Friday, February 14, 2014

Comcast's CEO must just be kidding when he calls swallowing up Time Warner Cable "pro-consumer, pro-competitive, and strongly in the public interest"


by Ken

My first thought on hearing of Comcast's acquisition Time Warner Cable (which as far as I can tell is a more accurate description than a "merger" of the country's no. 1 and no. 2 cable-TV companies) was: They're not gonna let that happen, are they? By "they," I guess I meant the FCC, the FTC, the Justice Department's Anti-Trust Division -- whoever would have to sign off on a corporate conglomeration that would turn two pretty powerful players in the cable industry into one behemoth. It's just not possible, is it?

My second thought was: Well, they spent a lot of time and billable lawyer hours negotiating the deal, so they must think they can somehow slip it past the regulators?

And my third thought was: Uh-oh. You see, I'm a TWC of NY/NJ customer. (And for that matter, Howie on the opposite coast is also a TWC customer.) Next to my rent, my TWC bill is my biggest monthly bill -- and I haven't figured any way of lowering it, even as TWC keeps managing to find ways for that bill to keep movin' on up. From everything I know about Comcast, I ain't seen nothin' yet. Since cable companies aren't subject to any price limitation, TWC is already charging about as much as it thinks it can get, but I can't help feeling that Comcast's approach to billing, and to customer service as well, is going to make me look back on TWC as a veritable philanthropic enterprise.

The last time I tried to make a dent in my monthly outflow for cable TV and Internet access, some years back, I yielded to the siren song of the "triple-play" package, turning my phone service over to TWC as well. I had all kinds of numbers thrown at me, telling me how much I would save. When the billing dust settled, I counted myself lucky that at least I wasn't paying any more than I had been for cable, Internet, and phone service.

Of course there was the small matter of the phone that no longer rings. I discovered that even while the installer was still on the premises, but he insisted that nothing he did could have caused that, which ended the discussion, even though that phone had been ringing normally before my service "upgrade." And oh yes, the router I was provided during that installation to handle all the services -- a couple of years ago we got a notice that as of such-and-such date it would become a rental item, with a nice little chunk of $$ to be added to my monthly bill. Add in the cost of the router, and my guess is that I am now paying more for the "package" that I'd be paying for the separate services.

Still, I have to say, all in all I'm not displeased with the actual service provided by TWC. I get a pretty darned fine TV picture, and having after more or less overlappingly swapped out all my old cable boxes and upgraded two of my three TVs to HD, they're all working fine. A couple of those boxes at least should probably have been replaced years ago, but I've always been afraid to ask the Customer Service people for anything, since somehow it always seems to wind up costing me money. In fairness, though, TWC has insisted since the introduction of HD that customers wouldn't pay any more for it than for previous service, and they've made good on that promise both in my switching out of boxes and in my billing. I even now have a box on my remaining CRT TV that will provide HD service if and when I upgrade that TV.

What people in other parts of the country often don't realize is that in much of NYC, especially Manhattan, cable TV isn't a luxury, it's a necessity if we want to have a watchable TV picture. And for most of the city, our only choice is none other than TWC -- or whatever the new entity is going to be.

And The New Yorker's John Cassidy says (in a post, "We Need Real Competition, Not a Cable-Internet Monopoly," that "by far the most important" reasons why we Americans pay so much more than people pretty much anywhere else for those "triple-play" services -- and he provides some eye-popping numbers -- are "compettion and competition policy."
In countries like the U.K., regulators forced incumbent cable and telephone operators to lease their networks to competitors at cost, which enabled new providers to enter the market and brought down prices dramatically. The incumbents -- the local versions of Comcast, Time Warner Cable, Verizon, and AT&T -- didn't like this policy at all, but the regulators held firm and forced them to accept genuine competition. "The prices were too high," one of the regulators explained to the media writer Rick Karr. "There were huge barriers to entry."

That quote accurately describes the situation in the United States today, where vigorous competition is almost non-existent. In some big cities, broadband consumers have a choice between a cable operator, such as Comcast, and a telephone provider, such as Verizon. But that's practically no choice at all. Although the cable and telephone companies spend huge sums of money on advertising trying to lure each others customers, they rarely compete on price. To use the economic jargon, they act as a cozy "duopoly," keeping prices well above their costs. Many people, myself included, don't even have two options to choose from. On my block in Brooklyn, Verizon's high-speed FiOS service isn't available yet, so I'm stuck with Time Warner. (And, no, they don't rush out to repair the frequent outages.)
And, says John, "This sorry situation isn't an accident."
It's the predictable outcome of Congress bowing to the monopolists, or quasi-monopolists, and allowing them to squelch potential competitors. "Americans pay so much because they don't have a choice," Susan Crawford, a former adviser to President Obama on science and innovation, and the author of a recent book, "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age," told the BBC. "We deregulated high-speed internet access ten years ago and since then we've seen enormous consolidation and monopolies… Left to their own devices, companies that supply internet access will charge high prices, because they face neither competition nor oversight."
And Comcast, he argues, "is one of the big consolidators and overchargers." He provides some cases in point, and says, "No wonder Comcast's stock price has quintupled since 2009. (Time Warner Cable's stock has gone up even more.)"

John begins his piece by talking about Comcast.
Comcast Corporation is America's biggest cable company, its biggest internet-service provider, and its third-biggest home-telephone provider. As the owner of NBCUniversal, it's also one of the largest producers of programming for film, cable, and television; on NBC's networks, it is currently showing the Olympics. It's not just big by American standards. It's the largest media company in the world. In 2013, it took in $64.67 billion, generating $13.6 billion in operating income and $7.1 billion in net profits.
"Now," he says, "this behemoth wants to get even bigger," and he gives Comcast CEO Brian Roberts "some marks for chutzpah. In announcing the TWC deal, John says, Roberts "brushed aside concerns that the regulators and anti-trust authorities might veto the deal, describing it as 'pro-consumer, pro-competitive, and strongly in the public interest.' "

"Pro-competitive" is obvious nonsense, and since one clear intent is to put all of both companies' customers at their mercy, "pro-consumer" seems even more nonsensical. And "strongly in the public interest"? Yeah, sure.

"What we need," says John Cassidy, "is a new competition policy that puts the interests of consumers first, seeks to replicate what other countries have done, and treats with extreme skepticism the arguments of monopoly incumbents such as Comcast and Time Warner Cable."

"But will we get it?" he asks, and points out that the new FCC chairman, Tom Wheeler, "is a former lobbyist for two sets of vested interests: the cell-phone operators and, you guessed it, the cable companies."
Wheeler took office in November, after seeing his nomination to head the F.C.C. criticized in many quarters, including this one. He has pledged to do all he can to defend the public interest. He's said that his motto will be "competition, competition, competition." If Wheeler means what he says, this is a good opportunity for him to demonstrate it. He could start by tossing out the merger as another self-serving scheme and announcing that he's flying to London to find out how the British managed to introduce some real competition. That would give Brian Roberts and his fellow cable guys something to think about.

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