Last week, Comcast publicly announced the deal to purchase Time-Warner Cable to the tune of $45 billion. Before the merger is complete, it must pass inspection from anti-trust regulators and the FCC, who will evaluate whether or not the merger presents an obstacle to the public interest.
In this situation, many students may be wondering if this merger is going to result in higher cable and internet prices. These concerns are valid, as internet access is more often being viewed as a necessity along with food, shelter, and medical insurance. The answer to the question of rising prices is unclear.
If cleared by regulators, Comcast will own 30 percent of pay-television subscribers. This is a massive share and one that gives Comcast considerable influence through various levels of the market.
Network content providers, like CBS and Fox, may now be negotiating from a position of weakness. Time-Warner was locked in a contract dispute with CBS, which saw Time-Warner block CBS from its customers, leading to consumer outcry which in turn forced Time-Warner to yield to some of CBS’ demands and reinstitute CBS back to normal programming. A merger would change the stakes at these types of negotiations, giving the service providers leverage over network content providers.
Online content providers like Netflix and Hulu have different concerns. Netflix publishes an Internet Service Provider Speed Index, which catalogs the speed at which various companies perform when streaming Netflix videos. As of this January, Time Warner Cable was clocked at 2.01 Mbps, while Comcast posted 1.51 Mbps. Obviously, Netflix consumers with Time-Warner as an ISP do not want a decline in performance but that number will likely decline over the short run.
Comcast was also found to be blocking internet traffic several years ago. What this means is that P2P communication (peer-to-peer), which includes file-sharing mechanisms like BitTorrent, is squeezed in its bandwidth during peak congestion times. Some claim this violates a principle called “net neutrality,” which argues that all data content should be managed equally, a principle publicly supported by many consumer advocacy groups and corporations like Google and Amazon.
Comcast contends that its adjustments at peak congestion times do not block any communication but rather slow its pace, only until peak congestion (ascertained individually by household) passes, affecting a minuscule amount of consumers.
The deal puts Comcast increasingly closer to monopoly territory. Comcast argues that competition in the industry is not lessened, because Time-Warner and Comcast do not compete in any ZIP code in the U.S. But that claim is itself an indictment of the lack of competition, and by extension industry balance, already existing. It falls to the FCC to decide if it is in the public’s best interest for a merger. If it becomes clear that the merger will result in rising prices, limited competition, and weakening of free information practices, it’s time to step in.
Collegian Editor at Large Zack Burly can be reached at email@example.com.