Comcast recently shocked Wall Street when the company announced its plans to buy Time Warner Cable (TWC) for $45.2 billion in stock, a deal that could prove disastrous for consumers as well as for smaller companies. The merger would combine the two largest U.S. cable companies and would allow Comcast about 30 percent of the TV market subscribers and 38 percent of high-speed Internet customers.
While one would expect opposition to the merger from Comcast’s competitors and from television networks, the industry has been largely quiet on the matter, primarily because they don’t perceive the merger as a threat.
CBS and TWC were involved in a messy “war” over content prices just last year–a fight that cost TWC 300,000 subscribers but had almost no impact on the television network. CBS, one of the five major English-language networks in the U.S., already reaches over 97 percent of the households in the country.
Similarly, companies like AT&T and Verizon have little to complain about regarding the merger. If the Comcast-TWC merger were to go through, they would be able to makes similar requests of deregulation or expansion from the Federal Communications Commission (FCC).
So, fighting this merger has been left to consumers, smaller cable companies, and satellite TV providers. And, that’s why it’s all the more important.
Comcast already ranks among the 10 least reputable companies in the U.S., according to Harris Interactive annual “Reputation Quotient” survey. It also has the fourth-worst rating in the country according to the American Consumer Satisfaction Index. The company provides sub-par Internet services for high prices. The United States as a whole suffers from slower Internet speeds than most developed countries across the globe, primarily because a small group of corrupt, large, and profitable companies such as Comcast dominate the broadband market.
A merger between Comcast and TWC would give the company even more power over the broadband market, which could not only lead to increased prices, but also poorer service for certain websites, such as Netflix.
In addition, Comcast is unique in that it is not only a broadband and cable company, but since its 2011 merger with NBC Universal, it is also a content creator. Comcast also owns most of the regional sports networks in the areas it controls. Not only does Comcast have control over what media is pushed to the public, with access to a large number of subscribers, but it can also control whom the media reaches.
Furthermore, as the FCC’s net neutrality rules were struck down by a federal appeals court last month, broadband companies can now block or prioritize Web traffic. This would allow companies like Comcast to charge Web companies such as Netflix and Hulu for better Internet service, and this cost is likely to show up on consumer bills. And while during negotiations for the NBC merger, Comcast agreed to abide by the net neutrality rules until January 2018, there is little to control Comcast and other companies’ ability to discriminate between web companies past that deadline.
This is especially important as the number of subscribers for cable companies continues to dwindle. Several people are beginning to favor satellite TV or, even more so, options like Netflix or Hulu Plus. And according to TheWrap, Comcast, “could favor its [own] channels and services such as Steampix…over the high capacity services of others.”
FCC has yet to approve the merger, and former FCC commissioner Mike Copps has publicly said, “This is so over the top that it ought to be dead on arrival at the FCC.” However, Comcast’s profitable relationship with several officials in Washington could certainly help the company with the merger. Comcast has reportedly spent $18.8 million for lobbying purposes in 2013. There is also the possibility that the company might agree to extend the deadline for following net neutrality rules in hopes of getting the merger with TWC approved.
A merger between Comcast and TWC will give Comcast an unfair leverage over content providers who need broadband access to push media to subscribers. Open Internet Advocates and groups that fought against legislation such as SOPA and PIPA continue to fervently oppose the merger.