ATLANTA – October 6, 2010 – EarthLink, Inc. (NASDAQ:ELNK, news, filings), one of the nation's leading Internet service providers, has presented an economic report to the Federal Communications Commission on the proposed merger of Comcast Corp. and NBC Universal. The findings demonstrate that control of NBC Universal's content and assets will result in Comcast raising the prices that consumers pay for standalone broadband service. This report was prepared by Professor Simon J. Wilkie, Former Chief Economist of the Federal Communications Commission, and is available at http://fjallfoss.fcc.gov/ecfs/document/view?id=7020915403.
The report shows that an increase in the price of standalone broadband service will harm consumers in several ways. In response to higher prices, existing subscribers may be forced to drop their broadband service subscription and new subscribers may not be able to afford Comcast's broadband service. Further, Comcast customers who wish to "cut the cord" from the higher-priced Comcast cable television subscription in order to access lower-cost online video and voice services via standalone broadband or simply "break the bundle" and subscribe only to broadband services will face increased charges. As a result, the market for innovative online video services will be stifled and the nation's goals of ubiquitous broadband adoption and usage will be dampened.
In June, EarthLink asked the FCC to deny the merger or adopt a condition requiring Comcast to offer wholesale standalone broadband access service to independent Internet service providers. Professor Wilkie determined that allowing consumers to have a choice for broadband services will allow consumers to "break the bundle," promote and discipline Comcast's pricing and protect the development of online video. This remedy will impose little or no costs on Comcast while at the same time generating significant benefits.
"Professor Wilkie has confirmed through substantial findings that the Comcast-NBCU transaction will result in a real and significant harm to consumers," said EarthLink General Counsel Samuel R. DeSimone, Jr. "The FCC must step in to ensure that consumers have access to affordable standalone broadband service."
About Prof. Simon J. Wilkie
Simon J. Wilkie serves as Chairman and Professor of Economics at the University of Southern California. He also serves as a co-director for the Center in Law, Economics, and Organization at the USC Law School. Prior to joining USC, he was an Assistant Professor of Economics at the California Institute of Technology and a Member of Technical Staff at Bell Communications Research. Professor Wilkie's research focuses on game theory, its application to business strategy, economic, and regulatory policy design, and the economics of the communications industries. His most recent research is on the wholesale telecommunications market, and the diversity concept in media markets. He was also formerly a faculty member of Columbia University, the University of Rochester, and served as Chief Economist at the Federal Communications Commission. Professor Wilkie is on the editorial board of the Journal of Public Economic Theory and the International Journal of Communication. His work has been widely published on subjects of spectrum auctions, game theory, and telecommunications regulations in leading scholarly journals, including: Economic Theory, Journal of Economic Theory, Journal of Economics and Management Strategy, Games and Economic Behavior, Journal of Regulatory Economics, Review of Economic Studies, and Social Choice and Welfare. Professor Wilkie holds an MA and PhD in economics from the University of Rochester and a BComm in economics from the University of New South Wales.
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