>> do you continue to send people here who have no real world experience, no real hardship, no real difficulty no real successes in life outside of politics you will continue to get the same results. that is why i think we need a constitutional constitutional career limits. the other thing that will open up lots more seats for a lot more people who actually have real world experience to be competitive in terms of coming up here to fix this. that's only one part of what you can do to fix the government. you were not owing to fix fix it

shinki in today. i'm literally convinced of that. i will have spent 16 years in congress and i continue to be disappointed every day at the lack of foresight, the lack of judgment, the lack of long-term thinking and the lack of critical decision-making that occurs. senior officials from comcast and time warner cable were asked about the effect their proposed merger could have on cable and broadband consumers. the proposed 45 billion-dollar deal needs to be approved by the federal communications commission and the justice department's antitrust division. senator patrick leahy chairs the senate judiciary committee.

[inaudible conversations] [inaudible] [inaudible] >> all took the oath. and i welcome everybody here.

i'm going to be the chair and ranking member of the committee with jurisdiction was senator klobuchar in senator lee 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 that cable industry develop -- delivering cable television programming as we all know migrated to the internet. the industry has been changed 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 grandchildren. they will explain it to us. but when companies like comcast and time warner cable were founded the term binge watching was unheard of and now it

describes how many americans watch their favorite shows. cable companies have moved beyond television and networks to provide broadband. they now sole-source the service for millions of americans resulting in the dominant role and 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 make? we are going to cover the current video broadband markets. the discussion of relevant markets public understandings important issues including mergers. consumers don't want to hear complex legal jargon. they just want to know why their cable bills keep going up.

they want to know why they did not have more choice in providers and consumers want to know is this merger good for them or not. frankly everyone of us want to find out the same things. in 1996 i voted against the telecommunications act in part because of the concerns i had for the lack of competition of the cable tv market. i'm so concerned similar questions being raised about the broadband industry where consumers feel they get large bills and inadequate choices. in vermont the concern of net neutrality is not just lip service on meaningful rules to protect the open internet so anyone with an idea can have a chance to succeed in the on line marketplace. thousands of americans have comments supporting the restoration of open internet rules and their voices have to

be heard. i appreciate the, and the fcc open internet rules as part of the universal transaction. it's an important commitment especially now core elements in the open internet have been struck down. the commission sees the endpoint rather than the minimum level of protection should apply to promote competition on line. regardless of the outcome of this latest merger i hope comcast will accept the rules beyond 2018 but i still urge them to support stronger rules that protect consumers to drive innovation and the recent interconnection between comcast and netflix also raises important questions for advocates of net neutrality. when isps can charged tolls and block access to the networks net neutrality policies will no

longer be enough to protect consumers are promote open internet. companies have agreements to ensure the quality of their streaming video service. i worry about the potential of other bandwidth intensive services. one that i think of that i've worked on for years as 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 internet shins -- internet -- the proposed transaction touches on a range of critical policy issues and goes beyond just broadband stream -- space. diverse and independent review

program and viper marketplace for on line video. so we have to ask how it's going to impact consumers. i urge the fcc and the justice department to consider it so i thank everybody for being here. i'm going to yield to senator grassley and senator klobuchar and senator lee. >> good morning. thanks for the witnesses being here our judiciary committee's role is not to decide whether or not 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 on this committee on other mergers is very important part of the process because it does give the

committee an opportunity to hear and to conduct proper oversight not only of the specific merger but to make sure that we understand the issues and the federal communications commission and the justice department is carrying out the law. every year we are seeing new and exciting innovations in technology and communications. when i first came to congress i didn't carry a phone around in my pocket like to do now. i never knew that one day there would even be such a thing as twitter and 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

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're experiencing a bit of revolution in internet technology. just examples, product like verizon fios and google fiber. are changing the internet's infrastructure by delivering faster access through fiber optic cables. and on the content site companies like netflix and hulu are allowing people to cut the

cord. and access their media through internet and their handheld devices. comcast and time warner control a significant amount of cable infrastructure that americans use to access high speed internet. they control the cable lines that go directly into the people's homes. so there's a lot o interest in and quite frankly probably just stated a little bit different but i have the same interest that chairman leahy has express. consumers want to know whether combining comcast time warner will be in a better position to expand high-speed internet access. will consumers have higher cable bills? will they have more are 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 they combined comcast time warner will impact televisiotelevisio n or internet content in a detrimental way. will the company be able to block consumers access to content or will the merger all out the company to negotiate for better licensing arrangements from popular broadcasters like espn and disney? comcast create some of its own program some have suggested this will put independent programmers at a disadvantage. all of those things are what this hearing is all about. today we have an opportunity then 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 the 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 plan merger. i look forward to a very important hearing and also following up with how doj and fcc is going to respond. thank you mr. chairman. >> senator klobuchar. >> thank you very much mr. chairman and thank you to you in 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, and

