Washington Post Editorial Board Deploys A Bunch Of Bad Arguments In Its Defense Of The Comcast Merger

from the fewer-companies-somehow-equals-better-competition dept

Searching beyond Comcast itself, it’s hard to find too many people who have no objections to this massive cable company acquiring another massive cable company. Inside the Beltway, where it possibly matters most, you can find a few defenders, many of whom have pocketed Comcast’s money during their legislative careers. But once you step outside of the insiders, you have a multitude of people who realize that, thanks to years of abusive behavior by incumbent service providers, making these companies bigger certainly won’t make them better.

I’m not sure where the Washington Post’s editorial board falls in terms of insider/outsider status, but it just issued an editorial supporting the merger. And, oh man, it’s just a terrible set of opinions bolstered by some equally terrible assertions. The gist of it is that a massive cable company is no problem because regulators have done such a great job at ensuring a competitive playing field to this point.

The government’s smartest move is not to block the merger, but to make clear that regulators will respond if big industry players begin to violate basic principles of market fairness.

There’s no question of “if.” The violations are not only happening, they’re ongoing. Incumbents have squeezed out upstart competitors by using their entrenched positions, pushing for favorable legislation and protecting it all with an army of lawyers that makes it almost impossible for new players to enter the market.

WaPo’s board tries to deflect the arguments raised by merger opponents by deploying a combination of Comcast talking points and assertions that have no basis in fact.

[T]raditional cable television and wired broadband providers are in increasingly dire competition with online video services, wireless Internet providers and a cash-flush Google expanding its installation of high-speed fiber-optic cable across the country. Consolidation is the only way to ensure these companies have enough capital to invest in new and better technology that will keep their customers happy — or, at least, satisfied enough not to cancel their subscriptions.

Of everything that’s wrong with this paragraph, the presentation of Google’s fiber service as a serious competitor is perhaps the worst. Google’s limited market entry only presents a direct threat to incumbents in the few areas it’s selected to offer its service. At some point in the future, Google may expand the number of markets, but it’s a stretch to call a handful of deployments a true competitor to the cable giants. Even the incumbents seem to realize they won’t be going head-to-head with Google any time soon — if at all — judging from the number of “fiber to the press release” statements being issued.

And it’s not as if the cable companies are lacking in capital. The biggest names in the business are also flush with money and they’re certainly not spending it on “new and better technology.” The supposed “wireless competitors” are giants themselves — old school incumbents like AT&T that are divesting themselves of their landlines just as quickly as regulators will let them. These companies prefer wireless because it’s more profitable, not because they have any desire to keep their customers happy. The maintenance costs are lower and the opportunity to deploy caps on calls and data keeps margins high. One needs only look at Verizon’s post-Hurricane Sandy efforts in New York, which saw the provider tell customers it was inferior wireless packages or nothing and the service they once had wasn’t going to be repaired.

More bad-to-inaccurate assertions follow.

Some criticism of the merger is misleading or speculative. Cable subscribers will not lose flexibility to get their television service from another company. The market is split geographically: Comcast and Time Warner Cable do not compete for customers.

The first part is only true because many cable subscribers already have little to no flexibility. There’s very little for them to actually “lose.” For many customers, the only “true” choice is Cable Giant A or DSL Giant A — at best. That’s not competition. That’s an illusion of choice. In most markets, the number of competitors rarely rises above a very small number of interchangeable companies that work together to ensure their existing market share never dwindles. They act in concert to keep upstarts out and customers locked in.

That these two companies rarely compete directly for customers makes no difference. Turning two companies into one doesn’t magically increase the number of options available to cable customers. Instead of simply aligning behind the scenes to preserve a duopoly, the unity of vision will now be out in the open. If anything, this will result in a more transparent screwing of customers, but that’s hardly the sort of thing regulators should be giving their thumbs up to, or be encouraged by a responsible journalistic outlet.

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Companies: comcast, time warner cable, washington post

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Comments on “Washington Post Editorial Board Deploys A Bunch Of Bad Arguments In Its Defense Of The Comcast Merger”

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Pragmatic says:

Re: Re:

… and that private enterprise, and indeed Capitalism, is inherently good in and of itself, despite all the evidence to the contrary.

My point is, ANY system is only as good as the people running it, and will only ever work as intended if carefully regulated and its regulators kept accountable.

What “No regulation” actually means is, “Let us get away with bad behavior.”

