The Comcast Deal Won't Make a Terrible Industry Any Worseby
There is some pleasure in reading telecom merger press releases—each one is a study in protesting too much. I count five mentions of the word “competitive” in Comcast’s announcement that it would merge with Time Warner Cable, four mentions of “consumer,” and eight of “innovate.” The announcement, like all such announcements, is a not very subtly coded plea to the Justice Department and the Federal Communications Commission. The merger will not harm competition, Comcast is saying. It will not harm consumers nor halt innovation.
Comcast is right. This deal, if approved, will not harm competition, consumers, and innovation. This is also a moot point. The deal will not help on those fronts, either, and it will do nothing to change an already regrettable situation: There is nowhere near enough competition among wireline Internet service providers.
By “wireline,” think of the actual wires that are attached to your house. Because of the way telecom companies are regulated in America, you can buy service from only as many companies as there are wires running up your driveway. Generally, the Justice Department considers a market competitive when it has four or more providers. Almost no American household has more than three providers of true high-speed wireline access, according to a report from the FCC (PDF), and 37 percent have only two: the local cable company and the local phone company. Another 28 percent has only one choice: the local cable company.
Comcast protests in its press release that it won’t have more than 30 percent of the national market. That is a true and irrelevant number. Comcast, like every wireline provider, is a kind of holding company, selling broadband in lots of uncompetitive local markets. Since you can’t move your house, the local market is the only one that matters. And none of these local markets changes with the merger.
Your local market already stinks. Four of the top 10 most disliked companies in America are cable providers, among them Comcast and Time Warner Cable. This isn’t an accident. They don’t have much incentive to work too hard to make you like them. So, sure: merge. It won’t make things any worse.