time warner cable, the two largest cable companies in the country presents unique issues. from my perspective while the company service areas don't overlap this cannot be our only focus of our discussion today. the combined company would control about 30% of the pay television market in 40% of the broadband market with some estimates putting it at 50%. its size and scope would give it the power to affect prices service and content offerings throughout the industry and the future of on line 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're not promising their consumers will pay less or that their bills won't increase less quickly. what then if it's to 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 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 competitor. there are concerns that they merging companies larger presence at the company especially in major markets like new york and l.a. who gave it even more leverage to charge competitors more for its programming a cost that could be passed onto consumers. by combining its vertical integration of content ownership with an expanded share 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 access of how it might affect their negotiating decisions. they say it is increasingly hard to negotiate agreements in the

market where content providers and distributors are consolidating. a post-merger with 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 her 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 on line video distributors like netflix youtube and hulu. during the comcast-nbc merger the fcc highlighted that comcast has quote the incentive and ability to hinder the development of rival on line video offerings. concerns have been raised that the merged entity would now have even greater ability to limit competition through data caps discrimination against nonaffiliated 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 on line service will be able to get their content to the merged company's growing consumer base with. with control of nearly 40% of the national broadband market comcast could potentially exert undue terms conditions and prices on on line providers that are trying to serve the customers. the lines between cable and internet are rapidly growing in 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 an independent on line distributor or some combination? will be channeled through a cable box or routed through the internet? the merger has implications for how much these services will cost and what radio 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. >> thank you very much. 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, and time warner has implications for two markets that affect the everyday lives of most americans certainly a majority of the people in my state and the country as a whole. most americans pay a monthly bill for both video and broadband internet. in fact as recently as 2012, 90% of u.s. households with a television paid for television subscription. in a recent study concluded that approximately 70% 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. two companies assure us that they do not currently compete in each other's footprint and the combined company would have less than 30% 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 verticallverticall y integrated with nbc's universal. this is a complicating factor for a large distributor of video content and broadband internet that is seeking to become larger but if the company points out it remains subject to conditions stemming from regulatory approval of that previous

transaction. the proposed merger is nonetheless raising 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 weather experienced in terms of pricing or quality of service are not currently enjoyed in these areas. it's important that this committee take into account the state of competition in the markets for video and internet with pre-existing issues a 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's 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 businesses and it is of special importance to an increasing degree. the combined company will potentially control greater than 50% 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 anti-competitive 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 market. a complicating factor arises given that, owns nbc universal. considering the significant share of the video and the internet market that the new comcast would have and considering the well-known political leanings of nbc i have heard concerns the comcast might have the incentive and the ability to discriminate against certain political content including for example

conservative political content and that capacity could be significantly enhanced as a result of this transaction. as with any matter before this committee or the relevant enforcement agencies is essential 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. >> thank you very much and i thank you and senator klobuchar for your work on this. the first witnesses david cohen executive vice president of,.

activities including corporate communications government regulatory affairs public affairs legal affairs corporate administration community investments. mr. kho then please go ahead. >> thank you mr. chairman and members of the committee. i appreciate the opportunity to testify and explained the substantial benefits to consumers of the transaction between comcast and time warner cable. traditional boundaries between mediacom indications and technology companies are becoming obsolete. while this transaction won't make us bigger that's a good thing, not a problem. most of our real competitors are national and global and larger than us like the bell's satellite companies apple google sony and netflix. the business reason for this transaction is to create a scale that will enable, to invest more in innovation and infrastructure and enhance our ability to compete more effectively. 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 x. one and attainment operating system and more robust wi-fi. 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. first our extremity wi-fi network achieved another milestone with the deployment of more than million hotspots and second we have just increased

internet speeds again. after two meg service in the northeast will increase to 105 meg and her 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 two of expand the entire footprint our industry-leading internet essentials program that has already connected 1.2 million low-income americans to the internet and our commitment to up by 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 anytime to big companies combined. objectively this is not a

challenge in transaction from an antitrust perspective. our company serve separate and distinct geographic areas. we don't compete for customers anywhere so the transaction will not lead to any reduction in competition or consumer choice in any market. we also won't gain undue power over programmers. after divestitures the combined company will manage subscribers representing less than 30% of the market. the fcc twice adopted a rule setting up 30% ownership con to prevent a single cable operator from wielding bottleneck control over programmers in the federal courts twice rejected it finding that no cable operator could exercise market power in 30% or higher market shares. lastly american consumers will enjoy the same choice among broad and 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 1200 customers in tupelo mississippi. we have always tried to invest innovative leader industry with a focus on the consumer. if this transaction 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. >> thank you very much and as per our normal procedure the full segment of course the longer segment, the full statement will be made part of the record for each of the witnesses. our next witness is arthur manson executive vice president chief financial officer at time warner cable. he oversees the financial cable functions including financial operations financial planning treasury accounting tax mergers and acquisitions and investor

relations. please go ahead mr. manson. >> mr. chairman and members of the committee thank you for the opportunity to speak with you today. i'm 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 -- global powerhouses. we compete to develop the most innovative products and services to attract and retain both customers and employees and access funding for 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 aliens 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. .. 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 foot print. 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 our competitive alternative to larger businesses in the regional and national marketplace. given our limited geographic foot print 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. thank you for the opportunity to appear before you today. i look forward to answering your questions. >> thank you very much mr. minson. and our next witness is gene kimmelman. president and ceo of the washington-based public knowledge. previously served as director of the internet freedom and human rights project, new america foundation. chief counsel of the u.s. department of justice's antitrust division and is also well known to this committee. please go ahead, mr. kimmelman. >> thank you, mr. chairman. members of the committee. i'm 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'm very comfortable being here this morning to testify. 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 settop 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 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 systems,

