The Nation's Entirely Objective Think Tanks And Consultants Want You To Know Comcast Deal Is Secretly Awesome

from the my-wooden-unreasonable-arguments-are-entirely-my-own dept

Comcast faces obvious regulatory and public relation obstacles in getting its $45.2 billion acquisition of Time Warner Cable approved, given concerns about vertical integration and scale. Comcast last week got a running start on selling the deal to regulators by insisting that allowing them to get absurdly massive would somehow be “pro-consumer.” Comcast’s other big argument last week appeared to be the idea that the larger company couldn’t possibly use its larger size as anti-competitive leverage, because Google Fiber (with all of its 1,000 or so users) and Hulu (which Comcast co-owns) would somehow keep Comcast honest.

If you watched AT&T’s ham-fisted acquisition attempt of T-Mobile, you know that this is just about the time when Comcast’s lobbyists, PR agencies, “non-partisan” think tanks, consultants and various other policy tendrils all work to create a massive media sound wall insisting that the deal will be really wonderful for consumers. Most reasonable people generally understand that an already universally-despised company with a history of anti-competitive behavior getting much more powerful isn’t a great thing, regardless of their beliefs. But buried among the massive wash of complaints about the deal are some folks who’d like you to know the deal is secretly awesome. And not just kind of awesome, but a-benefit-to-humanity-the-likes-of-which-you-may-not-see-again awesome.

Enter Scott Cleland, a “consultant” who has built an entire career testifying as an objective telecom analyst in DC while taking money from ISPs and Microsoft to smear their competitors via incoherent arguments (usually directed at Google, as we’ve illustrated previously). Cleland offers his two cents on the amazing deal:

“Not only is the Comcast-Time Warner Cable merger pro-competitive, via the improvement of services and innovation for millions of Americans and many thousands of businesses, this merger also is occurring in the most competitive communications marketplace with the most consumer choices ever. It should be approved”…

“Since the last cable-to-cable mergers were approved about a decade ago, every single facet of the communications marketplace has become dramatically more competitive, dynamic, and innovative.”

Yes, when two of the worst-ranked companies for customer satisfaction — from the worst ranked industry for customer satisfaction — in one of the least competitive industries in the country get together — magic happens. History has proven it. So has your incredibly inexpensive and “dynamic” cable and broadband service.

You’ll note deal supporters are quick to (correctly) point out this isn’t really about market share or competition (at least in telecom), since Time Warner Cable and Comcast don’t directly compete. However, supporters-for-hire like Cleland intentionally ignore how a larger Comcast has even more leverage to use regulatory capture, content licensing deals, and ever-expanding broadband usage caps in a broadband market that’s actually getting less competitive as AT&T and Verizon back away from it. It’s also worth noting that Comcast’s historically-low customer satisfaction rankings are thanks to growing too quickly for customer support to keep pace and a lack of competition, and another deal fixes neither. The deal’s problems aren’t really about competition (at least in telecom), but size and scale.

Yet the Information Technology and Innovation Foundation, a think tank whose donors include telecom companies and the MPAA (ITIF was a big pusher of SOPA/PIPA), wants you to know that you needn’t worry, because a bigger Comcast will mean lower bills for you:

“…the economic benefits of the combined efficiencies and economies of scale will flow to consumers in the form of lower prices and/or higher quality service. Comcast expects to save about $1.5 billion in annual operating efficiencies through the deal. The combined company, which will have 30% of the pay TV market, will also be able to drive harder bargains with upstream content providers, resulting in savings that will be passed on to cable subscribers.”

I’m not sure in what plane of reality the cable and broadcast industry ever passes on savings to you, but it’s not the one most of us inhabit. Whether it’s modem rental fees, below the line surcharges, soaring cable TV costs, or the ramping up in usage caps and overages, cable broadband is an industry that prides itself on not competing on price. I guess I should note here that Comcast’s David Cohen, on a conference call defending the deal last week, stated “we’re certainly not promising that customer bills are going to go down or even increase less rapidly.” Apparently the ITIF has no problem making that promise for Comcast.

