Is the online video industry ready for 'Comzilla?' The FCC thinks so

Jim O'Neil

So, Comcast is going to be allowed to gobble up NBC Universal in one huge bite, creating a giant cable company-Internet providing-content generating-programming distributing-amusement park operating-VoIP telephone providing entity that will dwarf any other media company in the world in reach, power and resources.

Don't despair, the FCC is going to protect the online video industry from Comzilla.

At least that's what FCC Chairman Julius Genachoski said after the agency voted 4-1 Tuesday to allow the transaction to move forward. But can it really? And, more importantly, will it?

During a conference call with the agency yesterday, FCC officials all beat their chests about the conditions the agency had put in place to make sure there was "incentive" for Comcast to play nicely with the online video industry. They pointed out that the "enforceable voluntary commitments" (now there's a mouthful) made by Comcast will be in place for seven years, which, on the surface, seems like plenty of time.

Of course, in a corporation's lifetime, that's a pretty minimal time span. And, frankly, a new administration, a new FCC chairman, or an administrative law judge could change that duration in less time than it takes to say "Republican."

And, what of those commitments? Well, Hulu's the one making the news today. The FCC mandated that Comcast can maintain ownership of the operation, but not managerial oversight. That means it can count it among its many minions, but can't overtly direct it. The rationale? The agency believes that if Comcast retains ownership of Hulu, it will have a financial incentive to help it succeed.

Hmm. That's an interesting perspective. So, Brian Roberts can't call up Hulu CEO Jason Kilar and tell him to raise the Hulu Plus subscription price to, say, $19.99? Sure he can. And that will be the end of Hulu Plus because, to most consumers, it's barely palatable at $8.

Of course, the FCC said, Comcast can, at any time, decide to simply divest itself of Hulu, and that may be a more likely scenario. Then Hulu can join Google as an NBC-content free zone.

The FCC folks, in answer to a question about Google TV, said the agency held no sway over NBC's decision to not send content to Google TV. "It's a content owner's issue," an official said. And it will be elsewhere as well, especially if its Comcast/NBC content.

They did mandate that Comcast offer standalone 6 megabit broadband for $49.95, pointing out that the national broadband policy only targets 4 megabit. That, they contend, will help online video businesses reach consumers without having Comcast's cable entity get in the way.

In the end, the FCC said, it "looked at the many pledges and commitments" Comcast has made and came away with the opinion that the deal was in the public interest.

All except for Commissioner Michael Copps, who said the conditions at best "aim no higher than maintaining the status quo. The status quo is not serving the public interest." He warned that the deal could allow for more walled gardens, not less, and for content prioritization and access fees... what he called a "stake in the heart of independent content production."

The deal, he said, "puts new media on a road traditional media should never have taken. It further erodes diversity, localism and competition--the three essential pillars of the public interest standard mandated by law... (this is) a damaging and potentially dangerous deal."

And, in the end, Comzilla will eat the world. -Jim