could lock in increased high prices for nbcu programming, and sports, and regional sports, and cable programming, expand cable's ability -- comcast's ability to price 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 models in this marketplace. and finally, could provide favorable internet connection 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 communication regulators is really very, very simple. if we want more innovative, low-priced, internet-delivered services, this merger must be rejected. thank you. >> and next witness james bosworth, chief executive officer of back9network, a network focused on the golf

lifestyle. mr. bosworth previously held high level sales at marketing positions at a number of leading golf equipment companies. and we note that in college he led the seton hall pirates to big east golf championship. that might have been a few years ago. we wanted to remind everybody of that. please go ahead. >> thank you, chairman. good morning, chairman leahy, ranking member grassley, and members of the committee. my name is jamie bosworth and i'm 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've accomplished over the past two years. state-of-the-art 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's 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 requirements for a successful cable launch. one, the ability to produce or acquire 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's 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-nbc universal merger, comcast vert k58 integration makes it one of the largest content providers, as well. now, if you marry that vertical integration with distribution in ten of the top ten 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

our aspiring independent networks. it doesn't matter that our programming has been praised by cable executives. it doesn't matter that we're offering an attractive value proposition. we're 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 wouldn't worry about comcast's vertical integration if there were effective competition in distribution marketplace. we would put our programming up against the golf channel and let the audience decide what's compelling. but in the real world, new, independent networks need to be in the top ten 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's 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 leeb obligation and not discriminate based upon its ownership of the golf channel and we hope that comcast would judge us on the merits of our content and 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. >> thank you very much mr mr. bosworth. next witness richard sherwin, founder and ceo of spot on networks. that's a provider of wireless telecommunications for the multifamily market. as i understand 30 years of experience in wireless communications, radio frequency transmissions, including significant experience with wireless and wired

telecommunication ventures in europe. mr. sherwin, thank you for coming and please go ahead. >> 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, high speed wi-fi services to buildings which otherwise would have only limited and more expensive choices for high spied broadband. we believe in doing well by doing good. the multifamily residential community currently represents nearly 35% of the united states population. this segment includes a large percentage of affordable housing. the population residing in these communities use 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've 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 wi-fi competitors, our brethren are generally 30% less costly than services provided by the dominant cable providers. and spot on provides unique features not otherwise found in other wire-to-wireless access technologies or provided in off-the-shelf or cable company supplied wireless reuters 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 date to access limited but 911 calls are, at best, sketchy. communitywide managed wi-fi service cannot 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 back hole b d bandwidth. 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, as the only retail supplier to that area, once we secure our broadband back hole we build our own facilities based network inside the building making use of the fcc allocated wi-fi spectrum. these users use our distribut distributed -- our wireless

network to do all sorts of things. from social networking, video streaming, smart building applications, e-mail, 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 couldn't acquire that bandwidth from a large broadband provider, for whatever the reason, we'd be basically out of business. competition would be squelched, there would be no innovation. comcast has refused to sell us bandwidth 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 bandwidth 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 powers to exclude alternate high speed providers from offering competitive high speed wireless internet access in multi-family residential communities. thank you very much for your time. >> thank you very much, mr. sherman. christopher hugh is a professor of law and communication, computer and information science at the university of pennsylvania. also the director of the upn center for innovation, technology and competition. professor yu's research focuses on law and technology. the regulation electronic communications. we thank you for taking the time to be here, professor. please go ahead. >> thank you to you, mr. chairman and the committee for inviting me.

i am happy to have the opportunity to offer my views on the impacts of the proposed merger between comcast and time warner cable would have on consumers. my written submission contains my complete testimony. i'd like to focus on the impact of the merger for 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 indicates 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 the subscribers pay for cable television subscriptions. in short, consumers that have the same number of choices a multi-channel video providers the day after the merger than they did the day before. two major court decisions in 2001 and 2009 also rejected arguments that companies that

controlled only 30% of nationwide cable subscribers could inflict anti-competitive harm on cable networks. in light of the merging party's commitment to reduce their holdings so they control no more than 30% of the national market, these court decisions represent a potentially insuperable obstacle. moreover, those court decision were issued in a different era, when the multi-channel video market was 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 base. as others have emerged as important video platforms. this industry is not structured in a way that would make anti-competitive harm in the markets for video programming

likely. any residual concerns may be addressed by the extensive program 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 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 access makes harm less likely than the market for cable television. by my count, it was 32% of the nationwide broadband subscribers, but more importantly, the market for broadband internet access is really undergoing dynamic change. at&t's project v.i.p. is increasing download speeds to 45

megabits per second, and substantial footprints, google is extending its fiber initiative beyond kansas city and us the tin to 34 additional cities. wireless broadband providers are racing to bill out lte, which is 12 megabits per second in a world where viewers only need eight megabits per second, lte promises to deliver speeds of 150 to 300 megabuiits per secon. it is fundamentally different from the cable system. subscribers can't receive content, with respect to the internet, multiple consumers always exist. comcast maintains relationships which ensures uz.not preve-- th would be extended to time warner

