Cable Industry Proclaims More Competition 'Hurts Consumers' & 'Damages Economic Efficiency'

from the bigger-ain't-better dept

As part of the conditions attached to Charter’s $79 billion acquisition of Time Warner Cable and Bright House Networks, the FCC imposed a requirement that Charter expand broadband service to another two million locations, one million of which must already be served by an ISP delivering speeds of 25 Mbps or greater. Unfortunately these kinds of conditions historically don’t mean much; merger broadband expansion promises are almost always volunteered by the ISPs themselves, who already planned the expansion regardless of their merger plans.

That isn’t stopping a lobbying organization representing Charter’s cable competitors from crying and stomping their feet over the condition. In a filing by the American Cable Association (ACA, pdf), the organization’s lawyers try to claim that not only would an influx of competition somehow harm consumers, the group claims that adding competitors to what are frequently stagnant markets will somehow “damage economic efficiency”:

“That overbuild condition is unlawful. It is not tailored to mitigate a merger-specific harm or confirm a merger-specific benefit. It will exacerbate the merger harms the Order identifies, damage economic efficiency, injure small providers, and harm consumers. The condition should be stricken.”

Another coalition of cable providers, the NTCA, tried to claim the same thing in a filing of its own:

“While the commission?s intentions in proposing the buildout requirement were undoubtedly good, the reality is imposing such a condition creates artificial competition in areas that cannot support it, which will ultimately undermine, rather than further, broadband availability and affordability in higher-cost areas in particular.”

When is competition “artificial?” When we say it is! The thing is, it’s not really competition these companies are worried about. It’s the inevitable hoovering up of their businesses by Charter down the road. Charter CEO Tom Rutledge recently made it clear at an investor conference that he won’t be targeting cable companies under the condition — rather, he’ll be targeting phone companies. Why? Phone companies, usually unwilling or unable to invest in fiber, make easier targets. There’s no need to compete with smaller cable operators, when you can just gobble them up at a later date:

“When I talked to the FCC, I said I can?t overbuild another cable company, because then I could never buy it, because you always block those,? Rutledge said at the MoffettNathanson event. ?It?s really about overbuilding telephone companies.? ?Why would we go where we could get killed,? Rutledge said.

In other words, Charter doesn’t want to compete with cable companies, because the FCC would then prohibit them from merging with them later for fear of lessening competition. Instead, Charter plans to take aim at the already struggling second-tier telcos in these areas, then acquire smaller cable operators down the road. So despite the FCC’s intentions, the deal creates another homogeneous giant just like Comcast with little to no real competition to keep it in check, and the conditions are little more than regulatory band-aids for what’s ultimately going to end badly for every individual and organization not-named Charter.

While the FCC’s conditions do include a few useful nuggets for consumers and small businesses (a ban on caps and net neutrality violations for seven years), with the pace at which the cable industry is looking to defang and hamstring the agency, it’s not clear there’s going to be much of an FCC left to enforce the conditions during the latter stretch of that window. While the FCC certainly tried to shine up these conditions to downplay the negative aspects of deal approval, it’s still abundantly clear that giant telecom mergers like this only ultimately benefit the companies involved.

That’s a lesson that for whatever reason we seem utterly unwilling to learn despite our collective disdain for the end result.

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Companies: aca, bright house networks, charter, ncta, time warner cable

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Comments on “Cable Industry Proclaims More Competition 'Hurts Consumers' & 'Damages Economic Efficiency'”

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33 Comments
Anonymous Coward says:

Re: Re: Re:

What I find incredible is that those espousing this nonsense can believe anyone listening might actually believe any of it.

Or, more likely, they know no one believes it but they are paying those that matter, politicians, to pretend to believe it (in the form of revolving door favors and campaign contributions).

Anonymous Coward says:

Was so right!

Told you so.

The FCC caused this problem, why is it that you all think they can solve it? The FCC has been riding Bitch for the Industry for a while now and the FCC just fell off the bike and now everyone can see the words.

“If you can read this the “BITCH” fell off!”

Maybe what I should be saying is that, CONGRESS caused this problem and now that the FCC is rebelling and NOT doing its job you all are finally getting to see what is going on.

