Kirkland-based Wave Broadband has filed a claim against Comcast, saying the cable giant is unfairly trying to force Wave to provide higher-priced premium sports TV channels to customers who don't want them.
Wave, which is owned by private equity company TPG Capital, filed the claim with the Federal Communications Commission on Tuesday. The FCC will now determine whether to investigate the claim.
Wave sells fiber internet and television service to customers, licensing TV channels from other providers, including Comcast. Besides owning content, Comcast also competes with Wave as an internet service provider.
Wave's claim underscores a shift in consumer preferences that cable companies and Wave are facing in the age of digital streaming: More customers are spurning traditional TV service for online on-demand options
changing the landscape for longtime cable operators.
TV-watchers are now more likely to piece together their video options: adding a Netfix subscription, for instance, to a lower-cost basic cable package.
That's creating problems for cable companies that are used to offering TV channels in large premium chunks.
Wave claims that it signed licensing agreements with Comcast's Sports Nets division in 2013 and 2014 that required a certain percentage of customers to subscribe to the premium sports channels. At the time, Wave thought the targets were attainable because Comcast was selling the channels to only a few providers.
In the meantime, though, Comcast started offering those channels on multiple streaming sites, including Hulu and Sling TV. Some Wave subscribers downgraded their service to a basic package of channels and then flocked to the streaming sites, making it impossible for Wave to reach the minimum number of Sports Nets subscribers, the Kirkland company claims.
Wave says when it tried to negotiate a renewal of the contract that ends this year, Comcast refused to change the minimum Sports Nets subscriber number. That set off a series of arguments between the two companies, including Comcast telling Wave it had breached the current agreement. Wave paid about $3.5 million related to the breach, but says in its FCC claim that it wants to be paid back and wants a new agreement, alleging "unfair business practices" from Comcast.
Comcast wants Wave to offer the Sports Nets channels as part of its basic cable subscription, rather than just to customers who pay for premium channels, Wave said. But that would create a snowball effect, forcing it to offer other channels that come "bundled" with Sports Nets that could raise monthly prices to customers by $70, Wave argues.That could cause customers to defect to other providers.
On the other hand, Wave said, if it drops the Sports Nets channels completely, it will have an even harder time competing with Comcast.
"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's claim reads.
Comcast did not immediately respond to a request for comment.
Rachel Lerman: rlerman@seattletimes.com; on Twitter @rachelerman.
