Cabletown . . . er . . . Comcast is doing a stock swap with TimeWarner cable to create the nation’s largest ISP. But the deal is fundamentally bad for consumers. This point has been eloquently made by Harvard Law School professor Susan Crawford and others.
The companies see a national footprint, more reach and resources and the ability to lock up more consumer dollars. Comcast Executive VP David Cohen was quoted saying, “We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”
Consumers will have fewer options and Comcast will have little or no incentive to invest in broadband beyond its current infrastructure. Here’s Crawford’s argument:
The reason this deal is scary is that for the vast majority of businesses in 19 of the 20 largest metropolitan areas in the country, their only choice for a high-capacity wired connection will be Comcast. Comcast, in turn, has its own built-in conflicts of interest: It will be serving the interests of its shareholders by keeping investments in its network as low as possible — in particular, making no move to provide the world-class fiber-optic connections that are now standard and cheap in other countries — and extracting as much rent as it can, in all kinds of ways. Comcast, for purposes of today’s public , is calling itself a “cable company.” It no longer is. Comcast sells infrastructure subject to neither competition nor a cop on the beat.
She’s completely right.
The US is falling farther and farther behind the world when it comes to broadband speeds and pricing. People in other countries pay less and have much faster internet connections than we do.
The only way the FCC should allow or approve the merger is if it can compel Comcast to wholesale its network to third party providers at reasonable cost so that they can then compete against the cable giant at the retail level.
I have no faith that the FCC will do the right thing, which is to block the merger or exact meaningful consumer-centric concessions in order to approve it.
Separately we might hope that municipal WiFi initiatives will provide competition. I’m skeptical that municipalities have the budgets or the resolve to actually follow through with their good intentions. Thus I hope that Google Fiber’s expansion will provide sufficient pressure to give incumbent ISPs a run for their money. Today Google announced nine new metro areas (encompassing 34 cities) that might get Fiber.
Let’s hope that Google continues — and puts the fear of God into Comcast, AT&T and others. Broadband is now like electricity; it needs to be available to all and affordable. Accordingly it needs to be regulated by the government.
In the case of broadband infrastructure, capitalism and “the market” have failed us. Competition and innovation (save at the margins right now) aren’t happening, just “wealth creation.”