What Does The Dead Merger Between Comcast And Time Warner Cable Mean To Us?
It was announced Friday that the $45 billion merger between cable companies Time Warner Cable and Comcast was dead in the water. Not necessarily due to either company choosing to back out as much as fears the federal government would not approve.
“Today, an online video market is emerging that offers new business models and greater consumer choice,” said FCC Chairman Tom Wheeler. He went on to say that innovation and competition would be at risk with such a merger. The feds were apparently prepared to block the proposed deal, with Wheeler commenting on the decision to stop the plan as being “in the best interest of consumers.”
Why would this have been so bad for all of us? According to people opposing the merger, the combined company would have controlled as much as 50-percent of the nation’s broadband service. Both the FCC and Department of Justice were concerned about this type of conglomerate limiting the competition between internet service providers, essentially forcing us all to pay more, in some cases, for less.
Executives from the two companies have been working on this plan for more than a year. For Comcast now, it’s back to business. “Today, we move on,” Comcast CEO Brian Roberts said in a statement.
Having the two separate companies stay separate doesn’t necessarily mean we’re all going to get better or cheaper internet service. Each of the two companies already hold what could be deemed monopolies in certain markets around the country. This doesn’t give them any incentive to improve mediocre service. There are startups trying to break into the ISP world, such as a local San Francisco company Monkeybrains that beams internet service to your home wirelessly over an antenna placed on your roof. But any small business trying to compete with these behemoths on a national level will find it extremely difficult.
While it’s back to business for Comcast, Time Warner Cable may have a more active year. Prior to the Comcast plan, Charter Communications had been pursuing a deal to purchase Time Warner Cable and apparently have recently expressed interest again. This combined company would be the second largest cable operator behind only Comcast.
There are also rumors of Time Warner Cable purchasing smaller cable providers to expand their reach, though the company is keeping those discussions private. “I never comment on conversations we’re having with others unless somebody else decides to make it public,” their CEO Rob Marcus said.