Remember ladies and gents… Congress creates and destroys them AND… gets to tell them what to do. Technically Congress never had the power to give the FCC or any other agency rule making power to begin with! Congress created the FCC to be the “bitch” for the Industry when people, exactly like you all, were asking for regulation over the industry. How did that regulation work suckers? HMMM?

Say NO to regulation and YES to anti-monopoly and and anti-trust law instead! Regulation is code for… make it look like we are doing something while giving industry everything so those idiot citizens will shut the fuck up. We can then claim that we did do something, and if or when it fails they are dumb enough to blame the agency and not us… we win either way! What a bunch of dipsticks they are!

TMC says:

Re: Was so right!

Yeah! Why bother giving a limber administrative agency the authority to respond to a constantly shifting economic landscape when we can rely on anti-monopoly laws principally enforced by under-funded elements of the executive branch who are likely to give ISPs a pass anyway because all the information suggests that a particular medium of hardline transmission is a natural monopoly, the prosecution thereof will do nothing to encourage competition?

Regulation is how you manage natural monopoly. ‘Anti-monopoly law’ only avoids natural monopoly.

Anonymous Coward says:

Re: Re: Was so right!

Maybe you were not listening… no in fact you never were listening.

Regulation not only invites Business and Government to get into bed with each other, it FORCES them to! The problems you are bitching about now only get worse when we try to solve it YOUR way. Why do you think governments LOVE to hear ignorant plebs like you scream for it?

Listen well and listen good. Not matter which fairy tale world you live in, Regulation will only bring that which you seek to avoid! You are looking down the barrel of a gun while pulling the trigger to see if works!

Anonymous Coward says:

Re: Re: Re: Was so right!

That’s because the entire back-up mechanisms for the regulation have been dismantled int he US, through corporate laundering of favors.

Make lobbying in such a way illegal, make major other reforms to campaign law in the US, and reduce the amount of time people on the Hill have to spend fundraising, and you’ll solve a good number of problems.

Anonymous Coward says:

Re: Re: Re:2 Was so right!

You could be right, but remember, the reason it works is because our elected officials are hint hint & wink wink.

It will be hard to get bribery out of government. The people that want the job are often the people that should never ever get the job.

Since, human corruption will be a factor in everything you do, I try to gun for the policies that make that corruption less effective. That is why I am a proponent of Anti-Monopoly law. If the only action are regulatory agency can take is, break company into smaller but competitive businesses then it cannot make policies where ATT gets this section, TWC gets this section, Verizon gets this section, so on and so forth. Regulation is literally desired by the businesses even though they claim they do not want it. They like regulation because it makes new competition harder to start, and cements their position so they can begin gouging the consumer because they are captives now of regulation that was supposed to create competition but actually just granted mini-monopolies all over the place.

There are so many way to bribe congress that it becomes less about the bribery and more about regulatory efforts. If an agency wants to stay alive then they need to take action, if they are not taking action then they are not needed. If businesses abuse things against we create another agency and the cycle begins anew.

Eternal vigilance is the price. It is not and will never be possible to create any construct that will last through time. It is always better to have ebb and flow, regulation just creates ebb and stifles flow!

TMC says:

Re: Re: Re: Was so right!

When the effects of regulation are to for ISPs to act as a dumb pipe, the potential ‘harm’ of industry/government collusion is minimal. Especially considering the amount of industry/government collusion already in place, that has nothing whatsoever to do with industry regulation.

Your arguments are barely coherent and don’t align with anything I understand about the current market or regulatory landscape as an observer, so I’m writing you and this argument off. Better luck next time, I guess?

Anonymous Coward says:

Re: Re: Was so right!

And lets add another thing. The Constantly Shifting Landscape argument is bunk! If a law/agency is written/created that requires that much dynamic oversight then that law/agency does not serve the public good, it only serves special interests and works against the economy.

Natural Monopoly would better be addressed through title 2 for example, or just flat out declaring all telco lines to be public property. So the method of production can be privately owned (ISP and their central routers and switches) but the method of carrying a signal (cables on the telephone poles are buried under water) is public property that everyone shares the cost of maintaining.

Wendy Cockcroft (user link) says:

Re: Was so right!

Say NO to regulation and YES to anti-monopoly and and anti-trust law instead!

Those are “regulations.”

