OP-ED: California and the Proposed Comcast–Time Warner Cable Merger

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This commentary was submitted by Michael McCauley, Consumers Union; Bruce Mirken & Paul Goodman, Greenlining Institute; Tracy Rosenberg, Media Alliance; Mindy Spatt, TURN; and, Sarah Swanbeck, Common Cause.

 

Federal regulators are currently reviewing the proposed merger between Comcast and Time Warner Cable, which would combine the two largest providers of both cable and Internet service into one giant corporation. At the same time, the California Public Utilities Commission, which oversees telephone and broadband Internet service in the state, is evaluating the merger to determine whether it’s in the public interest.

If the merger is allowed to go through, Californians can expect higher prices, fewer choices, and even worse customer service. We’re writing to urge the Post to editorialize against the merger and to call on California PUC to use its authority to block this lousy deal in our state.If California acts to stop the merger, it would likely undermine the merger nationally.

Consumers are already frustrated with their lack of options. According to FCC Chairman Tom Wheeler, three quarters of Americans have no competitive choice for truly high speed broadband. Most have just one provider to choose from and it’s usually their local cable company. Cable companies provide the overwhelming percentage of high speed Internet connections in the country and Comcast is already the dominant player in the market.

If the merger is approved, Comcast would control most of California and over half of high-speed broadband customers in the country. One of the key areas where Comcast would extend its dominance is Southern California, including the Los Angeles market. In California it would cement the already existing duopoly of an incumbent telephone and a cable provider, leaving customers with even fewer options and hamstringing competition.

The merger would combine two companies that have consistently scored low in survey after survey on customer satisfaction. Both Comcast and Time Warner Cable were rated poorly by consumers in the latest Consumer Reports survey for value and earned low marks for customer support. Long waits with customer service, technicians who fail to show up as scheduled, and billing mistakes are some of the more common complaints. A larger Comcast with increased market power will have even less incentive to address these issues.

With meager competition come steep prices. Comcast has been among the worst offenders when it comes to price hikes, raising rates faster than other providers and significantly higher than the rate of inflation. Consumers can expect more of the same if the merger goes through. A Comcast executive has even acknowledged that the company can’t promise that customer bills “are going to go down or even that they’re going to increase less rapidly” as a result of the merger.

By controlling so much of the broadband market, Comcast would become, in effect, a national gatekeeper of the Internet with tremendous power to decide who could pass through the gate, and on what terms. Online video programmers would be dependent on Comcast’s “last mile” network for access to millions of consumers.

Comcast already used its gatekeeping power last year to raise prices on Netflix as a condition for ensuring faster and smoother access to broadband subscribers. The merger would give Comcast even more leverage to do this and make it difficult for smaller online video distributors to enter the market or compete. Consumers stand to lose since those higher costs will likely be passed on to them or they’ll have to put up with slower speeds from online content providers who can’t pay higher fees for faster speeds.

No one corporation should be allowed to dominate the marketplace and have that much control over our choices. Comcast could dictate what programs get carried not only in its markets but across the country. Since video programmers would have to distribute their programs through a bigger and more powerful Comcast, the merged company could hinder programming diversity by deciding what to carry, where, and when.

The companies claim the merger would not harm competition because they serve subscribers in different geographic areas. But that narrow view of how competition works does not make sense. By that logic, Comcast should be free to acquire every cable and Internet company throughout the country in every market it does not already serve. That’s why it’s so critical for California PUC to consider the national picture as it reviews the merger.

The proposed merger would cause disproportionate harm to low-income communities and communities of color, both of which already have lower broadband adoption rates. In addition, the proposed transaction would give Comcast the power to control which television channels are available to watch, potentially eliminating non-English content and diverse viewpoints from communities of color.

This concern is heightened by Comcast’s generally weak track record with communities of color and lack of minority contracting. While California telecommunications providers reported spending over $2.6 billion on supplier diversity in 2013, Comcast’s share of that amount was only $24 million, by far the lowest amount of any provider.

If this deal goes through, Californians can expect to be hit with more price hikes and worse service as Comcast gains even more control over what we see online and on TV. No package of concessions or conditions is capable of addressing the fundamental flaws in this ill-conceived mega-merger. The only effective response to the merger application, the only response that will serve the public interest, is for the California PUC to deny it.

For more information, please contact Michael McCauley (Consumers Union) at (415) 431-6747 and see the filings opposing the merger submitted to the California PUC by the Greenlining Institute and Consumers Union, TURN, and Media Alliance.

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