Comcast Gamed FCC for Internet Essentials "Concession" in NBC Merger

Last year, when Comcast unveiled its Internet Essentials program, the corporate powerhouse received accolades from FCC Chairman Julius Genachowski. The program was promoted as an example of corporate philanthropy helping to bridge the digital divide.

Comcast received all kinds of positive media coverage for its program. Most of that coverage failed to note that the FCC required Comcast to integrate the program as one of the supposed concessions offered in return for Comcast being able to take over NBC -- giving the largest cable monopolist in the US even more market power.

DSLReports has publicly exposed what many of us suspected all along -- the program was not a concession on Comcast's part. Internet Essentials was originally conceived as a program that would offer slower connections to certain low income households at affordable rates that nevertheless remain profitable for Comcast.

A recent Washington Post Technology profile on Comcast's Chief Lobbyist David Cohen, notes how the program was actually conceived in 2009, but:

At the time, Comcast was planning a controversial $30 billion bid to take over NBC Universal, and Cohen needed a bargaining chip for government negotiations.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a recent interview.

Eligibility depends on four factors:

• Participants must reside in an area serviced by Comcast
• Participants must not have an overdue Comcast bill or have unreturned equipment
• Participants could not have had Comcast service within the last 90 days
• Participants must have at least one child in the house that qualifies for free or reduced lunches

When the program launched in 2011, only households with children qualifying for free lunches under the National Free Lunch Program were eligible. After residents in Philadelphia expressed their derision at the narrow eligiblity, Comcast broadened the criteria to include those that qualified for reduced lunches. Even with this one requirement relaxed, eligibility is narrow. From a 2011 DSLReports article released when the program was new:

Once you've eliminated those who don't qualify for the school lunch program, eliminated those who already have service (not uncommon even in poor homes), and eliminate those who also owe Comcast money (also obviously not uncommon in poor homes), how many customers will Comcast actually wind up having to serve at the $10 price point? Even then, they'll only have to offer it for a few years, making it significantly less of a difficult merger condition than it might originally appear.

The Philly.com article notes that Comcast estimates 2.3 million people nationwide are eligible for the program. Even though meeting the participation criteria is incredibly difficult, Comcast blames low participation rates to on the people they are supposed to be helping:

Comcast says it has found that the biggest barrier to Internet Essentials' adoption is that many people in poor neighborhoods don't understand the Internet (emphasis added by me).

"They think it may be used for Comcast or the government to spy on them," said David Cohen, the program's chief booster and an executive vice president at Comcast.

I am one of those 2.3 million, used to help Comcast increase its market power with the NBC merger. Very few of us think much about the government or Comcast spying on us. In fact, we spend most of our time thinking about paying the bills. If Comcast or the government DID spy on us, we know they would be pretty damn bored.

As a lower-income single parent of two children that qualify for reduced lunches, our household qualifies largely because a subscription to paid TV is a luxury that we have chosen to avoid for several years. But believe it or not, I DO understand the benefits of Internet access and so do all the parents of all the kids that I know who are similarly situated. In fact, the kids understand the Internet, too.

As an experiment, I called Comcast and am happy to report that a very nice lady helped me. After answering all the questions she presented, my application for the Internet Essential program is on its way. 

I hate to report stories like this for multiple reasons. First, there is the conscious decision on the part of Comcast to cynically delay a program supposedly designed to benefit the most vulnerable populations. Then there is Comcast's obvious goal of positive media attention for their hated brand rather than effectively advertising the program to the vulnerable populations.

There is a policy lesson that DSLReports nails:

On the plus side, some people got less expensive broadband, which certainly isn't a bad thing. On the other hand, you've got a Comcast lobbyist who delays a program for the poor in order to profit handsomely by buying NBC, and an FCC claiming credit for a show pony program just to earn political points and to avoid imposing tougher conditions. As we'ved noted previously, hollow programs that do little but sound great has been a constant theme at an agency too timid to actually regulate.

The obvious question that has been utterly ignored by just about all the press coverage of this program is if Comcast makes a profit on its $9.95 service, why is the price so high for everyone else? Comcast, AT&T, and others are constantly crowing about how much competition supposedly exists in U.S. broadband but their profit margins and capacity to incease rates year after year proves the opposite is true.

We need to continue pushing the FCC to protect the rights of all Americans, not just a few big cable and telephone companies.