It’s always hard to know where the for-hire astroturf ends and genuine-but-just-plain-wrong opinion begins (which is the entire point of astroturf). Enter TechFreedom, a non-profit think tank that, like most such groups, doesn’t disclose its funding — professing its insights are driven solely by its honest Libertarian leanings (perhaps that’s even true, I’ll give them the benefit of the doubt). The think tank believes the deal will be truly nifty, and consumers don’t have to worry about Comcast bullying Internet video startups because Comcast has kindly agreed to keep adhering to the FCC’s dead net neutrality protections:

“When Comcast bought NBC Universal in 2011, it agreed to a long list of conditions required by the FCC, including special protections for online video distributors and Net Neutrality rules. These remain in effect even though the D.C. Circuit Court has struck down the same rules in the FCC’s Open Internet Order. The deal will extend these protections to eight million Time Warner Cable subscribers.”

Well, no. People crying over the FCC’s freshly-deceased net neutrality protections fail to remember (or never knew) that the rules didn’t do all that much. They don’t really cover wireless whatsoever, and the language of the rules (because it was crafted predominately by industry) allows for all manner of discrimination — just as long as the carrier uses faux-technical justifications to claim it’s for the protection and safety of the network (don’t worry, regulators won’t check). The rules did restrict outright blocking of competing content and services on fixed-line networks, but generally no incumbent ISP is dumb enough to do that and incur heavier regulation prompted by public outcry. It’s also worth noting that most of the conditions attached to the NBC acquisition were suggested by Comcast itself and, like the neutrality rules, don’t do much of anything by design.

TechFreedom goes on to pretend the deal will make service better and lower consumer bills (again, as if rate reductions ever happen in the cable industry), before finishing its love letter to industry with the claim that it’s not broadband carriers that are responsible for limited sector competition — it’s all the local governments’ fault for being jerks:

“Those concerned about broadband competition should focus on the real problem: barriers to entry created by local governments and the pricing of rights of way and pole attachments,” added Szoka. “That’s what’s made it hard for companies like Google, Verizon and Centurylink to build fiber networks. Last summer, Szoka explained in Wired that it’s local governments, not cable companies, that are to blame for hampering broadband competition.”

While I knew that towns and cities could occasionally be annoying in TV franchise and pole attachment negotiations, I was just as shocked as you to learn that awful protectionist bills write themselves, politicians bribe themselves, and you pay $70 for a 3 Mbps DSL line because your Mayor is mean. I’m equally amazed to learn that mediocre, over-priced broadband isn’t the product of limited competition, regulatory capture or myopic investors too short-sighted to wait for investment returns, but entirely because of the villainous machinations of Billy and Janet Burbit on the Podunk town council. Nefarious, indeed.

For the record I do think the deal could bring a few small improvements to some users. Comcast might be an upgrade for users in markets where Time Warner Cable has historically been even worse at providing either faster speeds or improved television services and set top boxes (looking at you, New York City). It’s again those Comcast usage-cap “trials” where my attention is fixated, as all the upgrades and promises in the world don’t matter if Comcast insists on arbitrarily throttling the pipe to the detriment of smaller businesses and startups. Deal supporters like to insist regulators will crack down should this happen, but so far regulators have dumbly nodded in agreement that usage caps and per gigabyte overages are just “creative pricing innovation.”

Over the next few months you’ll start to notice a pattern of editorials popping up in papers and on websites around the country. They’ll all cling to the same talking point insightful logic, with none of the outlets noting any author’s financial ties to industry. Be aware that these individuals and groups, no matter how specious, wooden and incoherent their arguments might be, are simply looking out for your well being as consumers because they’re good people. That said, Comcast might want to tread carefully. Part of the reason the AT&T/T-Mobile deal put a bad taste in regulators’ mouths (aside from it being based entirely on lies, totally unnecessary and reducing competition) was AT&T’s hubris in making pretty much any bizarre claim they wanted, from the idea that reducing competition increased competition, to the argument that the inability to acquire T-Mobile would harm children and make the Internet explode.

