Ed's Blog

We oppose merger between giants Comcast & Time Warner Cable

By Ed Mierzwinski
Consumer Program Director

Along with a number of state PIRGs, we've joined the Consumer Federation of America in a petition (link to html release, link to large pdf petition) urging the Federal Communications Commission to deny the merger of cable/Internet giants Comcast & Time Warner Cable. The petition argues that the FCC must deny the merger, which would perpetuate unrestrained cable price increases, allow terrible service to deteriorate even further and stifle innovation.

The merger will be reviewed by the FCC on the basis of its effects on competition and consumer choice. Factors to be considered include  the ability of the new firm to block market entry by new firms and its ability to control prices. Markets for telephone service, broadband Internet service and television service have rapidly converged in the digital age. The petition to deny argues that cable (not wireless or DSL) will remain the dominant market channel for providing these bundled services and that this merger, if allowed, will multiply Comcast's cable market control into increased dominance over the entire digital information and entertainment economy.  From the news release:

“The acquisition of Time Warner would increase Comcast’s market power by at least 50% and create a Goliath that would tower over the industry.  Comcast would be:

  • 1.5 times as large as the next largest multichannel video program distributor (MVPD),
  • 2 times as large as the next largest Internet access service provider,
  • 3 times as large as the next largest service provider with the capacity to deliver an integrated bundle of video and broadband,
  • the dominant cable and broadband operator in 24 of the nation’s largest 25 video markets, including the addition of the most important media markets, New York and Los Angeles. “Sometimes size does matter, and in these markets it is particularly important,” said petition author Dr. Mark Cooper of CFA."

The petition points out that since Comcast was allowed to merge with NBCU, its promised synergies and consumer benefits have not occurred. Prices have gone up despite the massive scale of the firm, while service quality has declined and marketplace abuses have been common.

As the petition explains, allowing Comcast to merge with TWC will only increase Comcast's ability to abuse its market power, with consumers continuing to be the victims of its marketplace abuses. From the petition:

Comcast has shown it is willing to press its advantage to the limits of the law and beyond in disputes with video programmers in both the traditional and online markets.

  • The petition to deny points out that while Netflix, a very large firm, was eventually able to negotiate higher payments to resolve its disputes with Comcast over discrimination and degradation of service quality, smaller firms would have no chance. And as the petition argues, if there were competition in the video distribution market, Comcast would instead pay Netflix to make its content available to attract customers to its distribution network.
  • It points out that Comcast fought with Bloomberg News, delaying giving it a fair channel location.
  • Comcast has denied carriage to small competitor channels, such as the Tennis and Wealth Channels.
  • Further, Comcast has done as little as possible to deliver on its public interest promises. For example, participation in Comcast’s broadband lifeline program has been meager, one-quarter of what well-run assistance programs in the communications sector achieve.

And, as The Consumerist points out, Comcast has routinely held sports consumers hostage during fights (with satellite networks and others) over pricing and rights to view games of teams in its Regional Sports Networks. Its proposed merger partner TWC is not averse to this sort of behavior either, as a separate petition to deny from the Sports Fans Coalition alleges.

Another coalition that filed a separate petition to deny included both Consumers Union and Free Press as well as 63 other public interest organizations. Also, the American Antitrust Institute and Public Knowledge are among others filing petitions to deny.

Free Press maintains a page of 4 infographics that explain the impact of this merger in pictures and numbers (scroll down for infographics).

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