The news gossips are tittering and tweeting: on Thursday, Comcast will, they say, announce it is buying Time Warner. [Update 3:55 am Pacific: Comcast confirms merger]
Comcast, the largest cable company in the U.S., wants to buy merge with Time Warner Cable, the second largest cable company in the U.S.
Ah, yes. American capitalism at work: how many monopolies (or duopolies) can we create?
And here’s the argument: they don’t really compete against one another, so why not let them become one big happy family?
Because it’s not in the public interest.
Let me introduce you to Comcast:
- Based on revenue of $63 billion in 2012, Comcast is the largest mass media and communications company in the world.
- Comcast is the largest cable company and home Internet service provider in the U.S. At the close of 2013, it had about 21 million video customers and another 19 million high-speed internet customers.
- In 2009, Comcast became the third largest home telephone service provider in the U.S.
- Comcast is vertically integrated: it now owns
51%100% of NBCUniversal. Obama’s DOJ and the FCC approved the purchase in 2011.
And then meet Time Warner Cable:
- TWC is the nation’s number two cable company (a distant number two), with revenue of $21.4 billion in 2012.
- TWC had approximately 12.0 million residential video subscribers and 10.9 million high-speed data subscribers at the close of 2012.
- Time Warner spun off TWC in 2009; it is not vertically integrated, having no content ownership.
Hello, people, wake up!
The feds broke up AT&T, and it was a federally REGULATED monopoly with much less control over your media consumption than a Comcast+TWC behemoth would have.
Cable regulation? A joke.
Local government (often out-classed in the lawyer department, big bucks buy a deep secondary) “may regulate the rates your cable company charges for the basic service tier” but is not required to.
And all other fees, like pay-per-channel programming and internet connectivity, are not regulated.
Abysmal customer satisfaction
The 2013 American Customer Satisfaction Index (ACSI) revealed that the low end of the internet service provider market “belongs to CenturyLink at 64, Time Warner Cable at 63 and Comcast at 62.
“High monthly bills combined with problems across a broad spectrum of customer experience benchmarks—such as service reliability, data transfer speed and video-streaming quality—leaves customers less than satisfied with their ISP service,” says Fornell. “But in a market even less competitive than subscription TV, there is little incentive for companies to improve.”
And giving a green light to this consolidation would improve customer satisfaction … how, exactly?
About video streaming.
The next bucket of money to be made is in America’s overpriced-relative-to-the-rest-of-the-world “triple play” card: TV (video), voice (unregulated telephone surrogate) and internet. Look at the price of “broadband” in the U.S. compared with other countries; then consider our not-so-amazing speeds:
Note: wireline services? That’s POTS, plain ole telephone service. The service that’s still regulated in the public interest.
Despite the relatively poor cost-to-signal ratio, Americans are cutting the cable. Netflix now has more customers than HBO; and last year QZ noted that, “Netflix commands more attention—87 minutes per US household per day—than any American cable network.”
Why not nip that competition in the bud with a broadband cap?
Comcast has one; TWC doesn’t. Guess what happens after the purchase? Right. A bunch of new folks suddenly have caps.
Or throttling? It looks like this is happening around the country right now.
See interactive chart on GigaOm story.
On Deck: network discrimination
There’s even more money in legally shutting out competitors. If Comcast-TWC can legally discrimiate among bits (ignore network neutrality), they can speed up offerings from their partners (like HBO) at the expense of their competitors (enemy of my friend is my enemy).
Don’t you think privileging your partners — as well as your own offerings (after 2018) – would be easier to do and more profitable to boot if you bought up your closest competitor?
Numbers three (Cox Communications) and four (Charter Communications) aren’t as large as number two. Which is half the size of number one.
Telecom in the U.S.
The fact is that telecom policy in the U.S. has been molded in D.C. by hired guns and revolving-door-bandits. How else to explain the common carrier exemption for cable — the philosophy that led to long distance competition over our copper phone lines but not cable ones?
Tossing a spanner in the works would be a great first step in developing a new policy approach.
Maybe one closer to those in other parts of the world and like our own power/natural gas/phone systems for most of the 20th century.
One where infrastructure (cable, fiber, copper, cell tower) ownership is a regulated monopoly and services (the stuff that runs on the network like phones, data, “TV”) is a free-for-all competitive market. But with no vertical integration: an infrastructure company can’t own a service company (and vice versa).
A girl can dream, can’t she?
Until that dream comes true, it’s in our (consumer) best interest to vocally and vociferously oppose this acquisition. The FCC has been known to respond to citizen outrage when debating new rules for television station ownership.
This is even more important.
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Known for gnawing at complex questions like a terrier with a bone. Digital evangelist, writer, teacher. Transplanted Southerner; teach newbies to ride motorcycles. @kegill (Twitter and Mastodon.social); wiredpen.com