How the Comcast, Time Warner Merger Will Endanger the Internet
Combining the two largest U.S. cable companies will give Comcast too much power over what you watch on TV and download on the Web, according to CIO.com blogger Bill Snyder, and consumers should do everything they can to stop the merger.
It’s bad enough that most Americans have little choice when it comes to picking a cable provider. But by swallowing Time Warner Cable, the nation’s second largest cable company, number one Comcast will do more than gain an additional 8 million or so customers; it will come close to veto power over what you watch on your TV. The merger could also result in severe restrictions on what content you can download to your PC or your tablet.
This $45.2 billion mega merger needs to be smothered in the cradle. Here’s why.
Comcast is already the country’s largest cable provider, ISP and home-phone provider. It also controls a movie studio, a broadcast network and many popular cable channels. It has a well-deserved reputation for terrible customer service and monthly charges that frequently increase.
The giant company’s argument that it barely overlaps with Time Warner in most parts of the country is simply beside the point. Cable has become the most common way that people in the United States access broadband Internet. In most cities, the choice of a cable provider is hardly a choice at all since there are so few companies offering the service.
By eliminating a major competitor, Comcast will have much more negotiating power with content providers. And by content providers I mean companies that produce television programming, as well as companies that produce the Internet content you view on your computer or mobile device.
Cable channels like AMC make money by charging cable companies for its programming. When a channel and the cable provider can’t agree on a price, programming gets dropped, which is exactly what happened a few years ago when Dish Network dropped AMC, infuriating fans of Mad Men.
If the merger goes through, Comcast will be able to set rates that smaller production companies will struggle to live with. And once Time Warner is gone, those content makers will have no large company to carry their programs, a loss for consumers as well as the channels.
The Internet issue is more complicated, and in some ways, more important. Until this year, the FCC was able to enforce a rule called Net Neutrality. Simply put: Bits are bits, and no matter who controls the pipes used to transport those bits, all must be treated equally. In practice, that means that a carrier cannot discriminate against content moving across its network, even if that content is provided by a competitor.
So Comcast, for example, wasn’t allowed to slow down content delivered by Netflix or Skype while giving priority to its own content or that of its business partners. But that rule was struck down in January, and given that Comcast owns content produced by MSNBC and other providers, there’s a great temptation to stack the deck against content produced by competitors.
And if the acquisition of Time Warner is approved by federal regulators, Comcast will have that much more power to decide what content you can view at home. It’s likely that the merger will be scrutinized by the FTC and possibly the FCC. Both agencies generally take public comment once they decide to review a merger. If you care about an open Internet, reach out and let them know what you think.
San Francisco journalist Bill Snyder writes frequently about business and technology. His work appears regularly in CIO.com and the publications of Stanford's Graduate School of Business and the Haas School of Business at the University of California at Berkeley. He welcomes your comments and suggestions.