Communications Summit. Bullet points: He thinks net neutrality advocates have engaged in an “almost hysterical reaction” to FCC Chairman Tom Wheeler’s effort to set new open Internet rules without reclassifying the Web as a regulated common carrier service. Cohen sees usage based Internet pricing becoming the norm in a few years. And he doesn’t fear that Comcast’s $40B acquisition of Time Warner Cable would be endangered if AT&T agrees to buy DirecTV — which he says would do more to reduce competition.

On net neutrality, Cohen says that activists calling on the FCC to reclassify the Internet as a so-called Title II common carrier service that could be more easily regulated would be disappointed in the result. “There is nothing in Title II that provides authority for saying that all [Web] services have to be treated the same” — in other words, preventing Internet providers such as Comcast from offering a for-pay fast lane for certain content providers. Telecommunications companies now deemed common carriers “are allowed to provide different levels of service for different amounts of money.” A change also could backfire: “There’s no way Google is going to invest the money they’d need to invest” in Google Fiber if the Web is a Title II service, he says. “It’s inconceivable that any company would do that.” Meanwhile, those who object to Wheeler’s attempt to set net neutrality rules under the current legal structure are “reacting to a document they haven’t seen….It’s been the specter that’s been stirred up by the net roots.”

Cohen says that the days of all-you-can-eat Internet pricing are numbered, potentially posing a threat to heavy volume services such as Netflix. “People who use more should pay more, and people who use less should pay less.” Comcast likely will have usage-based or tiered pricing across its systems in five years, he says — although the data caps will be high enough so that most customers probably won’t notice them. The company will move slowly because “we have no desire to blow up our high speed data business. We don’t want to chase our customers away.”

He took issue, though, with Netflix CEO Reed Hastings’ claim that Comcast unfairly required the streaming service to pay a fee in order to provide smooth transmissions to the cable company’s Internet customers. “He would like free transit….I don’t blame him,” Cohen says. But he adds that there are expenses to maintain the broadband system and “Reed’s argument that he should have free transit is just a cost shifting argument….If Netflix doesn’t bear its share of those costs then we have no choice but to raise prices for everyone else.”

Cohen has repeatedly said that he believes federal officials will approve Comcast’s plan to buy TWC — and added today that he doesn’t see that changing if AT&T agrees to buy DirecTV or Sprint reaches a deal with T-Mobile. Although “the popular press” might link consolidation deals, the FCC and Justice Department appreciate that “each transaction has to stand on its own merits.” And AT&T might have a tougher time getting past regulators because its U-verse video service and DirecTV “overlap in 25% of the country” while Comcast and TWC “don’t compete for any customer.”

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