Comcast/TW Merger a Colossal Catastrophe for Consumers
OK, so Comcast and Time Warner want to get bigger. In the corporate world bigger is usually seen as better, especially if bigger results in bigger profits. American corporations’ prime directive is pursuit of bigger bucks; they aren’t merging because they want to please customers. If you accept this proposition and you are a user of any network services, then news of this particular merger should be alarming because the proposed merger would create a Network Behemoth the size of which hasn’t been seen in the U.S since MaBell. And she was fully regulated.
Before we get into the laundry list of dangers, here’s one benefit to the merger: the new Colossal Comcast might have slightly better leverage with which to negotiate with content providers. This could result in lower content costs which, in theory, could be passed on to its customers. It might also push content providers out of their current reluctance to negotiate deals with independent network content providers like Netflix, Apple, Google and others. But Colossal Comcast will only pass on those lower costs if competitors are threatening to do the same and since there won’t be too many competitors, don’t hold your breath on bringing in that particular benefit. Plus, Comcast owns NBCU, which is one of those feet-dragging studios. Our only hope is that regulators make this opening-up of content a condition of the merger approval.
Enough of the good news. Here’s the bad: Colossal Comcast brings about a breathtaking concentration of market power. A combined Comcast/Time Warner would control a major television network and film studio, become nation’s largest cable company by far and its largest residential broadband provider. The latter may be the most important; the power of the cable firms’ monopolies is magnified by the lack of practical alternatives to their Internet services. Sure, there’s always DSL (ugh) but if you don’t have Verizon FiOS or AT&T U-verse, you are pretty much out of luck. Oh, and if you do have access to U-verse, you are still out of luck as if it is as overpriced, underperforming as it has been in San Diego.
The pro-business Economist magazine published an eyebrow-raising editorial on March 15th concluding that the merger would reduce competition, provide no benefit to consumers and sap the incentive to innovate. It warned that the deal would create a “Goliath far more fearsome than the latest ride at Universal Studios theme partk (also Comcast-owned).” Strong words, indeed, from capitalist-oriented and influential analysts.
Bottom line: The merger would allow Colossal Comcast to dominate the cable industry and to be the big dog in 19 of the nation’s 20 largest pay-TV markets. It would have over 30 million customers — the next largest cable company has about 5 million. That could lead to — if not higher prices — a potential downgrade in service. Comcast has tested consumer data caps, which can reduce the ability of people to watch as much streamed entertainment over the Internet as they would like.
The Free Press makes a good point: “No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download. But that — along with higher bills — is the reality they’ll face tomorrow unless the Department of Justice and the FCC do their jobs and block this merger. Stopping this kind of deal is exactly why we have antitrust laws. Americans already hate dealing with the cable guy — and both these giant companies regularly rank among the worst of the worst in consumer surveys. But this deal would be the cable guy on steroids — pumped up, unstoppable, and grasping for your wallet.”
What’s going to stop this merger? Well, The FCC isn’t the only agency that can scuttle this deal. The Justice Department’s antitrust chief has been pretty aggressive in challenging mergers, at least wringing concessions in cases where the deals went through. But the wild card in this whole Comcast deal is new FCC Chairman Tom Wheeler. Wheeler who previously was employed as a lobbyist for the cable industry,……although he promises to be a tough advocate for consumers now. Are you as nervous as we are?
Ultimately, it may come down to consumers themselves, expressing their opinion. One way to do it is through the power of petition. The White House has begun a petition on this issue and it is worth the 1 minute it takes to weigh-in (note: you need to have an account at whitehouse.gov). And you may even want to start investigating other alternatives to cable TV at the other pages on this site. If the regulators fail to do their job, your best alternative might end up being an escape from the cable companies.