I am responding to the recent article on the "Comcast Shakedown," which claims that Comcast's pricing practice "toes the boundary of antitrust law" and bears a "striking similarity" to Microsoft's "strong-arm bundling tactics." As a professor of antitrust and telecommunications law, and former senior counsel at the Justice Department's Antitrust Division, I believe it is very important that the Microsoft case be understood properly. Indeed, because Comcast does appear to understand its lessons, its behavior deviates significantly from the tactics used by Microsoft. (For my views on the Lessons From Microsoft, see here.)
In Microsoft's case, every copy of its operating system -- Windows 98 -- came bundled with Internet Explorer and the "commingling of code" served only to prevent users from deleting Explorer and installing Netscape's Navigator. Comcast, by contrast, is not bundling one monopoly product with another, but is offering consumers a discount if they purchase two products from the same company.
Most significantly, however, Comcast does not have a monopoly in broadband in any event, as it faces competition from DSL, Wi-Fi and other platforms. Not surprisingly, telephone companies have also provided "bundled" offerings to consumers, including packages with DBS providers like DirecTV. This form of one-stop shopping and vertical integration is a direct consequence of the Telecom Act of 1996, which invites telecommunications firms to compete against one another in all markets.
The article's suggestion that regulators should take seriously the type of predatory conduct taken by Microsoft is important. But in this case, there is a very good reason that regulators are not responding to Comcast's pricing practices -- Comcast is not abusing a monopoly in the broadband market (it does not have one) nor preventing rivals from entering the market.
-- Phil Weiser
"The striking similarity of Comcast's and Microsoft's strong-arm bundling tactics raises an obvious question: Why haven't government regulators intervened yet?
"Quite simply, this would require a retraction of statements made less than six months ago."
The retraction of statements will have nothing to do with it.
The United States of America and Microsoft have a lot in common: both are powerful, arrogant, controlling and seek domination of the world within which they operate. Both use strong-arm tactics to force others into doing business with them whether they wish to or not; one way or another, to refuse is to lose. Is it any wonder that when Microsoft was found guilty of antitrust violations in a U. S. court, the resulting punishment would be a mere token? After all, the USA and MSFT operate under the same practices and principles. In short, the United States is simply unable to find anything wrong with the way Microsoft conducts business.
And so it shall go with Comcast.
-- Walter L. Bazzini
I see Comcast's damned commercials all the time. Of course, the commercials don't mention the buyout -- they want you to think that there is actually some competition in the cable market.
Oh, how I long for the days of local cable companies. Then TCI came along and bought out all the operations here in the Bay Area (with the exception of Palo Alto, I believe). Then AT&T bought out TCI, finally culminating in the Comcast buyout.
Thanks for the piece.
-- Mike Gollub
"Most recently the Justice Department punished Microsoft for bundling its Internet Explorer Web browser with its Windows operating system (OS)."
This is completely wrong. The Appeals Court that essentially decided the case in August 2001 completely threw out the claim that Microsoft tried to dominate the browser market. It also found insufficient evidence to support the "tying" claim (that is, that it illegally bundled IE with Windows, raising prices), and sent that claim back to the lower court. The DoJ then decided to drop the tying claim. Instead, Microsoft was punished for other kinds of anticompetitive behavior, mainly in the way it negotiated with hardware manufacturers. When nine states attempted to reargue the tying claim, they were soundly defeated.
You can argue until you're blue in the face whether the DoJ dropped the tying claim because they wanted to "pay back" Microsoft as a result of some unproven conspiracy with the Bush administration, or simply because they knew they'd lose. But despite all the wishful thinking of Microsoft competitors and bashers in the press, the fact remains: Microsoft has never been punished for tying applications ("middleware") to the OS, and unless the European Union forces it to unbundle Windows Media Player from Windows XP, it probably never will.
Thus, the rest of the article makes no sense from a legal perspective. Sure, I wish the FCC hadn't approved the merger (I'm an ATT broadband subscriber and I don't have cable TV), but wishful thinking isn't the same as legal precedent.
-- Matt Rosoff
(Editor's note: The story has been corrected to note that the DoJ "attempted to punish" Microsoft.)
Ain't deregulation great. What Comcast is doing is to ensure that anyone who lives on a limited income won't be able to have a high speed Internet connection. The cost of cable broadband is expensive enough but to then add at least another $25 on to the bill for cable TV is absurd.
Where are the boycotts of the '50s? You'd better believe that if every Comcast customer disconnected their cable Comcast would cease to exist. Maybe they should take that into consideration, but they won't.
The bottom line is money, customer service no longer matters as long as the money rolls in.
-- J. Browning
Thank you for this article! As a former customer of AT&T Digital Cable, I suddenly found myself watching Comcast cable a few weeks ago. Since this happened, I have noticed a distinct drop in the quality of my cable reception. In particular, the pay channels (HBO, Cinemax, etc.) have a lot more "hiccups" where the signal drops out for a few seconds. I don't know whether this is because of Comcast, but the timing seems very suspicious. As we sail forth (or backwards?) into a new golden age of monopolies, I guess we can expect the same level of service that characterized Ma Bell before 1984.
-- Alexander Osipovich
Comcast is offering a bundled package, where buying multiple services gets customers a discount -- what's so unfair about that? If you want to see really unfair, check out Verizon -- if I want their DSL service, I have to get a voice line from them. No choice, no option, it's mandatory.
-- James Ratcliffe