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Last week, the Senate Judiciary Committee held the first hearing to examine the merger of the nation’s top two cable operators, Comcast and Time Warner Cable. But the merger no longer has the air of inevitability it once did. What happened?
People who are studying this merger do not like what they see for many reasons. Here are three: less innovation, greater market power over high-speed broadband and higher prices and poorer service for consumers. Companies confronted with Comcast’s bargaining power, like Netflix, are speaking out. And, unusually for an antitrust case, the public is taking notice: 52 percent of Americans in a recent Reuters poll believed that this deal would reduce competition and be bad for consumers.
You can predict what Comcast and its highly paid lobbyists will say: “We don’t compete with TWC, so the merger does not lessen competition. We have our geographic markets, they have their markets.” Under this logic, Comcast can acquire not only TWC, but extend its footprint across America by acquiring the remaining cable companies. There is no limiting principle.
Comcast and TWC already have significant power over video and broadband services in numerous local geographic markets. In acquiring TWC, the second-largest cable provider of video, high-speed data and voice services in the United States, Comcast would extend its long reach to five geographic areas: New York State, the Carolinas, the Midwest, Southern California and Texas. A combined Comcast-TWC would control as much as half of the country’s high-speed broadband access — and in many areas would be the only Internet service provider — at a time when a record number of Americans are using broadband to access information, news and entertainment.
Comcast’s David Cohen says that the sky will not fall because of this merger. But the legal standard isn’t whether doomsday is imminent or whether monopoly is good or bad. Rather the antitrust laws employ an “incipiency test.” That is, certainty of anticompetitive effects is seldom possible and not required for a merger to be illegal. Congress sought to prevent situations where “several large enterprises [were] extending their power by successive small acquisitions.” Here, Comcast is extending its power through a major acquisition — one that expands its reach to most of the U.S. population.
There is broad consensus that our antitrust policy should protect economic freedom and opportunity by promoting free and fair competition in the marketplace. This is especially important for the Internet, whose defining feature is its openness. By taking over its top competitor, Comcast becomes the undisputed gatekeeper for all things broadband in America: content, interconnections, speed and access.