EarthLink Contends Comcast, NBCU Merger Will Increase Prices

Consumer broadband costs will rise and the market will be stifled according to an economist's report presented to the FCC by the Internet service provider.

William Gardner

October 7, 2010

2 Min Read
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Continuing its opposition to the proposed merger of Comcast and NBC Universal, Internet service provider EarthLink has presented the Federal Communications Commission with an economic report that it says demonstrates the merger, if approved, would result in consumers paying higher prices for standalone broadband service.

The report was prepared by former FCC chief economist Simon J. Wilkie, who currently is chairman and professor of economics at the University of Southern California. The report, which includes a lengthy analysis of the cable, Internet, and broadband markets, concludes that the merger would produce strong incentives on the part of Comcast to discriminate in favor of its own programming.

"The post-merger Comcast entity will have the incentive to raise the price of standalone broadband service absent other competitive pressures," Wilkie argued.

Wilkie added that an increase in the price of standalone broadband service will harm consumers in different ways including the possible necessity to cancel the service because of higher prices.

EarthLink added that new and potential subscribers may not be able to afford Comcast's broadband service. In addition, EarthLink maintains, consumers who wish to drop higher-priced Comcast TV subscriptions and obtain broadband-only services are likely to face increased charges.

"As a result," EarthLink argues, "the market for innovative online video services will be stifled and the nation's goals of ubiquitous broadband adoption and usage will be dampened."

Comcast has disputed Wilkie's analysis in reports of its own, also submitted to the FCC. Comcast maintains the merger would be good for consumers.

"Earthlink's economics are simply off base," said Comcast in a statement. "Opponents of the Comcast NBCU transaction like Earthlink are rereleasing and rehashing the same discredited arguments they made months and months ago. We have fully addressed these arguments in the FCC record and shown conclusively their analysis is flawed and incorrect."


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