cable. it bears keeping in mind how unstable it has been. it ended up being the end of $200 of time warner shareholder value. in addition, a few short years ago, many argued they would consign cable to history. how easy it is to overlook how innovation and willingness to undertake risk than anyone could have anticipated. >> thank you very much. your full statement will be part of the record. obviously you've heard this, that cable and broadband customers, many are concerned how the merger will affect them. that as much as any issue we're hearing on the hill. you said you'll be able to compete more effectively as a

result of increased scale. said "we're certainly not promising the customer bills are going to go down or even increase less rapidly." so they're 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. chairman, let me briefly address both halves of that question. i'm 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's 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 can't 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 generated will ultimately be to the benefit of consumers. and let's 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's why the scale that we're 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'm 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 wi-fi. access to a more ubiquitous national wi-fi network. access to comcast revolutionary new x1 video viewing experience. access to greater on demand

choices. 50,000 on demand choices. access to comcast industry leading tv everywhere experience where people can view video live and on demand on portable devices inside the home and outside the home. at the protections of the no blocking and nondiscrimination provisions of the open internet order. a more generic public interest benefits like extension of the internet essentials program, to low-income customers of time warner cable, extension of our diversity and community investment commitments across the time warner cable footprint. i think consumers are the big winners in this transaction. >> also said that you apply the fcc's open internet rules to time warner cable until 2018. will you do it beyond 2018? >> i think the answer so 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

industry wide open internet protections. and i can't imagine that the commission is not going to have those rules in place well before 2018. >> mr. minson, you must be expecting this question, but you're a ceo who will get $80 million for his two months at work, before he agreed to sell the company. you'll get 27 million if the merger is approved for less than the year you were there. in your position. do these golden parachutes help the shareholders? >> let me, mr. chairman, give you -- >> and you knew you'd be ask that question, so go ahead. >> let me give you our perspective on how we make

operating and strategic decisions at the company, and really the north star for us is what's 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'll have positive outcomes. >> and the golden parachute? i'm not wanting to interrupt by going back to my question. >> as it relates to the overall compensation packages, i would say for transactions this size and for transactions this complex, i think you'll find that they're in line. >> 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. >> you take as long as you want, mr. chairman. >> no, i want to give everybody else a chance. >> you're fair. >> thank you. mr. bosworth -- and i'll have other questions for others for the record, but i'm intrigued by what you discussed about your network. i'm not a golfer, but the fact that you have 24-hour network and people want -- that's pretty amazing. you worked very hard at doing that. i understand your frustration that you can't get cable or satellite. why is it critical for you to be carried by comcast? could you simply operate -- could you simply operate as an online video service?

>> thank you, senator. that's actually a great question, and while online content and over-the-top content is increasing, the average american still watches 20 times more video content via television, and the advertising rates mirror that as well. >> i will have other questions for the record. i'm going to be leaving soon, but i will come back. the questions i want to submit for the record are important to this consideration. also keep this record open to the end of the week for others who have questions or statements. >> and also, after i ask my questions, senator lee is going to take over as ranking member of the subcommittee. first of all, thank all of you for coming here.

i'm going to ask two questions first of mr. cohen, but i want you others to listen because at the end of my question, i give you an opportunity to respond or add to, if you want to, but i'm 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 internet 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's 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? >> okay, i think i only got two parts, but i think i can cover that. >> okay. >> 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're 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 cost of programming, bring down the cost of equipment. but i don't think that's the reality. programmers have inordinate market power, and attractiveness of their content. i'll 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%, and 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 don't think you're going to see dramatic shifts in programming costs, or in equipment costs as a result of this transaction. and by the way, that's one of the reasons why i say i can't 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. 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 in order 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 programmer equipment. the easiest way for me to explain this, since i'm not an economist, but how it's been explained to me, if that is the case, if we get a programmer to drop their cost to us by $100, that they'll go out and try and collect that hundred dollars from another cable provider, that means that they've left $100 on the table with that other cable provider. that as they negotiated the deal when they said we don't need that last hundred dollars, because we're getting it from comcast. as soon as they don't get it from comcast, they have to go back and say oops, we need another hundred dollars. 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, and there's no impact on what a programmer or an equipment manufacturer would charge to another multi-channel video provider based upon the negotiations taking place with comcast. >> you want to respond? >> if i may, senator. it's a nice economic theory. with an additional eight million subscribe herbs, or ten million subscribers from time warner cable, comcast will be in the driver's seat. you're either on their system serving more than 30 million customers, or you're not. will that impact the price? you've 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's logical. they'll 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. >> professor yoo? >> we are in a seminal moment in the history of the television history. looking at traditional video in some ways masks the fact that they are losing subscribers. and what we're 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're also fortunate to live in a world where 98% of american households have three choices in providers, which is the best in the world. i think we're in 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. >> mr. sherwin. >> you raised the issue of the impact on service providers. i'd like to address that for a moment. i mentioned to you in my opening that comcast refused to sell to us for the last year. 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 compromised position in which a condition is imposed where wholesale internet -- wholesale broadband is available to internet service providers, which would address the issue you raised on the internet service provision. >> i think you go ahead, mr. cohen, and i'm not going to take time with the committee for a second question. i'll submit it for answer in writing. >> just a brief response to mr.

