Why conservative senator is questioning Comcast-Time Warner merger
Comcast, the nation鈥檚 largest cable and Internet service provider, is entering the homestretch this week in its attempts to convince Congress, federal regulators, and a skeptical public that its proposed mega-merger with Time Warner Cable, the nation鈥檚 second largest provider, will be a boon for consumers.
If approved, the $45 billion deal, announced in February, would create a cable and Internet colossus that will provide cable service for nearly one out of three American consumers, while at the same time wiring in high-speed Internet service for almost 40 percent of the broadband market.
On Wednesday, Comcast executive vice president David Cohen testified before the Senate Judiciary Committee, arguing that the proposed merger would provide 鈥渕ore investment, faster speeds, better technology, more Americans connected.鈥� On Tuesday, Comcast defended the mega-merger with a 180-page 鈥淧ublic Interest Statement,鈥� filed with the Federal Communications Commission, which must approve the blockbuster deal.
鈥淭here鈥檚 been a lot of discussion as to whether big is bad, and sometimes when companies join together big can be dangerous,鈥� Mr. Cohen also said in a . 鈥淏ut in this particular space with this particular transaction, we think big is very good.鈥�
A host of consumer groups, however, think big is very bad when it comes to control of the nation鈥檚 communication鈥檚 pipes.
鈥淭he Comcast-Time Warner Cable merger would give Comcast unthinkable gatekeeper power over out commercial, social and civic lives,鈥� wrote a coalition of more than 50 media companies听听听 Tuesday. 鈥淓veryone from the biggest business to the smallest startup, from elected officials to everyday people, would have to cross through Comcast鈥檚 gates.
And both Comcast and Time Warner Cable have long been the butt of consumer service punch lines. Both companies rank at the , including the released last December. The top two cable and Internet service companies than the Long Island Power Authority, the New York utility caught unprepared after Sandy in 2012.
Cohen acknowledged this Wednesday, saying the company has received a 鈥渒ick in the butt鈥� from customer service critics. 鈥淲e are laser focused on trying to improve the customer experience,鈥� Cohen told Judiciary Committee members.
But cable service satisfaction aside, consumer groups and members of Congress are worried that the new cable giant, which will control their own significant entertainment and news offerings as well as the pipes that will distribute those of their competitors, will stifle their competition and continue to try to squash the concept known as 鈥渘et neutrality,鈥� which requires service providers to treat all content the same.
Federal courts have tossed out the FCC鈥檚 net neutrality rules after Comcast sued the FCC and won in 2010. Another court ruling against the FCC鈥檚 net neutrality rules this year has forced the federal regulatory agency to try to rework its rules. Comcast continues to oppose the rules, though it agreed to abide by them until 2018, a condition of its merger with NBC Universal.
Even conservatives on the committee expressed some skepticism at the proposed merger. In general, Republicans usually support the telecommunications industry鈥檚 complaints against the restrictions of net neutrality and oppose government regulation of the industry.
"Considering the significant share of the video and Internet market Comcast has, and considering the well-known political leanings of NBC, I鈥檝e heard concern that Comcast might have the incentive and the ability to discriminate against certain political content,鈥� said Sen. Mike Lee (R) of Utah, a tea party favorite and one of the Senate鈥檚 most conservative members.
A coalition of 13 conservative organizations, including TheTeaPary.net and Let Freedom Ring, also joined the chorus of concern, saying market forces are needed to develop innovation and push down prices.
Comcast rejects such concerns, saying that it does not compete directly with Time Warner Cable in any market, so consumers will see no effect. And Comcast aruges that Verizon and especially Google are rising as potential competitors, forcing the telecommunications giant 鈥渢o up our game,鈥� according to Cohen.
Still, the efficiencies gained by the merger may not end up saving consumers money, he told the Senate Judiciary Committee members. Noting that he was 鈥渂eing honest,鈥� he said he could not guarantee any price drops after the merger, though whatever 鈥渆conomic benefits are generated will ultimately inure to the benefit of consumers,鈥� who are 鈥渋n the driver鈥檚 seat鈥� with the options available.
Critics say a dangerous semi-monopoly is taking shape.
鈥淭he merger will only exacerbate conflicts between cable services and content providers, such as the television networks and cable channels such as HBO and Showtime, which means that we can expect to see more blackouts when these companies are unable to arrive at agreements,鈥� says Lance Strate, professor of communications and media studies at Fordham University in New York. 鈥淭he merger will provide Comcast/TWC with enormous power over content creators and distributors, and that will certainly add constraints on the kinds of content that will appear on cable.鈥�
鈥淐onsolidation rarely benefits consumers,鈥� he continues, 鈥渁nd the government should act in the public interest either by promoting competition or regulating telecommunications industries where competition is absent or limited.鈥�
