Media Wed Jul 07 2010

Eating Broadband for Breakfast: Doomsday Scenarios for Chicago's Media Landscape

By Timna Axel

[This is Part 1 of a series. Click here to read Part 2]

Tomorrow morning there will be a congressional hearing on Comcast and NBC Universal, and it will be smack in the center of the Loop. As I was rifling through last-minute research, it was obvious I hadn't been quite thorough enough.

So I googled, "Comcast sucks."

The litter of angry articles, Facebook pages, and dedicated web sites (not to mention niche porn) is impressive but boring - mostly people complaining about broken cable boxes or lazy technicians.

But dig a little deeper and you'll reach truly nefarious bloggings. The journalists, labor activists, techies, and musicians clamoring for Comcast's blood aren't just peeved; they're scared out of their wits. That's because Comcast, the nation's largest cable TV company and second-largest Internet service provider, is perched to gobble up the majority share of NBC Universal in a $28 billion deal that may lay off workers, kill local news, monopolize Chicago's telecom market, herald the destruction of broadcast television and prefigure the corporate hijacking of fair and open Internet - indeed, the end of the World Wide Web as we know it.

That's what a cadre of wonkish, over-caffeinated techies say. Federal actors are marshalling their troops for a showdown, and within six days there will be two hearings on the merger in Chicago, one held by a House subcommittee and another by the FCC. As ground zero for Comcast's wedding plans with NBC, the Windy City will play host to the year's greatest digital regulatory battle. But what does a high-power deal brokered between two media moguls have to do with the Internet apocalypse? To get there, we have to learn who the players are, and the very first one is named Comcast.

Comcast dishes out cable to 23.9 million people, a customer list the size of North Korea. In Chicago, Comcast is the undisputed cable king, and it's fought hard and dirty to keep the title. Although primarily a distributor (a cable operator, to be precise), Comcast has its fingers dipped in several jars. It owns 11 cable network stations, a movie studio and a local sports property.

NBC is no freshman itself - the production company is one of three 'duopolies' in Chicago controlling almost half the commercial stations in Chicago. Its marriage to Comcast will hand over control of 27 broadcast TV stations, 30 cable channels including NBC, Telemundo, MSNBC, Bravo, USA, and CNBC, two movie studios and over $17 billion in annual revenue. The monster merge would have an equity value three times that of CBS, nearly reaching Rupert Murdoch proportions. That's a nightmare situation for both competitors and consumer advocacy groups.

Layoffs traditionally accompany mergers down the aisle, and opponents are claiming that this deal will be no different. Comcast has promised to avoid "massive layoffs," but unions aren't buying it.

In February the president of the Communications Workers of America (CWA), a union representing employees of both Comcast and NBC, speculated that the merger would result in "the loss of good jobs, the erosion of employee rights, and would undermine living standards in the communications and media industries."

Not that they're exactly objective.

"Comcast has an awful record with organized labor," says Steve Macek, a media activist and professor at North Central College in Naperville. He cites the company's expensive lobbying efforts against the Employee Free Choice Act and a string of scuffles between Comcast and its unions, CWA and IBEW. "One of the things they do is take over unionized media properties and then try to break the union."

Monopoly Woes

Layoffs and labor rights aside, there are two words scarier than the rest: vertical integration. If Comcast does acquire NBC, a major distribution channel will control a massive content producer, and that comes with a host of disturbing possibilities.

Perhaps Sen. Al Franken (D-Minn.) said it best at a hearing in February: "It matter who runs our media companies. The media are our source of entertainment, but they're also the way we get our information about the world. So when the same company produces the programs and runs the pipes that bring us those programs, we have a reason to be nervous."

The consolidation of both sides of the media equation within one company will give it unrivaled power, especially in Chicago. Because Comcast is a cable provider, it can collect marketing data from its cable boxes, information which is far more accurate and detailed than the broadcast channels. As owner of NBC and Telemundo's news stations, Comcast can then give them a huge advantage through advertising revenue, diverting money from other channels and likely causing other news staff to be cut back.

Those other news channels, by the way, are employed by reporters covering local stories and catering to underserved communities, often minorities which receive little if any attention by national giants. NBC has a record of favoring national content over locally produced, specialized programs, and that winds up reducing the amount of coverage available, cutting down the number of journalist voices, and homogenizing the ethnic media makeup, all for a package price that will likely be much higher once the competition's been sent packing.

"In the past, NBC and Telemundo haven't had a good record," says Iván Román of the National Association of Hispanic Journalists, which made a public statement against the Comcast-NBC deal in April. Despite Comcast's hammering out agreements with several Latino groups in an attempt to appease, the NAHJ still isn't happy.

"[In 2006] NBC closed six local news casts, and replaced it with a single regional Telemundo news cast out of Texas," Román explains. "Since then, NBC and Telemundo have changed a bit and beefed up local coverage, but have not returned to local news casters. We don't see that it's going to change under Comcast."

