Bad News for Comcast Deal in FCC Report

The cable giant did well in the study, but it undercuts a Comcast argument for buying Time Warner Cable.

POMPANO BEACH, FL - FEBRUARY 13: A Comcast truck is seen parked at one of their centers on February 13, 2014 in Pompano Beach, Florida. Today, Comcast announced a $45-billion offer for Time Warner Cable. (Photo by Joe Raedle/Getty Images) (National Journal)

Comcast performed well in an Internet speed study released Wednesday, but the federal report could still be a blow to the cable giant's plan to buy Time Warner Cable.

The Federal Communications Commission report found that DSL continues to lag behind other Internet service options such as cable and fiber, calling into question just how competitive the broadband market really is.

A key argument that Comcast is making for why it should be allowed to buy Time Warner Cable is that consumers have an array of other choices for Internet service. The Justice Department and FCC are currently reviewing whether the merger of the top two cable companies would illegally suppress competition.

In testimony before the Senate Judiciary Committee earlier this year, David Cohen, Comcast's executive vice president, said DSL providers are "formidable broadband competitors."

"While some may scoff at the competitive viability of DSL service, market realities and investments by telcos in DSL technology that have led to increased DSL speeds rebut those concerns," Cohen said.

While the report found that many Internet services have gotten faster in recent years, DSL providers showed "little or no improvement in maximum speeds."

Additionally, DSL providers are advertising faster speeds than they actually deliver, the agency found. According to the report, DSL providers were the only companies to fail to deliver at least 90 percent of the speeds that they advertised.

The report also found that consumers are increasingly demanding faster service, further undercutting Comcast's claim that many consumers would be willing to switch to DSL.

Comcast and other cable providers performed well in the study. Comcast delivered 108 percent of its advertised download speeds during peak hours, a slight improvement over last year's results.

The FCC sent letters to the DSL providers and other underperforming companies demanding more information about why their customers aren't getting the speeds they paid for.

In a statement, FCC Chairman Tom Wheeler said it is "encouraging" that some providers are improving their services but he is "concerned that some providers are failing to deliver consistent speeds to consumers that are commensurate to their advertised speeds."

Harold Feld, the senior vice president of consumer-advocacy group Public Knowledge, said the report is "one more piece of evidence" that the government should kill the cable merger.

"Cable broadband is not a direct competitor to DSL in a relevant way," he said, pointing to "inherent limitations" in DSL technology.

He added that the report could actually bolster AT&T's case for why it should be allowed to buy DirecTV. AT&T has argued it needs additional revenue to upgrade its DSL network.

Comcast did not respond to a request to comment, but the National Cable and Telecommunications Association, a lobbying group that represents Comcast and others, published a blog post touting the strong performance of cable providers.

"The good news from a cable perspective is that providers are delivering speeds that consistently meet or exceed advertised numbers," the association wrote.