Comcast-Time Warner cable merger raises concerns

Time Warner BuildingThe Time Warner Center in Columbus Circle, NYC, which is about to be taken over by Comcast. (Credit: Flickr.com)
Time Warner Building

The Time Warner Center in Columbus Circle, NYC, which is about to be taken over by Comcast. (Credit: Flickr.com)

Who thinks cable service is already too expensive? Customers pay on average approximately $250 per month for Cable, Internet, and in some cases their phone line as well. We Americans already pay the highest amount for cable service in the developed world. These are all necessary services that keep us informed and interconnected in this highly technological day and age. Last week, Comcast (the largest cable company in the US) acquired Time Warner Cable (the second-largest cable company in the US) for $45 billion. The Comcast-Time Warner merger would result in a powerhouse which has the upper hand in negotiations with networks and internet companies. Who could afford to refuse the conglomerate’s terms? We consumers need more competition, not less. As a result of the acquisition, there’s a good chance that consumers’ monthly cable, Internet, and/or phone bill will rise even further. If the U.S. Government allows this merger to happen, there will be strong consequences felt across the country. For many reasons, I believe this merger should not be allowed to occur and the government should intervene.

Firstly, this merger will be an omen for capitalism as we know it if allowed to occur. Capitalism will begin to resemble media monopolies. Even Adam Smith, the founder of capitalism, asserted that said economic system functions best when many smaller businesses compete to create the best-quality product. With the merging of Comcast and Time Warner Cable, only 6 media providers in the entire United States will be in operation in comparison to the once 20 providers. This is highly concerning because the number of Internet sources will decrease. This can potentially lead to increased censorship and content control as different providers censor differently. In a democracy such as the U.S., censorship should only occur when in the interests of national security.

Furthermore, the consumer is likely to incur higher bills according to analysts, and Comcast will be viewed as a bully in the market. John Bergmayer, senior staff attorney for online consumer activist group Public Knowledge, stated that, “An enlarged Comcast would be the bully in the schoolyard, able to dictate terms to content creators, Internet companies, other communications networks that must interconnect with it, and distributors who must access its content. By raising the costs of its rivals and business partners, an enlarged Comcast would raise costs for consumers, who ultimately pay the bills.” As if $250 per month isn’t enough, our bill can skyrocket, we could lose channels and sources to boot! This is absolutely ridiculous. I do not believe people should have to pay even more for access to information, which is considered by most to be a basic necessity.

There is also the growing concern among many customers that this merger will result in lower service quality. David VanAmburg, the managing director of the American Customer Satisfaction Index, said, “Whenever there are mergers of two large customer-service providers … we tend to see quite a few problems.” This held especially true for the American Airlines and US Airways merger.

It is time for the government to respond and stop this merger. Adam Smith stressed that government has the responsibility for regulating when anti-competitive practices ensue in the market. Clearly, the Comcast-Time Warner merger is anti-competitive. It is predicted that out of a region of twenty states, nineteen of the states will wind up with the same cable and internet provider. In such a situation, the customer is disadvantaged while Comcast is not. This brings back memories of the AT&T phone monopoly, which President Reagan broke up in the 1980’s. Another successful busting of mergers which comes to mind is the separation of mergers of movie theater companies and movie producers in the 1940’s. The same should be done regarding Comcast and Time Warner to preserve competition, content, and high-quality service.