Comcast Town Meeting

Comcast Town Meeting
Statement of Congressman Sanders on 10/4/2005 regarding:

Good evening. Thank you very much for joining us tonight to discuss the proposed purchase of Adelphia Cable by Comcast. And I want to very much thank the excellent panel who are here with us as well.

Mark Reilly, Vice President of Comcast; David O'Brien, Commissioner at the Vermont Department of Public Service; Paul Burns, VPIRG Director; Mayor Peter Clavelle, of Burlington; and Lauren-Glenn Davitian, a representative of the Vermont Access Network and the Center for Media and Democracy. Each member of tonight's panel will have an opportunity to make an opening statement. After everyone has spoken we will be having a question and answer period, so please be thinking of questions you may have for our panelists.

The reason for this town meeting is simple. This is a huge transaction affecting more than 110,000 Vermont subscribers. Frankly, I have been amazed by the small amount of public discussion that a transaction this size has engendered, and I hope that tonight can be the beginning of a very serious public conversation on this issue. Secondly, my strong hope is that both the Vermont Public Service Department and the Vermont Public Service Board will be vigorous in representing the interests of Vermont consumers in a deal involving Comcast, a multi-billion dollar company and, by far, the largest cable operator in the U.S. with approximately 22 million video subscribers, 7 million high speed internet subscribers and 1 million phone subscribers. Vermont is a small state and we're dealing here with a huge corporation - and, in my view, it's imperative that the PSD and PSB stand tall in representing Vermont's interests.

1996 Telecom Act and deregulation

As Vermont's Congressman, I got involved in this issue through the 1996 Telecom Act which led to the de-regulation of the cable industry. When Congress passed the 1996 Telecommunications Act, which I vigorously opposed, proponents argued that the deregulation in the Act would allow for more competition within markets, which would lead to greater efficiency and would lower prices. I didn't believe that scenario then, which is why I voted against it, and I don't believe it now.

The simple truth is that since 1996 and de-regulation there has been a dramatic increase in Americans' cable TV bills. Since 1996, cable rates have increased by 59%--almost three times the rate of inflation-and we have seen an even more dramatic increase in price for basic and expanded basic services, which are the choice of the overwhelming majority of cable subscribers. Despite all the talk about de-regulation bringing competition, only two percent of all Americans have more than one cable company to choose from and, to the best of my knowledge, there is almost no cable competition in Vermont today. In other words, in the vast majority of instances the cable industry functions as a monopoly and cable companies can raise their rates at will. They now have the best of both worlds - a monopolistic situation and minimal regulation.

And, just as no one is particularly surprised that cable rates are soaring, no one should be surprised that the profits of the cable companies are also soaring. In 2002 Comcast had a gross profit of $6.1 billion. In 2002 it rose to $11.3 billion and in 2004, Comcast had a gross profit of over $12.8 billion. The bottom line is this: since the passage of the 1996 Telecom Act, consumers have seen their cable rates skyrocket and cable companies have seen their profits skyrocket.

Comcast and Time Warner Background

On April 21, 2005, Comcast and Time Warner, the first and second largest U.S. cable operators respectively, agreed to acquire Adelphia, the nation's fifth largest cable operator for $17.7 billion in cash and stocks. When the transactions are complete, Comcast will have 26.1 million subscribers and Time Warner will have 16.1 million subscribers. Together these two companies will control access to 57.4% of the nation's 73.6 million cable subscribers. If you include satellite, the two companies will control access to 45% of the nation's 92.6 million pay-TV subscribers.

But increasing the number of Comcast and Time Warner cable customers is only one part to their deal. Comcast and Time Warner also agreed to swap various cable systems in order to increase their "clustering" or level of concentration in a specific market. Therefore instead of equally dividing Vermont's 110,000 Adelphia customers between the two companies, Comcast will acquire all 110,000 customers.

Vermont

What I would like to know tonight is what impact the takeover of Adelphia will have on Vermonters. What will it do to the prices we pay for cable TV or Internet access - which are already very high? Will Comcast be raising rates the day after the take-over? How much? How often? Will they tell us tonight what their pricing plans are?

What about programming? How many and which channels will be offered in the basic tier and the basic expanded tier packages? Will Vermonters have any imput into those programming decisions? Instead of choosing a cable channel package determined by the company, will Vermonters be allowed to choose only the channels they want - an option known as cable a la carte programming?

What will the Comcast takeover from Adelphia mean for our public access channels which play a very strong role in dozens of communities around the state? And what about the quality of consumer service? When there is a problem with the TV or the internet, will Vermonters be able to talk to a human being rather than a tape recorder, and will problems be addressed promptly and professionally?

Let me conclude my remarks by saying quoting from a statement to the Public Service Board by a representative of the Public Service Department. Ms. Deena L Frankel writes; "…. Because of the nature of the transaction, which places legal and practical limits on the ability of the acquiring parties to make post-transaction business plans, the petitioners have offered little to Vermont to describe what we can expect service to look like following full transition from Adelphia to Comcast. This poses a challenge in evaluating whether granting a Certificate of Public Good to Comcast serves the public good."

Well, the purpose of tonight is see what answers we can get to determine whether this transaction is, in fact, in the public good.

http://bernie.house.gov/statements/20051004170620.asp