Comcast's Time Warner Cable purchase is a merger of monopolies
Once the news that Comcast plans to buy Time Warner Cable broke, the freakouts began. It’s yet another story of anti-consumer corporate consolidation that decreases competition, right?
There are reasons to not like this deal, and plenty of reasons to be wary, but let’s not ignore the fact that when it comes to true high-speed Internet access, in most areas these companies have no competition. This is a merger of various regional monopolies, not a consolidation that creates a monopoly. This isn’t a new dark cloud hanging over us—it’s been pouring down rain for a while, and now the wind’s picking up.
In most parts of the United States, there is only one real option for high-speed Internet access: The local cable company. DSL is slow, satellite has high latency, and fiber is rare. What’s worse, cable companies tend to use their monopoly over fast Internet access to crowd out areas where they have stronger competition. Bundling offers make it cheaper to buy television, phone, and Internet from a single company (Comcast’s vaunted “Triple Play” package) than, say, landline service from AT&T and television service from DirecTV.
I saw this first hand a few years ago. My DSL-based Internet service was laughably slow, slower than the 3G service on my iPhone. So I switched to Comcast as my home Internet provider. The service has been good and truly fast. But over the years, Comcast also sucked in my landline—yes, I’ve still got one, mostly because I still have a child without a cellphone. Last year, I finally dumped DirecTV and switched back to Comcast, partially because I wanted to buy a TiVo Roamio and partly because the switch would save me something like $20 per month. I’ve been Triple Played.
Cable companies can also use their Internet monopoly as leverage to skew competition for Internet services—manipulating network traffic so that Netflix doesn’t work well, for example, or exempting some services from data caps. These are tricks that allow cable companies to hobble the offerings from competitors and stifle innovation.
Comcast merging with Time Warner Cable doesn’t change any of that. These monopolies are still monopolies. At least in the wireless world there exists the possibility that a company like T-Mobile will create true competition and make things better for consumers; in the world of wired broadband there is very little possibility of that today, and this merger won’t really change that fact.
What really needs to happen is this: The FCC needs to declare broadband Internet service subject to common carrier rules, which a court recently ruled is within its purview. If this happens, then a 800-pound gorilla like Comcast couldn’t monkey with our connectivity in order to manipulate competition on the Internet. If this merger spurs the FCC to make that declaration, I’m all for it. If the FCC takes a pass, then yes, we all lose—and a bad situation just gets worse.
If Comcast/TWC merger goes through, fold in what's left and regulate it like we used to w Ma Bell. And wait for disruption to kill it.— Steven Levy (@StevenLevy) February 13, 2014
Some would say Internet access is a human right; it’s certainly a vital part of 21st-century society. As Steven Levy astutely tweeted, that portion of Comcast’s business should be regulated like the old AT&T, so Comcast can’t use its monopoly to distort other emerging markets. The future of not just Netflix, but the next Netflix, and the next Spotify, and some new Internet-based service in a category we haven’t even conceived of, depends on it.
Photo at the top of the page by William Warby.