Wave Broadband filed a claim with the Federal Communications Commission against Comcast Tuesday, alleging the cable operator is engaging in unfair business practices by forcing Wave to offer a single bundled premium sports TV channel package at a higher cost to customers.
Kirkland, Wash.-based Wave, which serves residential and business customers in California, Oregon, and Washington, is in the process of being acquired by private-equity firm TPG Capital in a deal worth $2.36 billion. TPG plans to combine Wave with RCN, which is already owned by the firm.
Wave says it typically offers two service tiers for video subscriptions: a lower-cost package that includes local broadcast channels, and an expanded content package that includes a variety of cable networks.
According to Wave, Comcast’s NBC Regional Sports Networks requires the company to sell a minimum number of expanded content subscriptions tied to the number of subscribers in its local broadcast service tier.
Comcast, however, has licensed its sports channels to a number of streaming sites, including Hulu, Sling TV, and fuboTV. Wave claims it was impossible to reach the minimum required number of Sports Nets subscribers, as some of its TV customers downgraded to the basic channel package and opted for a streaming service.
The two companies clashed after Comcast refused to change the minimum number of Sports Nets subscribers during renewal negations for the licensing contract that ends this year, the Seattle Times reported. Subsequently Comcast said Wave was in breach of the agreement and the company paid $3.5 million related to the breach. In its FCC claim Wave said it wants to be repaid and wants a new agreement from Comcast.
A spokesman from NBCUniversal, which is named in the claim, told the Seattle Times Comcast is “mystified” by Wave’s claim, which it contends holds no merit.
“Wave’s sale to RCN and a private-equity group is expected to close within a month, so NBCUniversal offered an extension until they come under new ownership and has separately offered marketplace terms to RCN for continued carriage on these systems thereafter,” the spokesman told the Seattle Times. “NBCUniversal has engaged with them fairly, on the same terms as other distributors.”
Wave also asserts that Comcast now wants it to bundle the Sports Nets channel with its basic channel subscription, which could raise prices for consumers who don’t actually want the channels.
“If Comcast Sports Nets prevails in forcing Wave to bundle its channels in the local broadcast tier, all video subscribers would then be forced to subscribe to this bundled channel package at a content cost of more than $70 per month—with consumers paying for more channels than they are interested in viewing,” Wave said in a statement.
However, if Wave doesn’t carry the Sports Nets channels then it will be even more difficult to compete with Comcast, the company said.
“Loss of ‘must have’ programming offered by the Comcast Sports Nets would devastate Wave’s ability to compete with Comcast Cable and could result in shuttering its video offerings,” Wave said in its claim.
The American Cable Association, a trade organization representing smaller and medium-sized independent cable companies, voiced support for Wave’s FCC petition, calling Comcast’s behavior “outrageous.”
“For years, ACA has drawn the FCC’s attention to the severe harms that a cable-affiliated programmer like Comcast-NBCU can cause to competitors and their subscribers. We’ve called on the FCC to be vigilant in protecting consumers. Just last month, ACA highlighted the unreasonable minimum-penetration requirements imposed by Comcast-NBCU’s regional sports networks,” Matthew Polka, president and CEO of ACA, said in a statement. “These requirements prevent Comcast’s competitors from broadly offering an inexpensive ‘broadcast basic’ service tier that viewers increasingly desire. We don’t find it surprising that the programmer most aggressively seeking to prevent ACA members from offering their customers a popular service tier has especially high levels of vertical integration. And Wave is by no means alone in being subject to Comcast’s unreasonable demands. Other smaller operators suffer as well. This must stop.”
Filed Under: Industry regulations