sherwin. i actually think his testimony sets forth in a pretty compelling fashion, where there's no need for such a condition in this transaction. he points out he has internet interconnection issues with comcast, time warner, verizon, at&t and a number of other companies. i know that today -- and i'm 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 nbc universal 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 and bundling of our internet service. >> thank you very much. i know senator grassley is going to go and vote. if you notice that there aren't many people left here, it's because people are coming in and voting. it's not like they've left for the day. i want to start with you, mr. co h -- cohen. you talked about some of the benefits you saw coming from the merger. would those not happen with the merger? >> i think the answer 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 the difference of scale between comcast and at time warner cable, and it's 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 the innovation that they are rolling out, we believe going forward in the future, and 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 won't have the choice, the innovation and the technology to be able to offer them in the future. >> ms. bosworth, i know the environment for independent programmers isn't that easy right now. i've 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. >> 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. >> comcast brings up apple and amazon, netflix's competitors and other outlets programmers can go to. are these viable options for backing that network? >> it's an increasing marketplace. but yet still, the average american watches 20 times more video via television than they do online. >> mr. cohen, what competitive pressures is there to keep contest from dictating terms and creating high hurdles for

programming like mr. bosworth's? >> so, three answers, if i can. first of all, comcast is probably the most independent programmer-friendly multi-channel 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'm expressing here today about our independent programmer friendliness. number two, the primarily legal protection for an independent programmer who wants to be carried in the program carriage rules that the fcc has.

those rules prohibit us from discriminating against the provider who wants carriage on our systems. >> but there have been some challenges, right? >> there have been a handful of challenges that we have tended to prevail on because there is an attitude -- or there is -- look, i don't 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've dropped a network in the last three years because we had trouble getting carriage elsewhere for that network. so it's tough to get carriage deals period. the space is very populated and it's very difficult to be able to do that. but we try as hard as we can to

have reasonable and rational discussions with independent programmers, and by the way, i would include the back nine network in that category of networks that we are talking to and that we are trying to reach arrangements with. they are meeting just this week between our program affiliation group and the back nine network, which was scheduled well before we knew the back nine network was going to be a witness at this -- >> you want to get to the third reason? >> 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 a case that our consumers want to watch this content, we will carry it. >> thank you very much. i don't want to miss the paycheck fairness vote. mr. kimmelman, do you want to respond to that, and then i'll be turning it over to mr. franken or leahy. >> this is the real scale question, as the scale issue raised before about acquiring time warner. with $45 billion, you co-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 can't launch, you can't get out there, as mr. bosworth said, unless you have advertisers willing to support you. they'll only support you if you have enough distribution. so it's a no-win game. the problem particularly is having been involved in crafting those original provisions more than 20 years ago, i throw up my hands because when you're vertically integrated and you have a golf channel and someone else comes along, how do you judge if it's a fair way of putting someone on. we know they have a self-interest. this becomes an almost impossible task. it has been extremely difficult for the fcc and so i question whether those rules can really do the job. >> thank you. do you think those rules should be changed or do you think as the justice department considers this merger that that should be part of the consideration? >> i think it's 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 reply them without understanding whether they work would make no sense whatsoever. >> okay, very good. i'm going to turn this over to senator lee and then senator franken will be next. thank you very much. >> 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've heard some concerns related to content. related to the idea of one company controlling a significant share of both internet and video distribution. with respect to politically affiliated networks or content

or otherwise, i've 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? >> so we've started talking about this just now. i think the easiest way to directly respond to that question is to say that it's an important question, but it's a question that is probably the most litigated question in the telecom space in the past 15 or 20 years. the fcc went through two lengthy proceedings in the late '90s 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 power, 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% horizontal ownership cap, saying if you are over 30%, those risks were present, but if you are not over 30%, 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% cap, and that there are the law did not support it either. and that, in fact, the portion that the cable company with 30% does not control is known as the open field. it's known as the rest of the public that you can get to, and what the federal court said was

a 70% 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% of the total mvpd market. by law, there is no 30% cap. but that 30% number is a bit of a hot button issue for those who watched this space, and by being under 30%, we believe that we have a compelling argument that the concerns that you're addressing in your question would not be significant concerns in this transaction. >> mr. kimmelman, i'll have you respond to that. >> things have changed since those rulings.

very importantly, a company with substantial vertical integration in programming. nbc networks, nbc cable programming, sports, regional sports. so they have a variety of different forms of leverage here that aren't simply addressed by this simple horizontal issue. i would say the thing that has changed the most since those rulings too is the internet. the growth of high speed internet delivery as we've seen in most places, we don't get much head-to-head competition with two, three, five cable operators or multiple phone companies coming in. it just hasn't happened. so the internet has become the vehicle for this new potential form of competition. and with that, they have as many as 50% of the really high speed customers in the country. that could be a choke hold. >> so if i understand you correctly, you're saying that mr. cohen's response doesn't adequately take those two factors into account?

