Turd Polishing PhD With Comcast

Comcast, the countries largest cable provider, will testify today before the House of Representatives about its proposed 45.2 billion dollar merger with the countries second largest cable provider Time Warner Cable.

A merger, or acquisition, that Comcast steadfastly contends is good for the consumer because it increases competition. You’ll forgive me if I am still a little murky on how combining the first and second largest cable providers in the country would increase competition. It would seem to me that it would do the exact opposite, but hey, these guys went to Harvard, so they must know better than I do…right?

According to the public interest statement filed with the FCC late yesterday, “the post-transaction company will improve the experience for customers today and forge ahead to meet future challenges and needs.”

Certainly, there will be people and businesses that do benefit from a combined company. But at what cost?

Currently, Time Warner Cable subscribers have no limit on Internet usage per month while Comcast subscribers have a maximum of 250g. Now, 250g is more than enough for the average person, but what about a small business? It is highly likely a combined company will enforce this restriction.

“Well, dummy, Comcast will just offer a different package to those that require it.” Right. Exactly my point.

A combined Comcast and Time Warner Cable will virtually decimate any concept of competition and would remove any restriction from the combined company “throttling” access to the Internet. Could that be why Netflix did the deal with them to tap right into their servers? Hmmmmm

Comcast currently owns virtually everything, all channels of media distribution, the content (NBCUniversal), the delivery method (the coaxial cable) and the tools (set-top boxes and routers). That. Is. Not. Good.

Also, the transmission fees charged by cable companies to networks (and ultimately charged to consumers). Would Comcast give better rates or deals to their own networks? Hmmmmm

While I am admittedly a little overwhelmed by the complexity of “re-trans” fees, I can tell you this much, the consumer ultimately pays for it. So what is to stop a combined Comcast/Time Warner from jacking the fee to companies, like  ESPN, to be on their service? Again, this is a fee that you ultimately pay for.

If they promise they won’t do that? A government oversight committee? A restriction placed on an approved deal? The third is the most likely…and within that restriction will be an expiration date, probably sometime around 2020-2023. This provides just enough time for people to adjust to everything before they start jacking the prices and consumers are left scratching their head wondering WTF happened.

Actually, I’ll let Comcast Executive Vice President David L. Cohen tell you, “We’re certainly not promising that customer bills are going to go down or even that they’re going to increase less rapidly.”

How’s that for ballsiness? Did this guy work for Donald Rumsfeld or Dick Cheney?

Just to be clear, we are the only country in the world where cable costs keep increasing. And not just nominally. On average the cost is increasing two to three times the rate of inflation. An aggregate rate of inflation since 2003 is 2.3%, which means your cable/Internet bill has increased at least 4.6% annually since 2003.

Comcast is spending a proposed 1.2 billion dollars for a new “Technology and Innovation Center” and they’re dropping at least 45 billion for Time Warner Cable…exactly who did you think was paying for all of this? Did you honestly think the Roberts family was breaking out their checkbook?

Comcast will argue that this merger will allow then to remain competitive with companies like Apple, Google, Yahoo, Intel, etc. That’s a half truth.

The whole truth is that the only company potentially providing direct competition is Google. They’re building out a fiber optic infrastructure to provide us with better Internet (and yes, everything else too). Building an entire new infrastructure from scratch does indeed pose a real threat to Comcast. BUT, Google is using fiber optic wires…ya know, like the rest of the world uses.

A combined Comcast/Time Warner would have ZERO motivation to update the antiquated coaxial cable they currently use. Where is the motivation for change when you essentially have 40% of the market held hostage?

Let me reiterate a few things. One, what Comcast is doing is legal (blame the law and the lawmakers…which is essentially the corporations). Two, I do believe that what Comcast is doing in the spirit of competition, but one must have a very very broad interpretation of competition.

And three, this is gonna happen. It will have a few minor restrictions placed on it, with expiration dates just beyond the scope of people’s memory of this event.

Sorta like when they bought NBC and in order to get the FCC to OK it Comcast had to agree to “…‘open access’ rules, also known as network-neutrality provisions”, which prevent Comcast from favoring certain content over its network.

Yea, that expires in 2017.

Stay informed, it matters to you more than it does to them.

Further reading:

Both Comcast and TWC have almost the worst reputation for customer service. No, seriously. They rank 15 & 16th, respectively, out of 17!

David Carr – Questions for Comcast

Puff piece on Brian Roberts from NYTimes, but would have been more at home in Parade Magazine.

US U.S. ranks a shocking 31st in the world in terms of average download speeds.

Why It Matters

Former FCC Commissioner Michael Copps, the only guy who voted against the Comcast purchase of NBCUniversal. (Seriously long, read Bill Moyers for shorter version.)

Look out for more consolidation.

Reuters – Comcast Takeover of TWC to Reshape U.S. Pay TV

Re-transmission fees, sorta explained.

Poynter – Reasons to Sweat

Or just do your own Google search, God knows there are enough articles with opinions about this.