Time Warner and Comcast? That's like letting the Joker and the Riddler merge
Raise your hand if you look forward to the nation's two largest cable companies getting married. Me too. Sounds about as much fun as the Joker and the Riddler teaming up to attack Metropolis.
Comcast announced plans to buy Time Warner cable on Thursday, and consumers everywhere felt a chill deeper than the coldest winter gale. Take two gigantic monopolies and smoosh them into one really gigantic monopoly, and you have a recipe for never-ending late fees, bad customer service, and hopelessly complicated bills.
Let's get one thing straight: Millions of consumers don't have choice in their monthly pay-TV or Internet service. This leads to arbitrarily high prices and customer abuse. Anyone who has ever tried to return a Comcast modem or set-top box when canceling service knows this. Hugh cable companies with their carved-out mini-monopolies act like bullies, and get away with it because there's no way consumers can stop a monopoly.
Comcast Chief Executive Brian Roberts said upon the announcement that the combined entity would sell off some coverage areas, dipping the national customer footprint of the combined firm just below the mythical 30 percent limit often used as a monopoly litmus test. Because of this, Roberts said he was confident federal regulators wouldn't have a problem with the merger. Hogwash, I hope.
When it comes to home TV and Net service, the overall U.S. consumer footprint isn't relevant. Here's what's matters: In how many markets do Jane and Joe America genuinely have at least three viable alternatives? Where they don't, there's a monopoly, and companies like Comcast can put consumers through Hell trying to cancel service whenever they like.
Ironically, Comcast is making sure regulators and media know that there's no overlap between their customer bases -- so the merger won't increase the problem I'm describing. In other words, it won't remove an option for consumers in any market. But read that defense of the proposed merger again, and you'll see a clear admission of the problem. Time Warner and Comcast should be COMPETING, not shacking up. The merger means such competition will never occur, today or in the future.
The recent flourish of competition in the cell phone market is instructive here. Regulators forbid AT&T from gobbling up T-mobile two years ago. Guess what happened next? Disruptive competition. T-mobile has created a series of new models that provide a real alternative to notorious early termination fees, and grant consumers an opportunity to upgrade their phones twice each year. Other carriers had to follow. Now, no carrier can now charge $350 ETFs without a risk of losing that customer. Competition is good. Monopolies are bad. Why?
Like gravity or the freezing point of water, the fact that monopolies lead to mistreated consumers is Natural Law. Stripped of bargaining power, captive consumers fall prey to Gotcha Capitalism. Suddenly their $40 cable bills are $123, as they've been turned from people into ARPUs (Average Revenue Per User). Sure, those who enjoy the game can call their cable provider every 6 months and threaten to quit, and get that $50 discount renewed again, and again, and again. Does anybody think that's a healthy way to do business?
Important decisions about the future of the Internet, and about the future of how we all communicate, are coming soon. The last thing we need is a marriage of super-villains.