U.S. lawmakers press Comcast on Time Warner Cable merger

WASHINGTON (Reuters) - U.S. lawmakers on Wednesday sought reassurances from Comcast Corp that merging with Time Warner Cable Inc would not result in higher prices or too much power over what Americans watch on TV and online.

The Senate Judiciary Committee held the first public hearing on the proposed $45.2 billion merger between the two largest U.S. cable companies that has raised eyebrows among public interest groups and some lawmakers even as Comcast promises the deal would benefit consumers without eliminating any choices.

"My concern is that as Comcast continues to get bigger, it will have even more power to exercise its leverage and squeeze consumers," said Senator Al Franken of Minnesota, who has written to regulators to express his concerns about the merger but had stopped short of saying the deal must be stopped.

"I'm against this deal," Franken said at Wednesday's hearing. "I believe this deal will result in fewer choices, higher prices, and even worse service for my constituents."

Lawmakers can be a powerful voice on merger approvals even as they do not have a role in deciding whether the deal gets the green light from the Justice Department, which is reviewing whether the merger complies with antitrust law, and the FCC, which has a broader public-interest standard.

To ease approval, Comcast has pledged to divest 3 million subscribers so the combined company's customer base of 30 million would be just under 30 percent of the U.S. pay television market. The combined company would also serve between 20 percent and 40 percent of the high-speed Internet market, Comcast said in a filing on Tuesday with the FCC.

The company also said its rivals no longer consist of other cable or satellite TV companies, but also companies like Google Inc, Apple Inc, Netflix Inc and Amazon.com Inc. These companies have made progress in competing against Comcast with video content, while cable operators have lost subscribers.

"If this transaction is approved, it will give us the scale and reach to innovate and compete against our national and global competitors," Comcast Executive Vice President David Cohen told lawmakers on Wednesday.

"The transaction will not lead to any reduction in competition or consumer choice in any market," Cohen said, reiterating that the two merging companies do not compete against each other anywhere and adding that the transaction would not prompt increase in consumers' cable bills.

NET NEUTRALITY

The FCC's review of the merger is particularly expected to focus on how Comcast would manage Internet traffic crossing its networks, and Senate Judiciary Committee Chairman Patrick Leahy urged Comcast urged to extend its commitment to so-called network neutrality beyond 2018.

The FCC's net neutrality rules that ban Internet providers from slowing down or blocking access to content online were struck down in court in January, but Comcast remains the only company bound them through 2018 as a condition for its 2011 merger with NBC Universal.

"The conditions that currently apply to Comcast should not be seen as the end point, but rather the minimum level of protection that should apply to promote competition online," Leahy said. "I urge Comcast to support stronger rules that will protect consumers and drive innovation."

Cohen said that as the FCC is currently reviewing how to rewrite the net neutrality rules to reintroduce them, Comcast is unlikely to need to extend its commitment beyond 2018 because he expected the FCC to set industrywide net neutrality standards.

"I can't imagine that the commission is not going to have those rules in place well before 2018," he said.

Cohen, sitting next to Time Warner Cable's finance chief Arthur Minson, testified alongside an independent programmer and a smaller Wi-Fi company who said they worried the larger Comcast would use its power to bully them.

Their concerns were echoed by Gene Kimmelman, a former Justice Department antitrust official who is now a vocal opponent of the merger as head of Washington-based public interest group Public Knowledge.

"The issue before antitrust officials and communications regulators is really very, very simple," Kimmelman said. "If we want more innovative, low-price Internet-delivered services, this merger must be rejected."

(Reporting by Diane Bartz and Alina Selyukh; Additional reporting by Liana B. Baker; Editing by Ros Krasny, Bernard Orr and Jonathan Oatis)

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