That’s not to say the Time Warner Cable/Comast merger isn’t still totally awesome. I’m just saying that those who want the deal to succeed (whether you’re paid to take that position or not) might just want to dial back the bullshit just a tad this time around.

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Companies: at&t, comcast, hulu, time warner

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Comments on “The Nation's Entirely Objective Think Tanks And Consultants Want You To Know Comcast Deal Is Secretly Awesome”

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Anonymous Coward says:

“Comcast’s historically-low customer satisfaction rankings are thanks to growing too quickly for customer support to keep pace”

I disagree. It’s not about them growing too quickly. It’s about them growing big enough and arrogant enough with no one around in competition that they just don’t give a shit. Oh they pretend to give a shit in their commercials because they are trying to entice more people to sign up. But in reality, they don’t care if you are pissed off about the decline in service quality along with the simultaneous raising of rates. They don’t care if they violate federal laws in their collection practices while harassing their customers. They don’t care if they have incompetent support staff that are purposely mis-trained to provide inaccurate (read: lies) support information to their customers. None of these things are the result of growing too fast to keep up with demand yet all of them are contributory their continued ranking at the bottom of the customer service list.

Karl Bode (profile) says:

Re: Re:

Well, I think it’s all of those things. Comcast grew very quickly acquiring a ton of companies. The lack of competition resulted in no incentive to invest in customer support that scaled with that growth. But yes, even if they had started out massive they still wouldn’t have made that investment without no competitive kick in the pants.

Anonymous Coward says:

Re: Re: Response to: Anonymous Coward on Feb 17th, 2014 @ 2:21pm

I agree that they have been allowed to continue to persist because of a lack of competition, however, I don’t see this as an issue of growing too fast. An issue of growing too fast can result in poor service because things are rolled out without being properly tested, large amounts of incompetent support personnel are hired without being properly trained as a matter due to a lack of time and resources. These are things that are not done maliciously but happen because of a huge demand that a company is desperately trying to meet and cannot quite keep up. THOSE are issues where a company grows too fast which may also have occurred as well with Comcast. But the things I pointed out are not a result of growing too fast. They are as a result of a “Fuck ’em because we can and we just don’t care about anything but the money” attitude within the company. These things are far more damaging to their reputation than growing pains related issues.

Anonymous Coward says:

The Nation’s Entirely Objective Think Tanks And Consultants Want You To Know Comcast Deal Is Secretly Awesome.

My first inclination was to ask “Are you nuts?” but then on reflection I realized that awesome does do the deal justice.

So lets count the ways:
1. In its audacity of the number of people who will pay more.
2. In the new price level of monopolist charges that will be collected.
3. In the decrease in the quality of service from current levels.
4. In the new additional charges what will be leveled against web based moves.
5. The level of throttling that will be applied.
6. The level of rollover to RIAA and MPAA type organizations.
7. The limits to which non US content will be removed.

Boy, if only we could experience the some what comical limits that the North Koreans apply to the internet we would floating in internet freedom.

Anonymous Coward says:

“…the economic benefits of the combined efficiencies and economies of scale will flow to consumers in the form of lower prices and/or higher quality service. Comcast expects to save about $1.5 billion in annual operating efficiencies through the deal. The combined company, which will have 30% of the pay TV market, will also be able to drive harder bargains with upstream content providers, resulting in savings that will be passed on to cable subscribers.”

Now they are talking out of both sides of their mouth. According to their Executive VP David Cohen:

“The impact on customer bills is always hard to quantify. We’re certainly not promising that customer bills are going to go down or even increase less rapidly,” Comcast Executive VP David Cohen said in a conference call today in response to a question on price. “Frankly, most of the factors that go into customer bills are factors beyond our control.”

