Verizon, Comcast a Study in Contrasts This Week

By Doug Mohney February 13, 2014

Comcast, which apparently has not received the memo that there is such a thing as too big, has announced it wants to acquire Time Warner Cable for $45 billion.  Meanwhile, Verizon announced a more competitive cellular plan. What is wrong with this picture?  What is right?

If Comcast's deal goes through, "the combined group will be the country's dominant provider of television channels and internet connections, reaching roughly one in three American homes," according to CNNMoney. When the smoke clears, Comcast will have about 30 million subscribers.

All the usual (bought and paid for) analysts are chiming in that this is a deal that Comcast allegedly needs to compete with satellite companies, wireless providers and new streaming services like Netflix. Exactly how you hand Comcast dominance of 30 million U.S. TV and Internet connections -- 30 percent of an estimated 100 million U.S households -- and call it necessary for the company to "compete" with Netflix and cellular is beyond me. You can't say that satellite has really been a big play, either.

The Federal Communications Commission (FCC) and others were discomforted a few years ago when Comcast swallowed up NBCUniversal for around $30 billion in 2011.  Since then, AT&T's attempt to buy T-Mobile USA was kicked to the curb and Softbank's recent attempt to stir up support for merging its Sprint property with T-Mobile have been kicked to the curb.

Currently, the spin on the Comcast-Time Warner deal is that the two companies don't directly compete for market share. There's no overlapping  ZIP code and nowhere will a consumer lose a competitive choice, sayth Comcast.  Supposedly cable and fiber optic and Netflix are all grinding down Comcast's video subscribers, so it is necessary to concentrate subscribers into one company for better results.

Some are hoping that Comcast will agree to a bunch of strings, like continued "net neutrality" provisions and affordable broadband Internet service to the underserved, and things magically will work themselves out for the good of the consumer.

My take on this is the only winners out of a merger might be long-suffering Time Warner Cable customers who reportedly have had poor customer service.   Also lost in the chatter about "competition" is the lack of motivation AT&T and Verizon have shown in deploying higher speed services. Google shows up with fiber and suddenly AT&T finds a way to bring gigabit service into Austin, Texas -- that didn't happen with the cable provider.

I bring Verizon into the picture because it just rolled out a new cellular plan that includes two times the data at the same monthly price, 25 GB of storage and unlimited international texting.  Does anyone really think Verizon would be offering a more lucrative cellular plan if it wasn't for an independent T-Mobile challenging the status quo?

Allowing a Comcast-Time Warner combination appears to offer little clear consumer benefit while concentrating a lot of market power into one company. Competition is not the issue in the deal, but the concentration of power -- just like with the proposed AT&T/T-Mobile deal. 

Edited by Cassandra Tucker

Contributing Editor

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