Editorial: Cable merger doesn’t pass test
Once upon a time, there was choice when it came to cable television providers. Or at least that was the promise.
And with choice comes competition, which is supposed to produce a winner for the consumer.
But a not-so-funny thing happened on the way to 2014. The choices that someone might have between companies when it came to providing your home or business with cable television actually are non-existent pretty much everywhere, leaving just a couple of giants to carve up the nation.
And what happens when these cable giants decide to get together?
That’s a question the country is likely to find out if the bid by Comcast Corp. to acquire Time Warner Cable for $45 billion is allowed to happen. The two companies now serve about 33 million subscribers, translating to about a third of the entire U.S. market. Such a merger would eliminate the possibility of any kind of competition between the two companies, although truthfully they seem to have an unspoken agreement about not treading on each other’s turf ... which seems somehow illegal in itself.
Thus the consumer is left with few or no choices when it comes to getting cable services. But as the public is well aware, it’s no longer about just television services. These telecommunication companies are also providing Internet, telephone, even home security.
This merger, among other things, would then solidify Comcast’s position as the largest Internet provider in the country. And it also places Comcast in a better position to meet other competitive challenges as well as expanding its brand.
“Comcast has ambitions that reach beyond its footprint, likely beyond the Time Warner Cable footprint as well,” James McQuivey, a digital media analyst with Forrester Research, told the Los Angeles Times. “Meaning that Comcast will eventually invest in its StreamPix streaming service to be a direct Netflix competitor.”
The question is who is looking out for the consumer. In the case of this proposed merger, it’s the Federal Communications Commission and the Justice Department that are supposed to determine its legality via anti-trust legislation, including what this will do to the marketplace. The idea here is to see that such deals create more competition, not less.
That’s something regulators haven’t been paying attention to for some time when it comes to cable.