Cohen didn’t elaborate on those “factors beyond our control,” but he said the promised benefits to consumers will come via “quality of service, by quality of offerings, by technological innovations.” Finally, Cohen said, “I don’t believe there’s any way to argue that [consumers are] going to be hurt from a price perspective as a result of this transaction.” Presumably then, prices would continue to take their natural path regardless of whether the transaction is approved by US regulatory authorities

Forget lower bills or even bills that don’t go up because according to Comcast, they don’t have any control over how much they charge their customers for some reason. Maybe they’ve let the Hollywood math accountants from NBC Universal take over their billing department so they don’t know how they price is figured as they do what all Hollywood mathematicians do. Just make the shit up!

Pragmatic says:

Re: Re:

Now, now, AC, we all know it’s the pesky gubmint that’s to blame when anything goes wrong. Corporations are people, my friend, and they are utterly incapable of any wrongdoing. In fact, it’s the perfect organism until the gubmint gets involved, which is why we don’t need no steenking regulation. Amirite?

Anonymous Coward says:

It’s like they’re trying to bring back the worst of the 1990s, whether it’s sub-par Internet quality, sweeping trade deals that only benefit the highest bidder and screw everyone else, and shit-tier entertainment that we’re losing our freedoms to (the very same garbage that made us lose faith in MTV and such). The only things missing are those wacko cults, and they’ll fill that void too (to me at least, these copyright cultists make the Branch Davidians look reasonable).

The West, is it really worth losing your high ground just to please the highest bidder?

RoKphish (profile) says:

The absolute WORST thing to happen to our Nation's Broadband Services

Allowing the proposed merger of Comcast and Time Warner Cable is exactly the opposite of a good National Broadband Plan for our future. There is no way this merger can conceivably be viewed as in the public interest.

This merger would put more than a third of all cable-TV subscribers in Comcast?s hands and give it control over more than half of the ?triple-play? services that combine TV, phone and Internet service. Don?t forget, Comcast already owns NBC, MSNBC, Universal Studios and tons of cable networks. That means that for most of America, Comcast could control even more of what you see and how you see it.

Putting this much power in the hands of one company is dangerous. This deal WILL lead to less consumer choice, less diversity and much higher cable bills.

Say No To Comcast-Time Warner Merger

Comcast + Time Warner Cable = Disaster

Anonymous Coward says:

Speaking of TechFreedom...

They’ve also somehow convinced Wired to let them carry their BS to the opinion pages of their site as well claiming that “ending net neutrality would GOOD for small businesses” of all things.

Wired is usually better than that about carrying such crap.

Karl Bode (profile) says:

Re: Speaking of TechFreedom...

I’m fine with diverse opinion. I like many Libertarian arguments. But yeah, those pieces Wired has been running of late really go out of their way to forge arguments with completely extreme and absurd underpinnings.

Like the idea that broadband providers themselves are completely faultless in the lack of market competition:

any moose cow word says:

Re: Re: Speaking of TechFreedom...

Or it’s possibly a good idea to run these kinds of “opinion” pieces. It’s one thing to say that these asshats are out of touch with the times, and quite probably all of reality, but it’s another to actually give them a soapbox and let them publicly hang themselves with their lies and rhetoric. If these opinions were run in a business rag like the WSJ, who’s readership would likely be swayed by a “poor wealthy capitalist” sob story, outrage would be understandable, but Wired’s more savvy readership would see these as the thinly veiled PR propaganda pieces they are.

John Fenderson (profile) says:

Re: Speaking of TechFreedom...

Wired has a long history of doing things like that. Remember, Wired is and always has been a mouthpiece for major corporations in the tech space. I remember quite a bit of controversy about it when the magazine began.

It’s not really too bad, as far as corporate mouthpieces go, but sometimes you do hit an issue that forces them to give up the pretense of being independent.

AjStechd (profile) says:

I worked for Comcast a few years back I can tell you from first hand experience that upper level management are some of the sleaziest out there. Sort of like wannabe Wolf of Wall Street types. In meetings, never once was actual customer satisfaction a concern, it was always how to get people to pay more. Period. One meeting we were discussing spectrum needs and one of the higher ups casually mentioned that internet was almost pure profit and only QVC was a better cash cow, he said we could offer it for $10 a month and still make money.

MondoGordo (profile) says:

Yikes ...