Therefore, no system is inherently good or bad in and of itself. That’s why we shouldn’t blindly cling to any given set of political principles for their own sake; they should be more of a guideline than a rule. Leave a little wiggle room, is what I’m saying – I’ve yet to see a political philosophy that provides the answer to every situation.

OldMugwump (profile) says:

The problem is not the merger

The problem is the lack of competition.

Just try to set up your own cable company – you’ll find out about:

* Permission to run wires
* Rules from state utility commissions
* Regulations from the FCC

Those are just broad categories. And the regulators who issue those rules have been bought by the incumbents, one way or another (as happens in every regulated industry).

Expecting the same regulators and politicians who have been enabling the closed market for cable services to suddenly start caring about consumers is ridiculous.

Google has the right approach – break into the market with big dollars and big marketing to overcome political resistance. But that is hard.

But focusing on the merger is allowing the bad guys to distract us from the real problem – barriers to entry in the market.

fgoodwin (profile) says:

Re: The problem is not the merger

Don’t incumbents have to get permission to run their wires, and don’t incumbents have to follow state and federal rules?

ISTM ALL cable companies, whether new or incumbents, have to follow the same rules. If so, such rules by definition cannot be barriers to entry. If a new entrant has to follow a rule that an incumbent doesn’t, THAT would be a barrier to entry. Or if a rule were written such that for all practical purposes, only the incumbent can comply then that too would be a barrier to entry.

Do you have any examples of such requirements?

art guerrilla (profile) says:

Re: Re: The problem is not the merger

heh, cable guy, how’s that monopoly working out for you guys ? ? ? swell, huh ?
no big deal, but that’s just peachy-keen for you 1%’ers, but us 99% are GETTING SCREWED EVERY FUCKING MONTH by these greedpigs…
its possible you’re not a bot, because approx 25% of the population are abject authoritarians like you…

Clownius says:

Re: The problem is not the merger

You forgot the final hurdle. When you finally spend the massive money required to get over those hurdles and lay the infrastructure the incumbent starts doing sweetheart deals.

Speed goes up massively and prices crash just before you hit the on switch. You have now invested megabucks and cant grab customers. You go broke.

Prices go straight back up again.

Anonymous Anonymous Coward says:

The Powers that Be

Is not this the publication recently purchased by one Jeff Bezos, aka Mr. Amazon? I was under the impression that he would not engage in editorial decisions for a while, maybe the while is over.

So the question might become, how does this merger benefit Amazon? Paymasters must be satisfied.

Yes, there is a tendency to look for the worst possible configuration of evidence. Just following the US gobmints lead.

Anonymous Coward says:

I’m glad Canada still has a lot of smaller ISP’s, some have horrible (worst than huge corrporations) customer service, not technical-wise, the accounting depts, but it seems only because of a flood of new customers since data caps were introduced by the big 3/4 here. I’m back with a large corp isp (it is only in one province though), because for 10 dollars+ a month you get unlimited data once again, like it always was. I guess they got tired of people going insane at them on the phone for sudden 300-400 dollar monthly bills or people flocking to smaller no-contract ISP’s that use big media corp ISP infrastructure already who always offered unlimited.

Last time I was with a small ISP I quit because of their accounting service total incompetence/and making me pay because of their own errors (Distributel on cable (they offer both cable and dsl, like most small isps). I would have used another small ISP though I was with before, but the phone lines in my apartment complex are old and crappy because after a test they did (Tekksavvy) on them from their offices, could only get 6mbps from their DSL service, I wanted DSL because they have a very cheap unlimited 25/10mbps DSL plan and their cable plans which I could get are the same prices or so as Distributel. There’s about 12 choices of ISP where I live, but as you can see, yeah it’s better with more competition, but some small isp/phone companies seem to want to stay small even when they manage to win at courts 3 times to be able to keep unlimited data while being a TPIA…its often a big headache whatever company you choose.

I might try another small company soon, because they also offer IPTV, unlike all the others who are ISP/phone companies only (even if they have cable modem services, like the isp I mentioned being with), but at the same time I’m scared they’ll be as unreliable (not the service itself, that is always great) but accounting and in some cases technical service so bad it makes people give up and go back to the big oligarchs.

Anonymous coward says:

“Consolidation is the only way to ensure these companies have enough capital to invest “

So they admit that competition in free market capitalism doesn’t work to advance the industry and their solution is to encourage monopolies and duopolies, which are proven to screw the customers and fatten the bottom lines, and tighten the political grip, of the oligarchy. The ‘ol “Reverse Robinhood is good for you” claim.

Oh yeah, that’s right, WaPo’s owners are that oligarchy.

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