Comcast defends merger as U.S. review kicks off

Comcast Corp sought to rebut critics of its planned $45.2 billion takeover of Time Warner Cable Inc, arguing that newcomers like Google Inc and Apple Inc would ensure competition in both Internet and video markets.

In a 175-page filing with the Federal Communications Commission that coincides with the formal launch of the controversial deal, Comcast argued that either all or key areas of its and Time Warner Cable's businesses compete with an "array of sophisticated companies with national or even global footprints."

The U.S. Department of Justice will conduct the antitrust review and the FCC will examine whether the deal is in the public interest.

Comcast has pledged to divest some cable subscribers so the combined company would serve just under 30 percent of the U.S. pay television video market. The company said it would serve between 20 and 40 percent of the U.S. broadband subscribers. MoffettNathanson research estimates the company would cover about 33 percent of the high-speed Internet market.

Opponents have raised concerns that the combined company will have too much power over what Americans can watch on television and do online, becoming a powerful buyer of web and pay-TV content.

The cable companies are expected to face those concerns on Wednesday when their officials, Comcast's executive vice president David Cohen and Time Warner Cable's finance chief Arthur Minson, testify in Congress.

In Tuesday's filing, Comcast argues that such concerns are unwarranted, especially given the growing competitiveness of both the video and internet markets.

The filing names Inc, Apple, Google, Microsoft Corp, Verizon Communications Inc, Netflix Inc, Dish Network Corp and DirecTV as companies making progress over the last decade in competing against Comcast with video content, while cable operators have lost subscribers.

"In the evolving video marketplace in which these companies have thrived, there is no reason why a cable company should be limited in evolving as well," Comcast said.

But Chris Lewis, vice president for public affairs at consumer interest group Public Knowledge, said that while all those companies do compete against Comcast, the merged provider would have something the others do not.

"The great equalizer is that for many of those companies, they don't own the network in the high-speed video marketplace, which means (Comcast-Time Warner Cable will be) controlling the pipe into the people's homes," Lewis said in an interview.

An array of public interest groups have opposed the merger, and on Tuesday submitted a letter to FCC Chairman Tom Wheeler arguing that the merger of the nation's two largest cable companies may create a gatekeeper for online and pay-TV content.

In Comcast's filing, the company reiterated that Comcast and Time Warner Cable do not directly compete in any markets, meaning no consumer would lose a choice of an Internet or cable provider, plus Comcast instead would boost the quality of Time Warner Cable's services and bring faster internet speeds.

The company also reaffirmed its commitment to so-called network neutrality rules, rules banning Internet providers from slowing down or blocking access to any content online that have been struck down as formal FCC rules in court in January.

Comcast, thanks to a condition placed on its 2011 merger with NBC Universal, is now the only company bound through 2018 to uphold net neutrality and has promised to apply it to Time Warner Cable's networks, too.

The FCC is now reviewing how to rewrite the net neutrality and the treatment of web traffic, including the fees content companies pay Internet service providers in so-called interconnection deals, is likely to be part of the agency's review of the merger.

Another public benefit Comcast touts in its filing is how it will be able to better serve large and small business customers, giving companies an alternative to telecom providers such as Verizon and AT&T.

Comcast shares traded at their lowest level on Tuesday since the Time Warner deal was announced in February, a four-month low of $48.27 per share, and were about 1 percent lower on the day.

(Editing by Andrew Hay)