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If the Federal Communications Commission and U.S. Department of Justice antitrust lawyers ever had an easy-peasy, slam-dunk decision to make, it is to deny the proposed merger of Time Warner Cable and Comcast.
Just about the only parties who think that merging the cable colossi is a great idea are Time Warner and Comcast.
Comcast has proposed acquiring Time Warner for a stock swap valued at $45 billion. The company promises better service and lower prices after the merger.
In terms of service, the American Customer Satisfaction Index ranks Time Warner Internet service dead last, 236th out of 236 companies rated, and its cable delivery as 235th. Comcast is also a customer satisfaction bottom-feeder, consumers rating its Internet service 234th and its cable service 232nd. So I guess if you’re the worst, improved service shouldn’t be that hard to deliver.
A slim majority of Americans oppose the merger, 52 percent according to a Reuters poll, 56 percent according to a Consumer Reports poll. But Consumer Reports also found that a whopping 74 percent believe the merger would result in higher cable and Internet prices for everyone.
The idea that merging the two largest cable TV providers in the country will somehow lower prices flies in the face of that old free-market mantra that competition keeps prices down. In fact, the cost of a cable TV subscription just keeps going up and up, from about $10 a month in the 1990s to more than $60 a month now. This corporate greed and real competition from other programming providers are the reasons that cable subscriptions have begun to decline in this country.
Time Warner and Comcast argue in their application to merge that their combination would not be anti-competitive, because the two companies don’t compete. True, they have monopolies in their coverage areas, but they do compete for municipal contracts. Maybe if we had true competition within cable markets the prices would come down.
Consumers obviously stand to lose if the Time Warner-Comcast marriage takes place, but so does the business sector. As U.S. Rep. Chellie Pingree, D-Maine, wrote in an email to Attorney General Eric Holder, “a merger of the two largest cable companies in the United States would be a bad deal for consumers, leading to less competition and likely higher prices for subscribers. And a combined Comcast-Time Warner would be in a position to slow or even block Internet traffic from content providers like Netflix or Hulu if the cable company decided they didn’t want the competition.”
Netflix has filed a petition to deny the merger, as have the Rural Broadband Association, DISH Network, Cogent Communications, Frontier Communications and Sinclair Broadcast Group.
“If the Comcast and Time Warner Cable merger is approved, the combined company’s footprint will pass over 60 percent of U.S. broadband households, after the proposed divestiture, with most of those homes having Comcast as the only option for truly high-speed broadband,” Netflix CEO Reed Hastings complained.
Netflix now accounts for close to one-third of all traffic on the Internet, about the same as online pornography, so the company is just trying to cover its bottom line by objecting to Comcast becoming the de facto gatekeeper of the Internet. But the public policy rationale for having antitrust laws in the first place is to prevent monopolies like the one the proposed Time Warner-Comcast merger would create.
Having recently moved from a Time Warner service area to Comcast country, I have my own personal reasons for opposing the merger. Time Warner was so simple – no big black box, just one remote. Comcast is way too complicated with all its encryption and unscrambling, and I now need a separate remote to access Netflix. Do you think there’s no Netflix button on the Comcast remote because they want me to watch On Demand movies?
My biggest complaint, however, is that at my advanced age I will never be able to learn all of the channel designations. Why aren’t cable channels universal? And why doesn’t Comcast group all the news channels and all the sports channels together like Time Warner does? I’ve watched the Red Sox on NESN (Channel 27) for years. Now NESN is Channel 22 and NESN HD is Channel 522. That’s just not right.
Nor is this proposed merger.
Freelance journalist Edgar Allen Beem lives in Brunswick. The Universal Notebook is his personal, weekly look at the world around him.