The Cord Strikes Back

The real reasons to be concerned about a growing Comcast.

Like plenty of other New Yorkers, a chill ran up my spine when I read the headline that Comcast had reached a deal to purchase TimeWarner Cable (TWC) for $45 billion. Sure, TimeWarner sucks and any proper New Yorker enjoys griping about it, pining for Verizon FiOS to expand. For the most part, however, TimeWarner is serviceable if not great. Importantly, in my own experience, I’ve been able to buy Internet-only plans for pretty cheap prices. On the other hand, I have never heard anything but horror stories about Comcast.

It’s easy to overreact to the Comcast story, though. We spend a lot of time fretting about the monopoly power of a company like Comcast, but cable companies like Comcast and TWC are already monopolies, albeit regional ones. Most places have just one cable option: I had TWC when I live in Albany and now in NYC; my parents have the option of Cablevision’s Optimum in Rockland County. The only competition is satellite, and telecom [for internet, and, if you’re lucky, television]. So, really, Comcast won’t have much more power than they already did, just a larger footprint.

There are 2 issues, however, that should be a real concern. Both stem from Comcast’s differing incentives as both a Cable company and an ISP. ISPs, ideally, compete by offering us with the fastest, most reliable service at the best price. Cable companies, however, compete by bundling their services into ever-larger, and therefore apparently compelling, packages: more channels, premium channels, sports, mobile apps, on demand, etc. These two goals are in conflict: internet service that is too good and/or cheap provide an opening for customers to cut the cord and move to IP-based services like Netflix and iTunes. It’s no secret that in the battle between these two incentives, cable is the clear winner for team Comcast.

Some of suggested that the FCC block the merger, but that would just leave us in the same crappy place we started. Instead, I would propose that the FCC put some restrictions in place in order to grant Comcast the stamp of approval. First, Comcast should be legally bound to net neutrality. If Comcast is allowed to discriminate amongst traffic that runs over it network, it can effectively quash web-based competitors like Netflix in favor of its own services. This would be truly anti-competitive. Secondly—and this is a bigger ask—Comcast should be required to market and offer a reasonably-priced internet-only package. Comcast tends to set prices to make it a no-brainer to get cable if you’re going to pay them anything. This tilts the playing field in Comcast’s favor.

After the merger, Comcast will dwarf all other cable services, they will effectively be a nation-wide cable carrier—a utility, in other words. They should expect to treated like one.