Making Sure a Bigger Comcast Is Better
No doubt about it, Comcast Corp.'s $45 billion purchase of Time Warner Cable Inc. would create a media and entertainment colossus, with some 30 million subscribers and a dominant position in the U.S. cable television market. Still, that's no reason for regulators to intervene.
The Federal Communications Commission and the Justice Department should forget the fading cable-TV business and focus instead on the deal's effect on high-speed Internet services and content. That's where all the entrepreneurial action is -- and where the U.S.'s economic future rests.
As Comcast and Time Warner have been quick to point out, cable companies don't compete against each other, so merging the two biggest wouldn't necessarily reduce competition. For cable providers, the competitive threat is more from satellite TV and telecommunications giants Verizon Communications Inc. and AT&T Inc. And the biggest threat of all comes from the likes of Netflix Inc., Amazon.com Inc., Aereo Inc. and other subscription streaming services that deliver movies, sports and TV shows to laptops and mobile devices -- whenever and wherever viewers find it convenient to watch.
Streaming services like these need content, of course. But they also depend on a network -- in two ways: First, they need an open Internet that doesn't discriminate against different types of content; second, they need broadband providers devoted to improving their technology. Regulators should ensure that the Comcast-Time Warner merger won't threaten either one.
Comcast already is the U.S.'s largest Internet service provider. This merger would only cement that position. Comcast's bundle of Internet, cable and telephone services is a formidable hurdle for any startup, even one offering superior Web speeds or lower prices (or both).
Comcast can be expected, of course, to use its monopoly position to "encourage" -- that's one word for it -- customers to use more of its services. Already, it charges some subscribers a surcharge for exceeding a monthly cap on data downloads, but not for downloads through Comcast's own Xfinity online video service.
It's an open question whether this behavior violates the open-Internet principle that Comcast promised to follow in order to get its acquisition of TV network/movie studio NBC Universal approved in 2011. The FCC has yet to rule on the matter, but at the very least, Comcast deserves a close interrogation on these and related matters.
There is also the question of vertical integration. As a nationwide cable conglomerate and a major content creator, Comcast has leverage in talks with programmers and negotiations with advertisers. Its power could conceivably result in lower prices for consumers, but regulators should take care that Comcast not use its position to restrict consumer choice.
To win approval for the NBC Universal deal, Comcast committed to following so-called net-neutrality standards through 2017. Regulators should extend that commitment for several more years to give Web-based rivals time to build content and improve distribution technologies. It would also give Comcast time to prove it can compete -- not as a dying cable company but as a state-of-the-art high-speed broadband service.
--Editors: Paula Dwyer, Michael Newman.
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