Say That Again

by Karl Bode


Filed Under:
acquisition, cable, television

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



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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  1. icon
    Karl Bode (profile), 17 Feb 2014 @ 3:33pm

    Re: Re: Re:

    The conference call with Cohen was simply jam-packed with gems like that.

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