Net neutrality objections fade, Congress appears likely to pass NBCU + Comcast

Committee Chairman Rep. Rick Boucher (D - Va.) turned up at least a few ticks more heat than Rep. Markey, by bringing up the subject of Boxee, the media center software that last spring got into a tangle with Hulu, which is co-owned by NBC. Boxee wanted to be able to show videos provided by Hulu, but its methodology appeared to give Boxee the ability to remove Hulu's advertising.

With NBC effectively getting married to the creator of the TV Everywhere concept, Rep. Boucher asked witnesses, what's to keep the combined entity from denying NBC or Hulu content from Boxee's or anyone else's software? Comcast's Roberts responded with a message that was crafted in a very comforting manner, taking credit for having done no less than invent broadband as we know it, and invent its successor as well.

"We have helped create the broadband experience that consumers enjoy today, some of the work out of CableLABS, going back a decade, was one of the first to create high-speed broadband. It's the fastest-growing part of Comcast, our broadband business," said Roberts. "In fact, we are in the process of completing a nearly $1 billion upgrade to create wideband. And if you say, 'What do you do with wideband?' Right now, I don't have a great answer, except that at 50 or 100 Mbps, I trust there are great entrepreneurs out there to come up with the answers, and we want to be a company on the leading edge...I've said consistently for several years that we believe that video over the Internet is one of those applications that requires more speed, and justifies the investments that we're making in wideband and broadband. We think it is a friend, not a foe."

All that without having to utter the word "Boxee." Boucher then put the question to NBC's Jeff Zucker, representing a co-owner's stake in Hulu. Zucker was more direct in his response, accusing Boxee of not stepping up to the bargaining table.

"What Boxee was doing was illegally taking the content that was on Hulu without any business deal," Zucker told Congress. "We have several distributors...of the Hulu content that we have legal distribution deals with, so we don't preclude distribution deals. What we preclude are those that illegally take that content." Would NBC be willing to negotiate such a deal with Boxee, Boucher pressed on? "Well, we said that we're open to negotiations."

One of Rep. Henry Waxman's (D - Calif.) perennially key issues has been content protection, and the need to craft digital content to prevent theft and piracy. With NBCU's content being added to the production catalog of Comcast, Rep. Waxman asked Roberts, would Comcast be more compelled to provide more of a leadership role in taking steps to reduce online content theft?

"I think we absolutely recognize the vital nature of protecting the licensed, legitimate, non-theft model. It's what's propelled NBC Universal to where it is today, and every owner of content," Roberts responded. "In the distribution business, we also rely on licensed content to be the successful part of our business. So I think we now have double the incentive to figure this issue out, better than it's figured out today. Specifically, I think there have been technological advancements in the last couple of years that are going to make it more likely that we can cooperate...We will now be an active member of NCTA, MPAA, and other industry trade groups that are focused on these questions. I think it's vital that we have a cooperative solution; we obviously, on one hand, have privacy concerns and copyright protection concerns; on the other hand, by having 33,000 employees at NBC Universal that I've got to worry about, and 100,000 employees at Comcast Cable, it's in my interest, and I think the consumer's interest, to continue the licensed model and find solutions that are acceptable."

The strongest opposition to the idea of extending cable-style licensing into the Internet space -- the thing that keeps Boxee from simply showing Hulu in its own window -- came from Dr. Mark Cooper, research director for the Consumer Federation of America. Although Dr. Cooper was advised at least twice to keep his answers short so everyone could move on with things -- Rep. John Dingell (D - Mich.) strictly advised "25 words or less" -- he laid down the only law that anyone was going to lay down today regarding opposition to the deal for ethical reasons.

"Frankly, we see it as an effort to extend the market division agreement that has existed between cable operators in the physical space, into cyberspace," Cooper told Rep. Dingell. That is the explicit intention of TV Everywhere. The statement that they will not use NBC properties to reinforce that does not answer our concerns, because NBC will stop developing altogether --." At that point, Dingell cut him off.

Dingell then asked Roberts, what commitments would Comcast make to prevent the very abuses that Cooper predicted? "Well...we're still 80% a cable company, so our eye is very much still in that perspective...Number two, I don't think the deal changes anything in that regard. NBC has great content and charges the best price that it can get from its customers, and I'm not sure that our incentive is any different, given the two companies coming together. I think that the quality of the content and the technology that's changed in the last several years, is part of the answer, but I think it's a broader industry question, not necessarily specific to this deal."

Earlier in the hearing, Roberts cited statistics saying that in the areas served by WOW cable, Comcast lost 1 million subscribers at the same time WOW gained 7 million -- a sign that competition must be working. But after Roberts' last remark, in an act of grace, Dingell allowed Cooper a "very quick" response, and it was definitely to the point:

"Comcast's sob story about losing cable subscribers is a dog that doesn't hunt," pronounced Dr. Cooper. "In the past few years, they have shifted to triple-play, increased the total number of subscribers that they have across their [portfolio], increased the price of cable, increased the margin on their cable customers. That is inconsistent with a market that is forcing them to lower prices. They are counting the wrong thing -- the thing that they're not really interested in any more."