by Karl Bode

Filed Under:
broadband, competition, merger, tv

charter, verizon

Verizon Eyes Charter Megamerger, Because Who Likes Broadband Competition Anyway?

from the ma-bell-and-the-ill-communication dept

Charter Communications just got done spending $79 billion to acquire Time Warner Cable and Bright House Networks. And like most telecom megamergers, the promises made before the deal (more jobs! better service! incredible new innovation!) have only a fleeting resemblance to what's actually happening in the real world. Instead, acquired markets have enjoyed frozen broadband deployments, rate hikes and scaled back social media support. With Charter already having among the worst customer service in any industry in America, support in the wake of the merger has been precisely what you'd expect.

With the ink barely dry on that deal, the telecom sector is looking to consolidate even further. Charter stock took a nice joy ride this week on the news that Verizon has reached out to Charter to merge, consolidating the sector even further. The deal would create a telecom giant the likes of which the sector has never really known:

"Verizon serves 114 million cellphone subscribers, 4.6 million TV customers and 7 million Internet subscribers; Charter has 17 million TV customers and 21 million Internet subscribers. Together, the two companies' high-speed Internet businesses would add up to more than Comcast's 25 million broadband customers; at 21.6 million, their combined base of TV customers would be roughly on par with Comcast's. Both Verizon and Charter declined to comment."

Rumors of a Verizon and cable industry megamerger have been floating around the industry for several weeks, with Comcast also being tossed about as an M&A partner. Most of the analysis suggests that Verizon's either interested in using Charter's large footprint to help shore up the company's fifth generation (5G) wireless ambitions, or feels threatened from the cable industry's plan to jump into the wireless sector -- Verizon hoping to head off any additional wireless competition at the pass via M&A.

Less talked about of course is the fact that Charter and Verizon directly compete in many markets (like New York City), and the deal would result in an already relatively uncompetitive sector getting less competitive than ever. Or the fact that time and time again, promises of job creation and improved service in the wake of these deals never actually materialize. In fact, quite often the opposite is the result as redundant positions are eliminated and competitive incentive to compete (or, say, improve utterly abysmal customer service) is eroded further.

Of course the X factor in this latest megamerger rumor is whether or not the Trump administration will approve of the deal. On the campaign trail, Trump promised to not only block AT&T's $100 billion acquisition of Time Warner, but even went so far as to claim he'd somehow break up the already completed Comcast NBC merger, completed back in 2011. Most Wall Street and telecom analysts however believe Trump was just grousing over the negative coverage by NBC and Time Warner-owned CNN, and the ideological bent of his regulatory appointments (like new FCC boss Ajit Pai) suggest standing in the way of such super-unions won't actually be a formal administration policy.

Since historically companies like AT&T and Verizon have had incredible success conning convincing the press and public that these kinds of deals are a great boon for job growth and improved infrastructure, it seems rather likely that Trump will somehow approve and co-opt the deals under a flurry of promises that will never actually materialize. Should these kinds of deals be approved, the cognitive dissonance among Trump supporters still convinced he's somehow a champion of the little guy (despite clear intent to gut consumer protections like net neutrality and his laundry list of ultra-industry friendly administration appointments) should prove equal parts entertaining and terrifying.

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  1. identicon
    Jon, 28 Jan 2017 @ 6:13am

    Re: Re: red/blue partisans don't care

    wow, lazy comment by you... each side of the fence falls short of their campaign promises on a regular basis.. It's called checks and balances.

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