Comcast-Time Warner Cable: How a monopoly can get even worse for you
A remarkable amount of cynicism is being expressed in connection with Comcast’s $45-billion offer for Time Warner Cable, a deal that will cement Comcast’s position as the dominant cable operator in America.
The idea is that already the cable industry is a web of monopolies -- no neighborhood in the country has more than one cable operator to choose from. As distilled by Matt Yglesias on Slate, the merger “will in effect turn two medium-size regional monopolists into a big sprawling monopolist. But in terms of consumer-facing competition, you’re going from zero to two times zero.”
Just because that’s a cynical take doesn’t mean it’s untrue. Comcast CEO Brian Roberts tried to finesse the issue Thursday by arguing that the deal “does not reduce competition in any market or in any way,” thereby acknowledging the paramount flaw in the nationwide cable market and trying to depict it as a virtue.
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But the ramifications of the cable monopoly go beyond mere access to channels on your set-top box. As we observed back in August, the more damaging consequence of the cable monopoly is in broadband Internet access, where the power of the cable firms’ monopolies is magnified by the lack of practical alternatives to their Internet services.
Yes, you can buy DSL Internet connectivity from your local telephone company. In some places, you can buy fiber-optic connectivity, also from a phone company (Verizon or AT&T). But DSL service is typically much slower than cable service and is geographically constrained even within service districts. (The further you are from a DSL connection box, or “central office,” the crummier your signal.)
Verizon has ended its rollout of its FiOS fiber service; if your neighborhood doesn’t have it now, it’s not getting it. AT&T says it’s still rolling out its Uverse fiber service, but hardly at a light-speed pace.
The harvest of this domination of broadband connectivity by cable monopolies is easy to see: In general, the U.S. has the lowest connection speeds and the highest prices in the developed world. The New America Foundation serveyed the world in 2012 to determine what customers could get for the equivalent of $35 a month. In Hong Kong, they could download from the Internet at 500 megabits per second (a half a gigabit); in Tokyo 200 Mbps; in Seoul, Paris, Bucharest (Romania) and Berlin 100. In Los Angeles, 10. Los Angeles is a Time Warner Cable monopoly.
The constraint here isn’t technological, but commercial. Our fat and secure cable monopolies simply don’t feel competitive pressure to provide customers with the fastest speeds at reasonable, affordable rates. When they do get pressured, they respond.
For example, AT&T recently announced that it will be increasing speeds to 1 gigabit this year for customers in Austin, Texas. Why Austin? Because that’s one of the communities where Google is rolling out its own Google Fiber 1-gig service. That shows how competition can get lazy incumbents off their rumps. But Google isn’t intending to be a nationwide Internet provider -- its fiber service is rolling out only in Kansas City, Austin, and Provo, Utah, and may not reach beyond those communities.
The lesson is crystal clear, isn’t it? We need more competition, not less; and allowing Comcast and Time Warner Cable to merge means much, much less.
