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

Broadband

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.

Filed Under: broadband, competition, merger
Companies: comcast, time warner cable, washington post