Letter to Fred Upton, Chairman Committee on Energy and Commerce, and Greg Walden, Chairman of the Communications and Technology Subcommittee - Hearing on Communications Mergers

Letter

The Honorable Fred Upton
Chairman
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Greg Walden
Chairman
Subcommittee on Communications and Technology
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, D.C. 20515

Dear Chairman Upton and Chairman Walden:

We are writing to urge you to hold hearings on the recently announced mergers between AT&T and DirecTV and between Comcast Corporation and Time Warner Cable (TWC). Although we have not taken a position on these proposed deals, we believe it is important that the Energy and Commerce Committee, which has exclusive jurisdiction over telecommunications policy and transactions in the communications sector, examine the impact these mergers may have on the public interest and hear testimony from opponents and supporters of these transactions.

On May 19, 2014, AT&T proposed a $49 billion acquisition of DirecTV. The Committee should understand how this proposed merger would affect competition. One area we should examine is the pay TV market. In 25% of the country, both AT&T and DirecTV's video services are currently available and they compete against each other.

On February 14, 2014, Comcast proposed a $45 billion acquisition of Time Warner Cable. If approved, the newly combined entity would serve roughly 1/3 of the nation's broadband Internet subscribers and nearly 30% of the pay TV market. When compared against its competitors, the new entity will be a full 50% larger than the next largest existing pay TV provider, DirecTV, and more than twice as large as the number three player, Dish Network.

Comcast and TWC have argued that the combined scale of the company post-merger will produce substantial benefits for the public, including accelerated investment in new technology and enhanced competition in backhaul data services for wireless carriers. Critics of the merger have suggested there may be potential competitive harms. Among the concerns that have been raised are the ability of the merged company to exempt affiliated services from data usage caps, but apply such caps to competitors; the ability of the merged company to exert anti-competitive leverage to capture fees from Internet backbone providers and charge interconnection tolls for access to their customers; and the ability of the combined company to leverage its control of 20 of the top 25 cable television markets and a significant amount of "must-have" programming to the disadvantage of independent cable programmers and smaller distributors. We should closely examine these issues.

The proposed mergers between Comcast and TWC and between AT&T and DirecTV signal a trend towards consolidation in the communications market. The possibility of a merger between two of the four largest wireless carriers also reflects this trend. If approved, these mergers could have a lasting impact on the wireless and broadband marketplace as well as how video programming is produced, distributed, and consumed across multiple platforms, including broadband-delivered video services. The Communications and Technology Subcommittee with its oversight jurisdiction over the media and communications sector has a responsibility to ensure these proposals meet the public interest test and truly benefit American consumers. We respectfully request that you hold hearings to examine the proposed transactions.

Thank you for your consideration of our request.

Sincerely,

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