Years ago, Comcast and Time Warner Cable and their brethren carried out a series of swaps and deals aimed at dividing up the country’s cable subscribers.
Time Warner Cable got Los Angeles; Comcast took Houston. They called this exercise the “Summer of Love.” Today, after massive consolidation and further swaps among industry members — some blessed by the federal government — the cable industry is reaping the rewards of “whole of market” control: for many Americans, their only choice for wired high-speed Internet access at speeds of 25 Mbps or more is their local cable monopoly. With Comcast’s proposed merger with Time Warner Cable—now under government scrutiny—we’ll reach an unwelcome tipping point. If the FCC and Congress don’t stop the merger, the combined company will, on its own, control 50 percent of the Internet access market for speeds over 25 Mbps.
Comcast has been hard at work buying advertising and deploying lobbying firms — three dozen of them, at last count — in an effort to give the merger an air of inevitability. But on Wednesday, that air got a little choppier: a new group, aptly named the “Stop Mega-Comcast Coalition” and made up of a diverse array of media companies and public interest groups (everyone from Glenn Beck’s Blaze TV to the Writer’s Guild West) introduced itself to the world and announced that it was out to block the deal.
We’ve been here before. Four years ago, the Comcast-NBCU merger sailed through; opposition to the deal was disorganized and disheveled, and the agencies involved (the Department of Justice and the FCC) convinced themselves that the lack of consumer benefits accompanying the merger could be remedied by special conditions imposed on Comcast.
Today things are different. For starters, the government now recognizes that Comcast is really an infrastructure company selling a service — high-speed Internet access — that Americans feel is a utility. FCC Chairman Tom Wheeler in a recent speech noted pointedly that cable dominates the marketplace for Internet access services over 25 Mbps. And Comcast’s ability to turn all the levers over which it has power, including all its exclusive connections to millions of American eyeballs, means that it can shape the destinies of innumerable varieties of American companies.
Everyone from video equipment manufacturers to freelance Hollywood writers is worried that if they aren’t nice to Comcast they won’t survive.
Now that the government—particularly the Department of Justice—has been through the learning process of the NBCU merger, it understands that the hidden grinding power of Comcast is deeply related to its size. A larger Comcast would have even lower costs-per-subscriber for everything it does than it enjoys now, making entry by any competitor into Comcast country increasingly unlikely. Buying in bulk — for programming and consumer electronics, among other things — it will be able to force all suppliers to meet its demands. And a larger Comcast will have even more power to squeeze all networks that want to reach Comcast subscribers but don’t want to pay tribute to Comcast, as I described in “The Cliff and the Slope.” (This practice almost shut down innocent businesses who just happened to use transit networks also utilized by Netflix.)
And now the FCC understands, perhaps even better than it did when it considered the Comcast/NBCU merger, that Comcast has to show genuine consumer benefits in order to get this merger through. Comcast has pushed forward hundreds of community organizations and lawmakers who have testified in support of the merger, but the benefits they tout — speedier innovation, better programming — ring hollow in comparison to the problems.
When one company can decide at its leisure — under no pressure from either competition or oversight — how, when, and why particular information reaches more than half of American households, at what price, we’ve got a problem.
Bigness, by itself, isn’t unlawful. We celebrate largeness as a country. We live large; we’re numb to bigness. But bigness in a world of essential communications and connections carries with it — if unconstrained — grave risks to speech, civic life and democracy. Allowing one company to have control over every bit of information and entertainment flowing to so many American homes should be unthinkable.
There’s nothing evil about Comcast. It just seeks to lower its unit costs, and it’s well-managed, enough to do what AOL/Time Warner couldn’t. But even though bigness isn’t bad and Comcast isn’t evil, in the absence of any visible benefit to American consumers, it’s hard to see why the FCC would let this latest merger proceed. Gene Kimmelman, president of Public Knowledge, a key member of the Stop Mega-Comcast Coalition, thinks the time is right and the feds will be receptive to the group’s message. He’s not alone—there is a definite vibe among Comcast watchers that this time the powerhouse might not get its way.
So let’s assume the feds do the right thing and block this mega merger. The bigger question is: what next.
Say Comcast stays its current size. We still have painful Internet access problems in America. We still have an access industry that is perfectly comfortable tacitly coordinating its plans and dividing markets — we’re still living through the Summer of Love. Maybe someday we’ll develop the industrial policy that will get the nation the upgrade to fiber and the ubiquitous, cheap connectivity we need to compete on the global stage.
Until then, it’s good to hear the other side of the Comcast discussion speaking with one voice. If the government doesn’t listen, they’ll be setting a new standard for tone-deafness.