number one, the effect of changes in the internet market, and number two, the relationship between comcast and nbc. is that in line? >> that's correct, senator. >> okay. professor yoo, would you care to chime in on that? >> 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 line a stone for 25 years in the traditional cable industry. the industry has below 10% vertical integration and it continues to deceive. concerns that this is a growing problem just aren't borne out by the facts. 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. the transformation has happened, it's becoming a video on demand world where people request

content instead of getting what anyone thinks a programming decision has made, decides what they get to see. actually, that's enriching the environment in ways that are almost -- if you want to see, look at our kids, see how they're doing it, it's just a completely different world. >> i'm sure i'm going have more questions and will follow up on this, but my time has expired. we'll turn it over to senator franken. >> thank you, mr. chairman. i want to thank chairman leahy for holding this hearing. what we're 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's no doubt that comcast is a huge influential corporation. i understand there are over 100 lobbyists making the case for this deal to members of congress and our staffs. but i've 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, whether it's in the public interests. i'm against this deal. because i believe it does not meet either test. i believe this deal will result in fewer choices, higher prices, and even worse service for my constituents. comcast has argued that there's nothing to worry about here, because it doesn't 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's really saying is that these two companies, each of which controls many of their own local markets want to become one larger company 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 serious impact on competition. for example, when comcast wanted to acquire nbc universal, comcast 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 anti-competitive prices for nbc content. the point is that comcast couldn't get away with that sort of behavior because the distributors, including time warner cable wouldn't stand for it and go to the fcc to complain about it, too. later in the hearing, comcast

ceo also assured us, "we are not getting any larger in cable distribution here." 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 can't have it both ways. we can't 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 don't compete against each other at all? doesn't it really underestimate the anti-competitive implications of this deal? >> absolutely, senator franken. it's true that they don't overlap geographically, but that's not the entire competitive analysis either for the department of justice or for the federal communications commission. 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 -- 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's what manufacturers will make. products for that, meet their specifications. if they continue to want that to be through a bundled high priced set of services, i'm sure it will be. these are all enormous dangers that have significant competitive impacts and tremendous harm for consumers. >> speaking of bundled services, we'll get to that later. i'm out of time. mr. chairman, i very much hope we'll go to a second round. >> i'm confident we will. >> great. thank you. >> thank you, senator franken.

>> the overriding objectives 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 have never met a merger that they liked. too often, government intervention in such matters risks harming consumer welfare. 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 in evolving technologies. government regulators must be careful not to intervene unwisely in such dynamic markets. 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 manner. let me ask you this, professor yoo. i'd like to get this from the perspective of antitrust law. 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 anti-competitive harms under antitrust law, and in particular, can you speak to this -- to the rel vevant marke at issue in that analysis? some critics stress that the combined company would control 50% of high speed internet access. a majority of cable subscribers

and 30% of nypd customers. but are those the markets relevant to antitrust analysis in a video space that includes satellite providers and internet video platforms, or in an evolving broadband space that includes enhanced dsl fiber, in advanced lte services. now, that's a lot of questions for you. but i just thought i'd ask them anyway. >> they're insightful questions, so i thank you for them. the people who have cited a number close to 50% of market share have not taken into account the latest technological advances that are going on right now. dsl is rapidly improving in pulling a vast array of new technologies, including itd slams, a bunch of technical jargon, which i won't bother the committee with. at&t is rolling out a new 45-meg

service across 80% of its footprint, and we're not the only country. the uk, germany, a lot of different countries are on the strategy. when you start to see that, you see that dsl was actually coming back from the dead and the facts say that where dsl has not enhanced itself, yes, it's losing market share from cable. the areas where at&t has upgrade its network, it's taking subscribers from cable. we see a market where the only way you can get the 50% number is if you pretend that dsl is not a competitor. the companies are losing numbers to dsl. the facts for them is there. this is the exact dynamic competition which we want, which is dsl, cable got better, put a challenge to dsl. it responded. and now dsl put the challenge back on cable. in a world where i think that you look at the analysis, even as of today, the markets are not structured in a way that any anti-competitive -- what antitrust level also tells you, what matters is not what's

happening today, but what happens in the future should guide analysis. that world is going to become even more competitive than the facts today would lead you to believe. >> thank you. mr. cohen or mr. minson, we all know the broadband mark place is dynamic. five years ago, many believed that no one could compete effectively. today someone suggested no one would be able to compete 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? >> thank you, senator. 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'll give you, just to look

at the combined footprint of comcast and time warner cable, in 98.4% of that footprint, the consumers have a choice between comcast, time warner, comcast or time warner cable, and at least one top ten. that's 98.4% of our combined footprint. as professor yoo just pointed out, it is a virtuous investment cycle that is occurring here. we launched -- the cable industry launched cable modem service that stimulated the bells to take dsl off the shelves. they invested in it and launched that product. we invested more in cable modem service and made cable speeds much faster. that led them to move to fiber-based fiber to the home. fiber to the neighborhood. fios or u-verse or other bell products that are like u-verse. that led us to invest more and

increased speeds, the new speed announcements that i announced today. 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. they have more speeds. we announce 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. 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 couple today because of this investment cycle. >> thank you. >> what i would add is that -- you know, 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 plan. we've increased speeds from three meg to 100 meg across our footprint and we have pockets we offer at 300 meg service. so obviously on a price per meg basis, we offer much more value to consumers today than we did ten years ago. in addition, what i would say is that has allowed us that investment to offer different tiers of service. we offer over six different tiers of service. for example, early this year, we offered an everyday low price offer for 14.95, so that customers could get an offer that, you know, for that part of the population was priced very effectively for them. all in response to a very competitive marketplace. >> thanks, mr. chairman.

