Broadband

by Karl Bode


Filed Under:
broadband, competition, merger, tv

Companies:
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. icon
    Toestubber (profile), 27 Jan 2017 @ 9:57am

    red/blue partisans don't care

    Should these kinds of deals be approved, the cognitive dissonance among Trump supporters still convinced he's somehow a champion of the little guy ... should prove equal parts entertaining and terrifying.

    Among the minority of Trumpeteers who even notice these events at all, the magic words "Hillary would have done the same!" can easily dispel any uncomfortable thoughts.

    reply to this | link to this | view in thread ]

  2. icon
    That Anonymous Coward (profile), 27 Jan 2017 @ 10:07am

    The trite overused - Insanity is doing the same thing over and over and expecting a different result.

    Allowing mergers has not improved anything except the bottom line for some CEOs. We get worse service, more hidden fees, more limitations, and lip service.

    One would think at some point the people might finally just toss out the politicians who sell their votes for small contributions at the expense of citizens.

    As we've seen in most cases, when an underserved community gets fed up and builds out their own network, its cheaper & faster than what incumbents claim they would offer (when and if they finally get around to servicing the area, but the people should have to wait for that to maybe happen.).

    Google rolled into a few towns and O M G somehow gigabit connections were suddenly rolling out from incumbents faster than lightning. Mind you they still want to impose caps to create another income stream, despite the costs being not that great.

    Why do we have such shitty service?
    We handed them unchecked billions to make sure service reached areas that weren't profitable... funny those areas have no better service today.

    We are expecting corporations to do what is right for consumers and not what is right for the investors bottom line. The alleged oversight over them hasn't done dick because our elected leaders fear the lobbyist putting out hit pieces & not funding them.

    Allowing the few to become the fewer just locks us into more slow roll expansions & spiraling costs always going up. No one is protecting the consumers, except the media who can manage to get stolen funds returned with 2 phone calls that the consumers been trying to get back for 2 years.

    They all claim they love free markets, so open the damn markets up. Use the universal service fund to run wires everywhere & make ISPs compete in selling service across the lines. Let towns see if they can offer better services for cheaper, stop listening to corporations who didn't give a shit about those consumers until they found a way to get service before the big boy decided it might be worth doing.

    Why should an ISP be a billion dollar corporation, when the services they provide is trailing so far behind the world? Its not because people using more is cutting their profits in bandwidth costs, it is simply because we allow a few players total control & look away as their magically have similar prices & offerings.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, 27 Jan 2017 @ 10:32am

    Re:

    We are expecting corporations to do what is right for consumers and not what is right for the investors bottom line.

    I've always thought this was one of the real dummy weaknesses of capitalism, or at least corporatism as we have it set up. Obligation to investors, now. Not customers, not potential investors years down the line, not the state that provides the infrastructure and framework for your existence. And there's a certain amount of reason for why it's set up like it is, but it always seemed like being legally obligated to maximize the short term and hell with the long term was a really weird, kind-of-obviously-fucked setup.

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, 27 Jan 2017 @ 10:36am

    When they become a content and delivery giant, they will have even more reason to uses caps and throttling to try and force consumers to consume their content, and not that of their competitors.

    reply to this | link to this | view in thread ]

  5. identicon
    Anonymous Coward, 27 Jan 2017 @ 10:55am

    Re: red/blue partisans don't care

    Seems to be the case.

    They seem to not care much, or not be aware, when their exalted leader comes up short of their expectations. It is a cult of personality complete with mindless worshipers who ignorantly praise their benevolent overlords whilst pleading for more draconian measures to bludgeon an unsuspecting public.

    reply to this | link to this | view in thread ]

  6. icon
    ECA (profile), 27 Jan 2017 @ 11:24am

    BULL

    There has been LITTLE if any competition in YEARS...
    FROM MS to canle..
    If you look in the background, MS, has given money to APPLE to keep them around, MS, has stolen software from MANY companies and OS's..
    The cable corps LOVE SAT..as they can POINT to it and say its competition..
    THEN the bait and switch on PRICES and contracts..WE charge you $20 for the first year and then $60-100 per month for 2 years..
    Even the break up of MA-BELL...REALLY didnt do anything, except create a Card game of WHO OWNS WHOM..

    reply to this | link to this | view in thread ]

  7. icon
    NaBUru38 (profile), 27 Jan 2017 @ 11:59am

    Less consumer choice is never a good idea.

    How many homes would have just one broadband internet provider?

    reply to this | link to this | view in thread ]

  8. identicon
    Anonymous Coward, 27 Jan 2017 @ 12:15pm

    Re: Re:

    "but it always seemed like being legally obligated to maximize the short term and hell with the long term was a really weird, kind-of-obviously-fucked setup."

    That's a widely spread urban myth, but if you want to do shitty things in order to line your pockets as quickly as possible it's a useful myth to help propagate. Below is an article that clarifies what is, and is not, required.

    I will agree with you that greed (just basic, human greed) is the elephant in the room that proponents of the free market don't want to talk about and it's this elephant that is driving the economic divide.

    If you and I both own companies and both just want to make as much revenue as possible it's in our best interests to work together, not compete. We should work together to keep prices high. Work together to keep employee compensation low. Work together to keep new companies from succeeding because that will dilute our revenue. Eventually one of us will most likely buy the other one out and we'll both reap the rewards of a monopoly.

    Competition gets expensive which is why incumbent companies don't want to do it. This natural path to homogeny is basically why anti-trust, consumer protection and labor protection legislation came into being.

    "Corporations Don’t Have to Maximize Profits"
    http://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareho lders/corporations-dont-have-to-maximize-profits

    reply to this | link to this | view in thread ]

  9. icon
    Jinxed (profile), 27 Jan 2017 @ 1:29pm

    The only "bright side" any of us has now is there will be only one major company, who'll get broken up into baby companies when it's "finally" realized the company is a monopoly (perhaps by then, with government oversight).

    reply to this | link to this | view in thread ]

  10. icon
    R.H. (profile), 27 Jan 2017 @ 6:16pm

    Re:

    Charter is already my only broadband internet provider. My choices for internet service are Charter, Frontier (who can't do more than 6 Mbps where I am, the salesperson on the phone actually admitted that their DSLAM was too far from my place and they'd be unable to provide the full 12 Mbps), and satellite service with its currently horrible latencies.

    That being said, I haven't had any big issues with Charter but, I still think we need more competition in the ISP space, not less.

    reply to this | link to this | view in thread ]

  11. 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.

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, 28 Jan 2017 @ 1:59pm

    Basic economics says that monopolies are generally the outcome if free markets. The best solution over time wins out.


    What you are seeing is the end result. Ask Mike for more basic education in this stuff.

    reply to this | link to this | view in thread ]

  13. icon
    Mason Wheeler (profile), 30 Jan 2017 @ 7:31am

    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.

    Hey, if he manages to pull this off, I'll vote to reelect him. That merger should never have happened in the first place and everyone knows it.

    reply to this | link to this | view in thread ]

  14. identicon
    Wendy Cockcroft, 31 Jan 2017 @ 2:18am

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

    LOL! Which checks and balances are being applied by the current incumbent? His family and friends are running the show!

    reply to this | link to this | view in thread ]

  15. identicon
    Wendy Cockcroft, 31 Jan 2017 @ 2:20am

    Re:

    So what you're saying is, in time markets stop being free. Break up the monopolies to free them up again.

    reply to this | link to this | view in thread ]


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