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Home Publications Blogs Beat the Press Comcast-Time Warner Merger Could Reduce Competition

Comcast-Time Warner Merger Could Reduce Competition

Friday, 14 February 2014 08:51

Timothy Lee has a good piece explaining to those of us who already thought competition was dead in the cable industry that yes, it could get worse. The point is that cable is also a buyer, not just a seller. If Comcast and Time-Warner are allowed to merge they will have enormous market power as a buyer of both content and new technologies. This means that even if their merger does not directly affect the market for consumers (they mostly don't overlap in service areas) it will still mean significantly less competition and presumably innovation in the industry.

Comments (3)Add Comment
It's Time for World War III: Fix the Internet
written by Last Mover, February 14, 2014 11:02

As Susan Crawford, author of Captive Audience said recently on NPR's Fresh Air hosted by Terry Gross, when visitors from other developed countries witness the state of broadband development in America, they feel as if they were in a remote backward rural area somewhere.

Crawford noted that Michael Powell of the cable association and formerly of the FCC, threatened the equivalent of World War III if the FCC attempted to enforce net neutrality on the internet, after relinquishing prior common carrier status of the internet by disqualifying it as a "communication service".

Brian Roberts of Comcast is shamelessly pitching the merger as "pro-competitive" with cheap carny talk of more-more-more made available, as if the merger was about more brands of cereal made available on the cereal aisle by the same producers.

Indeed. More of the terrible customer service both companies are famous for. More of the intentional oversold, underbuilt shortages in internet capacity and access; more forced bundling, lock-ins and extortion prices; more slowed speeds, usage caps, blocking and captured content; more call center and in-person runarounds and now; even higher prices via fast lane pricing for high-traffic websites per recent court order.

This merger is not just an obscene expansion of already goliath size private market power. The goliath is becoming the government itself, as it would if it took over the interstate highway system and converted it into private toll roads designed to extract maximum revenue-profit combined with reduced service in classic monopoly fashion. Where are the conservatives ranting about rent seeking by way of government monopoly power?

In fact as the monopoly and political power of the mega-goliaths grew out of control, they actually did storm into local municipalities with teams of attorneys and intimidated in neo-fascist style, with legislation and other means to prevent construction of broadband service by municipalities on grounds that government was unfair competition to the goliaths, who then proceeded to confiscate property rights to build, then reduce (planned) capacity and access, and more than tripled end-use prices.

Broadband infrastructure has come to undergird anything of economic importance in America. It's on par with electricity, water, transportation, health care and security in general. As Crawford emphasized, it's absolutely essential to economic growth per business start-ups who cannot get past ridiculous slow speeds.

Yet the economic predators who choked the life out of internet service in America are allowed to sit back smugly and announce what will be provided when, where, how and to whom at what price, capacity and speed.

Damn the consumer. Damn free markets. Damn competition. Damn free choice. Damn the right to vote and pay for highly efficient infrastructure. Damn economic efficiency of regulated natural and network monopolies. We are the goliaths of internet service. Take it or leave it.

Well, to Michael Powell, Brian Roberts and the rest, about that WWIII thing ... As George W Bush would say, it's time to ... bring it on, and put America in first place for broadband service where it should have been decades ago.

Then you and the other predators who have been preaching free market competition to everyone beside yourselves, can actually experience it firsthand, like the middle class who came before you and whom you now shamelessly mock as victims of market power rather than respect as sovereign consumers in working free markets.
our new pledge
written by Squeezed Turnip, February 14, 2014 12:37
I pledge allegiance to the flag
of the United Cable Corporations of America
and to the oligarchy for which they stand,
one monopoly, under Mammon,
with reality tv and news-as-dictated for all.
Broadband internet is becoming a utility and should be regulated as such
written by Peter T, February 14, 2014 4:42
I see two points regulators should be most concerned about:

1. Internet broadband is becoming or has already become a necessity for life: informations, job search, keeping in contact, etc. is increasingly web-based. We don't let companies that provide important goods like electricity and gas for heating set their prices without control, and neither should we let companies that prvovide often the single fast web-access in an area set their prices and conditions as they want.

2. Political and economic broadcasting should be especially protected from discrimination by the cable giant. Let the folks receive Fox News and MSNBC and other channels, maybe by including them into a political package that is included in the base package and cannot be charged for extra.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.