Regulation is code for… make it look like we are doing something while giving industry everything so those idiot citizens will shut the fuck up. We can then claim that we did do something, and if or when it fails they are dumb enough to blame the agency and not us… we win either way! What a bunch of dipsticks they are!

E.g. The PATRIOT Act.

We need regulations that prevent businesses from causing problems. Under-regulation is as bad as over-regulation. Remember, every regulation that exists was created to solve an existing problem. Whether or not each and every one of them is actually necessary and effective is a question for another day.

TMC says:

Overbuilding is always irrational from the builder’s point of view. And the consumer’s point of view, probably. Splitting up a footprint with twice the line suggests that more cost will go to maintenance for each individual user.

Now, if we could just come up with a dead-simple consumer option that integrates two internet connections, maybe it would make sense for people to keep two ISP services running to their home, with each connection costing half of what a standalone connection would (since its either half a consumer or 0), maybe overbuilding would be feasible.

LLU can’t happen fast enough. I wish some of these municipalities would just do an eminent domain grab and run municipal LLU through the court system, since the FCC seems reticent.

Anonymous Coward says:

'Damages Economic Efficiency'

The CSA said pretty much the same thing. It is easy to say your right when you don’t account for civil rights or natural capital.

Incidentally they are right technically speaking. Duplicating the last mile is a bad idea. Which is why the last mile should be handled by community level contractors, not cable providers.

It should be:

Content Provider CPE -> Backbone -> Carrier Neutral Central Office -> community owned DCS -> Consumer CPE

TCP/IP is designed to work the same way backwards and forwards. What the Cable Association of America calls “cablization of the Internet”, is the idea that things shouldn’t work the same way backwards and forwards. And that is how you know these guys intend to use network architecture to anticompetetive ends. They WANT to distinguish between corporate and citizen speech in a technologically constrainable way.

They are using bits to do what the Soviets did to Europe with barbed wire. Americans have a history of responding to that.

Anonymous Coward says:

“Cable Industry Proclaims More Competition ‘Hurts Consumers’ & ‘Damages Economic Efficiency'”

and if the government freely gave me a million dollars that will help consumers and economic efficiency. Think about it, when I spend that money others that receive it will spend it and it will stimulate the economy. So I want a million dollars.

Roland says:

overbuilding

Time for a little history: in 1905, all the NYC telephone cos. would not interoperate, deliberately. A bizman would have 5-6 phones on his desk to reach all his clients.
See http://glassian.org/Bell/yearsofprog.gif
All those wires caused some horrific deaths for pedestrians & workmen. The ice storm of 1906 brought all that down & the phone cos. were forced into interoperability. I suspect history will repeat itself. We ‘merkins do what’s right after exhausting all the alternatives.

ECA (profile) says:

Competition

LACK of competition…

WE used to have utilities overrun by the state and federal system..
NOW…
Electric..
GAS..
are PRIVATE Companies..ON THE STOCK MARKET..which means they need to make a PROFIT..

How does this compare with CABLE/SAT??
TONS of regulations, and a PUC(public utility counsel) to COMPLAIN TO..
You can even complain to DOT(department of transportation) if you ROADS arnt being fixed..

What does a Corporation want..
DO IT ONE TIME…and charge you every month, FOREVER..
(dont ask me about those 40+ year old telephone poles)

You DO NEED to understand 1 thing..THE MAIN ISP is only responsible to the LAST MILE…the cables run around your town/city..
The interconnections BETWEEN cities and towns..CAN be/MOST TIME…BELONGS TO ANOTHER COMPANY..

That One Guy (profile) says:

"This is bad and you're not allowed to do it... until a few years have passed."

While the FCC’s conditions do include a few useful nuggets for consumers and small businesses (a ban on caps and net neutrality violations for seven years),

Every time I see these kinds of conditions with time limits I’m left wondering how much money you have to be given, or how hard a blow to the head you have to take to be able to accept something like that as reasonable. Caps and net neutrality violations are bad and they’re not allowed to engage in such practices as part of the merger requirements… until seven years have passed and now they can do whatever they want.

If caps are bad now, then they’re going to be bad seven years down the road. If net neutrality violations aren’t acceptable now, then why do they suddenly become acceptable after seven years have passed?

It’s like saying ‘As part of your parole you’re not allowed to commit any crimes or your parole with be revoked. Once your parole is over though you can break any laws you want.’

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