President Obama’s request that the Federal Communications Commission (FCC) implement net neutrality regulations has brought another important public policy matter back to the forefront: the proposed merger between Comcast and Time Warner Cable (TWC).
An AP story notes, “Obama's stance on net neutrality has spurred speculation that Philadelphia-based Comcast may face more difficulty gaining regulatory approval of its Time Warner Cable Inc. acquisition, which was announced nine months ago.”
There is little question that heavy-handed net neutrality regulations could impede the deployment of new and expanded broadband consumer products. However, the policy merits of the Comcast-TWC merger remain as solid as ever, and the transaction should not be hindered by Obama’s announcement.
I noted in NTU’s filing to the FCC in August that the primary consideration for policymakers when evaluating the merger ought to be the preservation of consumer choice. On that matter, it poses no threat.
As I wrote in our filing:
Comcast and TWC do not directly compete with one another in any local markets, meaning the merger would not result in a reduction in consumer choice among multichannel video programming distributors (MVPD) or broadband Internet providers. Indeed, most consumers currently have one and only one option when it comes to cable providers. The vast majority of consumers are provided with multiple options for paid television services from other MVPDs such as satellite and fiber optic providers. Additionally, these services are seeing a surge in competition from online television content. The MVPD marketplace is dynamic and competitive and would continue to be so after the merger.
The second consideration should be the potential downstream effects of consolidation. Again, our analysis suggests there is no cause for worry.
From NTU’s filing:
Per the terms of the agreement, Comcast would acquire 11 million TWC customers and subsequently divest nearly four million customers to other providers. The net result would bring Comcast’s customer base from approximately 22 million to 29 million, while ensuring that Comcast’s total share of subscribers remains below 30 percent of the total MVPD market. At this level of market share, it is unlikely that downstream consumers or upstream businesses – such as content providers – would be significantly disadvantaged by any increased bargaining power of Comcast-TWC.
Finally, in NTU’s comments, I note some potential consumer benefits of the merger:
Current TWC customers in particular stand to gain. As of now, 100 percent of Comcast’s footprint offers all-digital service, while the same is true for just 17 percent of TWC’s. Comcast’s strong emphasis on providing digital services to its customer base will likely accrue first to its new subscribers following the merger.
In sum, the potential implementation of harmful net neutrality regulations ought to be a serious concern for lawmakers and regulators. The Comcast-TWC merger should not.