On paper, Comcast’s $45 billion acquisition of Time Warner Cable makes all sorts of sense: it gives the former a presence in major markets from coast to coast, while expanding its already-hefty lead in television and broadband subscribers.
Whether the deal can meet regulator approval is an open question, and Comcast could struggle to convince the FCC and the U.S. Department of Justice that it’s not a threat to competition despite having swallowed its number-two rival. (As part of that effort, Comcast reportedly plans to divest itself of 3 million Time Warner Cable subscribers.) But it’s undeniable that Comcast’s size, coupled with its extensive product portfolio, gives it enormous bargaining power with studios, networks, and other content providers.
In The New Yorker, Ken Auletta argues that Comcast isn’t a monopoly, with or without Time Warner: profit margins on cable have tumbled, while content providers are twisting cable companies’ arms on “retransmission content” fees. “The deal allows Comcast to offer the most advanced video-on-demand service, giving its customers an array of program choices, while denying them the ability to skip commercials,” he wrote. “The problem is that making consumers watch commercials—or charging them a monthly fee to avoid ads—is an exercise of power that is doomed to fail.”
But this is a much bigger deal than television channels, and others see the proposed acquisition as a dangerous one for content creators and the Internet as a whole. “[Comcast] is already the nation’s largest ISP, the nation’s largest video provider, and one of the nation’s largest home phone providers,” John Bergmayer, senior staff attorney for Public Knowledge, a nonprofit watchdog for intellectual-property law and competition, wrote in a Feb. 12 statement. “It also controls a movie studio, broadcast network, and many popular cable channels.”
Because of that hold, he added, Comcast could arbitrarily raise costs for rivals, partners, and ultimately consumers: “It would be able to keep others from innovating, while facing little pressure to improve its own service.”
Comcast claims it will follow the Open Internet Order through 2018, thanks to a previous agreement with the government. In the short term, that could help Net Neutrality, which suffered a serious blow in January when the U.S. Court of Appeals for the District of Columbia issued a ruling (PDF) that partially negated the Open Internet Order established by the Federal Communications Commission (FCC). But after that, Comcast could have the ability to throttle Websites and services that don’t necessarily fit its corporate needs. Whether the company eventually opts to go that route is something likely to cause anxiety among a lot of Web firms.