One of the worst-case scenarios being rattled is one where the rivalry between cable TV and broadcast, its slower, cheaper, antennae-bound predecessor, will finally come to a bloody end under one company that owns major shares in both.

"If Comcast completes the deal, it might be the first to pull the trigger on killing broadcast TV in the US," warns activist Mitchell Szczepanczyk of Chicago Media Action. "It could lead to other companies selling off their broadcasts as well. That's one big reason why the merger is so critical."

It may be a little early to panic - at least 15 percent of the population still gets their television delivered without cable. But Szczepanczyk isn't alone in raising the alarm over another media venue: the Internet.

Online Predator
To understand why Comcast might destroy open Internet, you first have to understand its role online. Comcast, Verizon and AT&T are the three largest telecommunications companies in the United States. In addition to supplying households with landline and wireless telephone service, these companies are also major Internet Service Providers, or ISPs. They control the pipes or roadwork of the Internet, delivering packets of data between users. The traffic they deliver can be anything from emails to online applications, music files and video streaming of the latest Friday Night Lights episode on Hulu.com.

The catch is that these ISPs have the ability to slow or block the traffic they choose, to act as "smart pipes" that deliver some content at higher speeds than others. They can act this way because the rules for broadband, high-speed internet access that is faster than dial-up and never turns off, are not yet clearly defined by Congress or the Federal Communications Commission. Network Neutrality is the idea that ISPs should not be able to discriminate against content running through their pipes, and that they shouldn't be able to charge more for faster delivery. Telecoms have announced they would like to charge content providers different rates based on bandwidth while reserving a "fast lane" for their own content, creating a tiered system that would destroy the Internet as a unique platform for innovation and a doorway to unlimited information and services. Instead, users would be forced to pay extra to load web sites without the resources to reserve a spot on the fast lane. If Comcast buys NBC, this would allow Comcast to let its customers view NBC news online for free while charging extra for visiting Huffington Post.

In principle, the FCC has committed itself to the goal of Net Neutrality. But thanks to a recent federal court case striking down the FCC's authority, broadband providers are floating somewhere between the rules governing telephone companies and those regulating newspapers.

Let's do a quick exercise: One-third of Hulu is owned by NBC. The popular online video site streams cable shows for free, and has been a constant thorn in Comcast's side. If Comcast acquires NBC, what's the probability that it will slow, block, or degrade the content of Hulu's video traffic? Actually, they've already been caught doing something similar.

"Comcast is the poster child for what happens without Net Neutrality," says Josh Stearns. Stearns is the associate program director of Free Press, a lobbying group at the forefront of the Net Neutrality battle in Washington. Of all the ISPs, Comcast has arguably had the worst record of violating Net Neutrality.

"They've been caught blocking traffic, everything from music files to the King James Bible."

Stearns is talking about a notorious case two years ago, when Comcast was caught selectively blocking content on the file-sharing site BitTorrent, provoking a landmark FCC ruling censuring the company. Comcast retaliated by denying that it had fully blocked content and filing a federal appeal. It also tried to cheat the public out of a hearing.

"When the FCC was doing public hearings in 2008, Comcast paid people off the street to fill the room so the public couldn't enter," Stearns says. "We're afraid that will happen in Chicago."

This April, the federal appeals reversed the FCC ruling, saying the agency had exceeded its "ancillary authority." Since broadband was classified as a Title I information service, it could not be as heavily regulated as a Title II telecommunications service. Now the FCC's Obama-elected Chairman Julius Genachowski is leading an effort to reclassify broadband in its very own category, a "third way" approach that is drawing fire from legislators on all sides.

But until they can figure out a way to enforce Net Neutrality, there's a growing concern among local activists that Comcast's deal with NBC will only solidify its ability to discriminate against content online.

"With NBC, they will have more power and even more of a reason to block other people's content," warns Stearns.

Showdown in Chicago
Before all that happens, Comcast will have to face public scrutiny from the FCC, Congress, and the Department of Justice. At 9 a.m. tomorrow in Room 2525 of the Everett Dirkensen Federal Building, 219 South Dearborn St., there will be a field hearing held by the House Subcommittee on Communications, Technology, and the Internet. The hearing is called "Comcast and NBC Universal: Who Benefits?"

Among the invitees are representatives from Comcast, NBC Universal, and even the Rev. Jesse Jackson in his capacity as founder and president of the Rainbow PUSH Coalition.

On July 13, the FCC will be heading to Northwestern University for a public forum to examine the same issue.

"Chicago has taken center stage because of its historical perspective and the history of media here in the city," says South Sider Karen Ford of the National Writers Union. "But also because Chicago is a very segregated city - there are the 'haves' and 'have nots.' Mayor Daley embraces the deal, but if you ask people in my neck of the woods, they're not even aware of it."

Tomorrow will be an early sign of whether Chicago approaches the merger as a single city or as just another town divided by cable fees.