The Comcast-Time Warner Cable Merger

by Bob Schwartz

Comcast TWC
Meet the new boss
Same as the old boss
The Who, Won’t Get Fooled Again

Comcast and Time Warner Cable are not bad companies, but their proposed merger is a bad idea, for consumers and for the country. For one thing, it would put cable Internet service for the majority of the country—including 19 of 20 metros—in the hands of a single enterprise. Consumers Union among others has come out against the merger. For an excellent overview, see Free Press, which has been articulate and vocal in its opposition.

Even in these first weeks after the proposal, this should have caused more public concern than it has. Some of that diffidence may be understandable. Without impugning motives, in this 2014 election cycle, federal candidates have received $1,184,535 in contributions related to Comcast ($3,188,117 for 2012) and $351,649 related to TWC ($845,616 for 2012)—split almost evenly across party lines.

MSNBC, the chatty and progressive cable outlet, has been relatively quiet. You can determine this by searching for “merger” on the site over the last month. Of the 54 hits, it looks like all but one reflect a February 14 Morning Joe joint appearance by Comcast CEO Brian Roberts and TWC CEO Robert Marcus. Their positive talk was expected. But the lack of sharp questioning is a different matter. In fact, at one point Joe Scarborough strangely prefaced his praise for Comcast this way: “It’ll sound like a softball question, but I’m genuinely intrigued: what is Comcast doing right over the past several years?” Why is that so strange? Because Joe and Mika and everyone else on Morning Joe and the network work for Brian Roberts, since Comcast owns NBCUniversal. None of that was discussed or disclosed.

But even that isn’t the solution to the puzzle of why this issue hasn’t and may never reach the level of concern it deserves. It’s this: consumers aren’t worried about living with cable monopoly because they already do, and have for a long time.

To understand that, we have to go back to the start of broadcast regulation. Radio was the beginning of over-the-air broadcasting. Just because the radio pipeline was invisible didn’t mean it couldn’t be filled to overcapacity; the radio spectrum was finite. People could build bigger and more powerful transmitters, using brute force to fight over frequencies, leaving the radio listener lost in chaos. Order had to be imposed so that some body—now the FCC—could control who was on the air, how they maintained their presence on the air, and, most controversially, what they said on the air.

Cable turned that (and cutting-edge modernity) on its head. Instead of just building bigger and more powerful transmitters to reach farther and more people invisibly, old-fashioned physical wires would be strung and laid to connect consumers to a network. Theoretically, there was no limit to how many cables you could build over mountains and across valleys, on poles and underground, all to bring broadcasts, and eventually Internet, from a source to your home. But practically, building out that infrastructure was expensive and inconvenient. To maintain, expand and improve service, cable companies wanted assurance that it would be worth it. And so local cable monopoly was born. For decades, and to this day, municipalities across the country enter into agreements with cable providers to be the sole source for particular areas, with loose oversight of rates and service. In general the place you live will be served by one particular provider.

This squeeze was a little relieved by certain technological advances. Satellite service could provide both television and Internet, though the physical requirement of line-of-sight to the sky made it sometimes impractical. DSL Internet over phone lines also offers an alternative, though as Internet needs have grown, cable has proven a much “fatter” pipeline for data. In the end, as a practical matter, the local cable provider is for many consumers the best choice.

If you can call it a choice. Those consumers may not be as concerned about whether Comcast/TWC acquires some sort of monopoly because for years those consumers have been living with a local cable monopoly. This is another of the strange moments from the Morning Joe interview with Comcast’s Brian Roberts. One of the arguments used to defend the merger is that there is practically no overlap between the Comcast and TWC markets. Of course, that is precisely the point. Roberts’s argument, though it isn’t what he meant to say, is that since consumers never had a choice in the first place, they won’t notice the difference.

And maybe, just maybe, he’s right.