Comcast and the “Digital Divide”

The FCC might use one to fix the other.

Photo | Jeff Fusco

Photo | Jeff Fusco

The Financial Times over the weekend had one of the better articles we’ve seen offering an overview of the Comcast-Time Warner merger, net neutrality, and how the two issues seem to intertwine.

“What is clear is that the FCC faces two important decisions: how to proceed on net neutrality and whether to approve Comcast’s takeover,”  FT’s David Crow writes. “Both have huge implications for broadband in the US, and will affect a swath of media and telecoms groups, as well as millions of consumers – including those on the wrong side of the digital divide.”

Three takeways from that piece:

1. The “digital divide” — between those who have broadband access and those who don’t — is acute in America, particularly in cities: Just 73 percent of U.S. households have a broadband subscription. The figure is 88 percent in Germany and the U.K.

The received wisdom has always been that the rural geography of much of the US is to blame for this low number: about 67 per cent of households in rural areas have broadband, compared with 75 per cent of urban households. Yet the problem is just as acute in scores of cities, including Detroit, Miami, Memphis and New Orleans, where household subscription rates are under 60 per cent. Around one-third of African-American households and 55 per cent of families earning less than $20,000 have no broadband connection.

2. If Comcast really wants to merge with Time Warner, it may have to go beyond its current Internet Essentials program to make a dent in that digital divide.

One option the FCC is considering to address these concerns is asking Comcast to do more to close the digital divide as a condition of approving its takeover of Time Warner Cable. It could require the cable group to offer cheap deals to a much wider pool of poor families, and to senior citizens and those with disabilities. “The FCC could use the Comcast deal to achieve its other policy aims such as low-cost service offerings and broadband build-out,” says Robert McDowell, a Republican FCC commissioner between 2006 and 2013 who now works at law firm Wiley Rein.

3. But Comcast may scuttle the deal if the conditions are too burdensome:

A person familiar with the deal said Comcast was “happy to accept reasonable conditions but not conditions that don’t make sense”. They pointed out the agreement did not include a “break-fee”, which means the company can walk away from the transaction without compensating Time Warner Cable.

There’s much more in the FT piece: If you’re interested in Comcast or net neutrality, it’s worth reading the whole thing.

In other news:

Comcast is deepening its push into China: Signaling a concerted push into China, Universal Pictures and Comcast brass gathered at an opening ceremony for the studio’s new Beijing office today. On hand were representatives from the Chinese film industry as well as Comcast Chairman and CEO, Brian Roberts; Chairman of Universal Filmed Entertainment, Jeff Shell; President of Distribution for Universal Pictures International, Duncan Clark; and the newly appointed EVP and Managing Director of China for UPI, Jo Yan. (Deadline Hollywood)

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