thank you. >> thank you for all of your testimony. i realized 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. professor yoo said what the antitrust law should look to is what happens not today, but in the future. which brings me to mr. kimmelman's suggestion. no, mr. bosworth's suggestion that perhaps what should be happening is the doj 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? >> 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 carrying and to make sure that people who have content must share it with other cable operators and other satellite operators. there are some complaints, people that don't get what they want out of the process. the correct solution to fix that process, so it's available for everyone instead of using a americaner to do a company specific solution that will only affect the merging party. >> for mr. cohen. your basic cable package is about $75 a month. is that about right? >> senator, we actually have many basic cable packages.

so we'd start with a lifeline type service, which would be broadcast channels and a few other channels that more typically would be around $20 a month. we have a digital economy package, which -- >> what is your median amount that your subscribers pay for your services? >> median -- i'm not sure i know that. i can provide that to the committee. it's 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. that includes video, high speed data and telephone. >> it's that group that i want to address. the people who have the bundles. 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 program they actually want and not have to pay for, in my case, for example, it would be some sports programming? >> right. so the answer is we do offer a variety of video bundles, most of which are available in bundles with high speed data and with telephone service. the whole issue of so-called a la carte programming 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 is complet concluded that the result would be less choice for consumers and higher cost.

the reason for that is the economics of cable programming involves both advertising and affiliation fees. >> i need to interrupt you. my time is running out. i think it just illustrates how dynamic this marketplace is. >> i would agree with that. >> 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. the oceanic has about 90% of all those cable subscribers and they have internet service where they have a particular internet address. should this merger occur. specific question. would they be able to continue their same internet address or do they have to completely change what's happening with them? >> we haven't gotten to that level of detail and transition

planning. 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. >> i take it the idea would be to be as accommodating to your customers all across the country. >> we are totally focused on the customer experience and have a lot of experience and that's exactly what the concern is and what the planning process would be. >> thank you. i've run out of time. thank you, madam chair. >> thank you very much. senator graham. >> thank you, madam chairman. mr. cohen, how would this potential merger affect the south carolina market? >> 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 and we are in different parts of the state. so i think that south carolinians would gain the benefits of the investment, faster internet, better video experience. rollout of the x-1 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'll continue to compete with directv, dish, and at&t as major providers in the state of south carolina. >> we don't compete with comcast

in south carolina, is that correct? >> that is correct. do you agree with what he just said about the potential merger affecting south carolina? >> i do. >> i'm a directv subscriber. so -- had problems with cable. >> if i can say, you're proof of the point that i am making. >> i've got problems with directv when the weather is bad. so i'm trying to revisit this. i really am. i don't know what to do. i'm trying to figure out what's 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're not taking two people that compete in the same marketplaces. am i right about that? >> that is correct. >> so my choices would be if the merger comes about, to stay with directv, go with dish, go with y'all. who else could i choose from? >> you could go with at&t as a wire line competitor.

>> i've got four choices? >> you've got four choices. and again, depending on where you live, other competitors in broadband and cable, are charter, home telecom, and wow in various places in south carolina. >> so it could be up to seven or eight to ten choices. >> on a statewide basis. but to be fair, so mr. kimmelman doesn't jump in and correct me, just like we don't compete with time warner cable, we don't compete with charter either, so it really depends where you live as to whether one of those cable providers -- >> so basically, cable companies don't compete with each other generally speaking? >> that's a result of -- that is correct and it's really because of the way in which cable grew up as a matter of local franchising. 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. >> so in my case, i wouldn't be losing a choice. the theory would be i could have a new choice with more services through the merger. is that correct? >> i should let you take the witness seat. that's exactly what i've been trying to say. >> so if somebody can sell me a product at this hearing, because i really don't know anybody to represent directv? because i really don't know -- i'm thinking about changing, because i've had the satellite signal knocked out twice. i've had to move the satellite twice. before that, the cable went out right in the fourth quarter of a ball game. so from a content provider's point of view, if i'm a content provider, am i at a disadvantage from this merger in your view? >> i believe that you are not. as a combined company would have under 30% 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 in the d.c. circuit have ruled on two occasions that having under 30% of the market does not create an undue risk of power or bottleneck authority. 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's different is that the multi-channel video marketplace today is even more competitive than it was in 2001 and 2009 when the d.c. circuit made those decisions. >> tell me why i should switch back to cable. >> i'm going to give you the comcast pitch, even though we're not there yet. and then i think comcast provides the best in class video viewing experience in the country. our x-1 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, inside or outside the home now. and tens of thousands of video choices on demand. >> thank you very much. senator blumenthal. >> thanks, madam chairwoman. and thank you for your leadership in the antitrust area. and for participating in this hearing. first, let me say how delighted i am to see two connecticut residents here. the more thanning after another great triumph by our team. if you are around long enough, you'll see me present senator rand paul my huskies tie, because he is obligated to wear it as part of the bet we made.

