Comcast defends TWC merger at House hearing

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Comcast Thursday defended its proposed $45 billion takeover of Time Warner Cable (NYSE: TWC - news) at a House of Representatives hearing as critics said the mega-merger would create a behemoth that would stifle competition.

Comcast vice president David Cohen told a House panel the goal of the merger is to provide a "significantly improved customer experience," thanks to the increased ability of the new giant to invest in key technologies to advance service.

The cable giant came in for pointed criticism from other hearing witnesses, who said Comcast's record shows a history of bullying smaller players that will only get worse if the merger is approved.

"Fundamentally, Comcast's strategy is to get everyone to pay them," said David Schaeffer, chief executive of Cogent Communications (NasdaqGS: CCOI - news) , a large Internet service provider. "When providers simply have no choice but to pay, these costs will necessarily be passed on to consumers.

"The proposed merger cannot be found to comport with the public interest."

None of the House members who questioned Cohen said they opposed the Comcast-Time Warner Cable deal, which would give the combined company some 30 percent of the US pay-TV market.

Yet lawmakers expressed concern that the merger would concentrate too much power over Internet and cable access in one company. But some said they were loath to wade too far into the fast-changing sector.

Comcast faced a similar hearing in the Senate a month ago. The huge merger plan is being reviewed by the Department of Justice's antitrust division and by the Federal Communications Commission.

House Representative Spencer Bachus, who chaired Thursday's hearing, highlighted that the combined company would be the largest pay-television provider in 37 of the top 40 viewing markets in the US.

"Size alone does not necessarily do harm to competition," the Alabama Republican said, while adding that "there have been cases in our country?s economic history of companies that achieved dominance and then exercised monopoly powers."

Cohen said Comcast has taken steps to abide by a pledge not to take more than a 30 percent share of cable subscribers, unveiling a deal last month with Charter Communications (NasdaqGS: CHTR - news) to divest some 3.9 million subscribers.

Cohen said the company's increased size would enable it to compete with other players from across the technology sphere, such as telecommunications giant AT&T (NYSE: T - news) and streaming providers like Netflix (NasdaqGS: NFLX - news) and Google (NasdaqGS: GOOG - news) , which is growing its video services.

- Potentially slower price increases -

While the transaction "has the potential to slow the increase in prices," it would not result in lower prices for consumers, Cohen acknowledged.

He laid blame for "continually spiraling" consumer cable bills at the foot of content providers, especially for costly sports events.

The remarks came one day after Comcast's NBCUniversal unit and the International Olympic Committee announced a $7.65 billion deal to extend NBC television rights to broadcast the Olympics through 2032.

Schaeffer of Cogent, which had provided Internet access between Comcast and Netflix, recounted how Comcast manuevered to pressure Netflix to sign a controversial deal to connect directly with Comcast due to service problems from increased customer traffic.

Efforts by Cogent to engage Comcast to improve networks were ignored, he said.

"A merged Comcast and TWC will make current anti-competitive practices demonstrably worse," Schaeffer predicted.

But Cohen said Netflix, which has opposed the Comcast-Time Warner Cable merger, told Comcast it wanted to deal with Comcast directly and "cut out the middleman."