Comcast is among the most disliked major companies in California. The cable television and Internet service provider is big and cumbersome and at times maddeningly inefficient. Now this utility behemoth seems on the verge of growing bigger by taking over Time Warner Cable Inc.
The $45 billion merger is subject to review by the Justice Department and the Federal Communications Commission. Because the two companies compete head-to-head in few locations, conventional wisdom is that antitrust regulators are unlikely to stop the marriage.
While there’s still time, officials who oversee the communications industry, including California’s Public Utilities Commission, need to give this deal their own thorough reviews.
Comcast rose to dominance as a cable television company. But Comcast’s cable business is declining, thanks to the changing viewing habits of “cord cutters” who get their video content a la carte over the Internet directly from Netflix, Amazon and others.
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One day, the major sports leagues will find it profitable to allow live, direct Internet access to their games. When that happens, the content side of cable television will have to please its customers in new ways or slip into obsolescence.
This is not true of Comcast’s Internet business. While there is hope that some sort of universal Wi-Fi could one day cut into the company’s dominance, for the foreseeable future that is not going to happen.
Comcast controls the pipes. It has some competition in that realm, from AT&T, Verizon and Google, among others, but it remains the dominant player. A merger with Time Warner would make Comcast even stronger, with the new entity controlling half of all broadband connections in the country and more than 80% in California.
Comcast executives say the FCC’s recent decision on Net Neutrality will prevent Comcast or any other Internet service provider from using market power to unfairly block content from reaching consumers. But until those rules are in effect and proven to work, regulators need to apply caution to this merger because it would give one company a powerful place atop the Internet pecking order.
Comcast has blocked customers from accessing HBO and Showtime on certain devices. Meanwhile, the fledgling Spanish-language network Estrella alleges that Comcast is trying to shove it off the air to protect Comcast’s own Telemundo. There should be protections against such practices.
An administrative law judge reviewing the merger for the CPUC recommends forcing Comcast to expand its low-cost Internet service for low-income Californians, and offer faster speeds. That’s a good start.
If a more powerful Comcast is able to use its market power to control content that flows over the Internet, rich and poor would suffer the consequences. Regulators need to make sure that doesn’t happen if this merger goes forward.