let me just say how much respect i have for -- 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, event historic issue that's before us and let me just say that i think what we've 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 won't go down. we've already heard that. where is the beef? where is the there there for consumers? 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. i'm especially concerned that bullworks of 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 anti-competitive conduct, industry grimace to limit consumer choice and skyrocketing monthly bills at triple the rate of inflation. that's the reason why i think you're hearing a high degree of

skepticism here. i think that the department of justice has to conduct a very comprehensive and thorough review of this merger, paying careful attention for the potential abuse of power and since i opened about sports let me focus for the moment on regional sports networks. also known as rsn's. the most recent manufacturings i have details comcast owning 11 rsn m country's largest markets, and time warner cable owning five rsn's along with 16 local sports channels combined they 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 paid tv provider's ability to remain competitive and the cost

of sports programming continues to rise with no end in sight. l.a. times reported last week 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. any competitors that won't pay your increase costs for sports programming get denied access, and that's led to some serious high profile disputes, as you well know, between comcast, timewarner, and your satellite and telco companies. in fact, i think there are still several outstanding disputes right now where regional sports programming continues to be with help from competitors from both comcast and time warner owned rsn's. i'm really concerned that the increased ownership of high

value programming, like sports -- 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 a economically crucial element of programming involving sports, so i wonder if you would address these concerns. >> should i go first and -- >> good morning, senator. i was wonder whenning you didn't 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're bringing this that, of course, the men's championship was on cbs, a broadcast network, and the women's was on espn, a cable network, and that's part of what cable has been able to enable in america to have this diversity about what's to show really exciting and incredible content like that. 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 couldn't 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 cost is sports programming, so we're in total agreement on that. in the rsn context, though, rsn's are not national networks, and as you point out, they're regional. they're offered in a particular

market. there's really nothing in this transaction that changes the dynamic in any market in the country. we already oen awe bunch of regional sports networks. time warner cable has a few. but in the -- let's take the l.a. lakers regional sports network in los angeles. comcast isn't in los angeles. time warner cable is. whatever the competitive dynamic is today for time warner cable negotiating regional sports network deals for multi-channel video distributors in the l.a. market for the lakers regional sports net will be exactly the same. we're 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. those markets, the impact of regional sports net bargaining power is tied to the structure of the local markets where the

regional sports nets are offered and there's nothing in this transaction that changes the competitive balance or competitive evening lib yum in those particular markets. >> there might be nothing in this deal that changes the configuration locally, but it increases the bargaining power on one side. >> the bargaining power for who? i mean, i'm trying to figure out -- >> the bargaining power for the entity that controls the programming. it's 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 -- >> so it's the collection -- >> if you view it only through the prism of the.

>> in the comcast case, distributors have the right to demand arbitration for regional sports nets on a stand-alone basis along with no other channels. just the sports net. so no one has done that. no one has availed themselves of the arbitration rights because we've been able to reach deals with people without the need for arbitration, but there is that extra protection that is present in the nbc universal ark. >> why not -- >> senator bloomfeld, do you want to go in a second round? >> i apologize. >> senator kunz. >> thank you to our entire panel and the members of this committee who 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 and customer service levels may lead to increase in price and may lead to a loss of jobs. are there any assurances you could give us today about how the significant benefits that you have described both in writing and in testimony to this merger will -- 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. >> so let me do -- service price and jobs. let me do price first because i have already addressed that. i'm not sure 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 the increase in prices for

comcast customers. nothing. whatever economic benefits we can derive, whether it's through synergies or whatever marginal additional leverage we might receive for programming negotiations and equipment negotiations, ultimately those are to the benefit of consumers. that is -- that's my response on price. on service -- so service, i'm glad you raised the question. senator franken has talked about this and, you know, senator franken actually appreciates what you have said about service because i want to tell you with our company, 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're 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 to 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 you 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 measure service improvements including creating one and two-hour appointment windows across most of our footprint, which we actually meet now 97% of the time statistically. we're not happy that we don't meet it 3% of the time. this is a place where we're having issues. 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.

i will tell you that over the last three years in jd power and associates, which i think is viewed as the cadillac survey of customer attitudes and customer value, comcast service -- comcast score and jd power has gone up about 100 points in video and about 80 points in broadband, and those are the largest increases for minimum in our industry. so the investments that we're making and the commitment that we have internally to improving the customer experience are beginning to bare fruits, but we are deeply disappointed as to where we are and all i can tell you is that -- 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 -- >> you're welcome. >> i meant -- i really mean

that. >> this is a place where external voices have absolutely had that impact, and we think in the end we're going to be a better company as a result of it. thank you. in terms of jobs, obviously unlike the nbc universal transaction where we could stand up and say this is a vertical transaction and there isn't any overlap and jobs and we're not going to be laying people off -- in fact, we expect to grow jobs. this is a transaction where there is some overlap of jobs, but it's head quarters and shared services jobs. it's not the basic operations of the cable system. the state of delaware we don't have headquarters or shared services jobs in the state of delaware. we don't have them in the -- we don't have them in the state of connecticut. we don't have them in the state

of minnesota. we don't have them in the state of utah. i can comment on that for now. we haven't 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 technicians and we don't anticipate any reductions many those jobs. >> thank you. i see i'm about to run out of time. let me ask one more question about sort of terms and conditions. >> the significant roll-out 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