I’m just saying that those who want the deal to succeed (whether you’re paid to take that position or not) might just want to dial back the bullshit just a tad this time around.

Frankly Karl … I’d prefer you don’t help them with you’re editorial suggestions. The fuller of bullshit they are, the easier it is for the dumbasses to smell them and reject their “logic”.

kenichi tanaka (profile) says:

I just don’t see the FCC approving this merger. The thing is, the government is all too much aware of any one company gaining a significant advantage over the rest of the industry. Take a look at what happened to Microsoft simply because if their “bundled IE” software.

Matter of fact, it’s more evident that with Comcast interested in purchasing Time Warner, they could open themselves up to Antitrust investigations by the Justice Department because Comcast would, quite literally, become the bully on the block.

And with all of the negativity focused on “too big too fail”, Comcast is going to have a tough time trying to get this approved, especially after they acquired NBC/Universal and the fallout they continue to have over that.

zip says:

Although Karl Bode hits the nail on the head (as usual) in pointing out that many of these supposedly-independent “consultants” and “analysts” indeed have close financial ties to the companies they write about and serve as “expert witness” for, many probably don’t. But the ones that truly don’t have direct corporate ties — in the present time — are in reality setting themselves up for a lucrative career in the future.

It’s not hard to notice that there’s an enormous disparity in career earnings between people who are pro-regulation/ anti-corporate-welfare and those who advocate corporate “trickle-down theory” — and these so-called “experts” (assuming they’re not completely stupid) are bound to be painfully aware of it.

If this deal goes through, does anyone want to bet me that within the decade, Scott Cleland won’t end up working for Comcast, either as a lobbyist or as a government regulator (or both)?

How about the FCC officials who approve this deal? Who will be the first of this current batch to jump ship and become the next Comcast lobbyist?

DV Henkel-Wallace (profile) says:

Telecom ALWAYS passes the savings on

I’m not sure in what plane of reality the cable and broadcast industry ever passes on savings to you…

I think you have missed the mathematical property that savings is a signed quantity.

Thus what you consider a price increase of 30% is really a savings of -30%, which is a savings of unprecedented magnitude thanks to our wonderful telcos! Be thankful we live in the USA USA USA rather than, say, Europe, where those socialists believe that companies should compete.

Anonymous Coward says:

The net neutrality clause Comcast agreed too, during the NBC merger, expires in 2018. After that, we’re all fair game for artificially low “usage caps”.

Seeing how everyone in the United States will be Comcast subscribers by then. We’ll either pay more for bigger “usage caps”, or we’ll have to “ration” our Netflix on our economy “usage cap” plans.

I can’t believe Comcast is going with the old “trickle down economics” myth. History has proven this myth false, since the dawn of mankind. There’s never been a successful “trick down” strategy in human history. Unbelievable!

zip says:

Re: "trickle down economics" myth

“I can’t believe Comcast is going with the old “trickle down economics” myth. History has proven this myth false, since the dawn of mankind. There’s never been a successful “trick down” strategy in human history. Unbelievable!”

Of course they don’t call it that — “trickle down economics” was what critics 30 years ago were commonly calling the controversial ideological reversal that ended a century of the US government’s adversarial oversight of private corporations in the name of the public good. We were then told that getting out of the way and allowing big corporations to do whatever the hell they wanted would not only allow them to reap huge profits, but that by doing so, the standard of living of all Americans (including the poorest) would benefit greatly. The public swallowed it hook-line-and-sinker, and a quarter-century later the policy was expanded again to include taxpayer-funded bailouts of “too-big-to-fail” banks that would not have “failed” [i.e., changed ownership via bankruptcy court]so catastrophically if both Roosevelt-era banking regulations and Harrison-era anti-merger restrictions had not been defeated.

It’s the same old thing. This time Comcast is claiming that allowing a merger that leads to a huge monopoly (which we all can agree stands to greatly enhance Comcast’s profits) will lead to lower prices and better products and service. This time around, that is — we’re not supposed to look at the past history of such promises, which has consistently demonstrated the opposite result.

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