Turn it off

[Commentary] Comcast announced that it would buy Time Warner Cable, the largest provider of TV and broadband after Comcast, for around $45 billion. The Department of Justice and the Federal Communications Commission are scheduled to begin reviewing the merger soon.

They should be skeptical. The deal would create a Goliath far more fearsome than the latest ride at the Universal Studios theme park (also Comcast-owned). Comcast has said it would forfeit 3 million subscribers, but even with that concession the combination of the two firms would have around 30 million -- more than 30% of all TV subscribers and around 33% of broadband customers. In the cable market alone (i.e., not counting suppliers of satellite services such as DirecTV), Comcast has as much as 55% of all TV and broadband subscribers.

If the takeover is approved, Comcast would control 20 of the top 25 cable markets, according to MoffettNathanson, a research firm. For consumers the deal would mean the union of two companies that are already reviled for their poor customer service and high prices.

David Cohen, Comcast’s chief lobbyist has said, “We’re certainly not promising that customer bills are going to go down or even that they’re going to increase less rapidly.” Between 1995 and 2012 the average price of a cable subscription increased at a compound annual rate of more than 6%.

The biggest worry is Comcast’s grip on the Internet. Unlike Britain and France, America unwisely has no “common carriage”, allowing for Internet service providers to rent cable companies’ pipes and compete on price and speed. Already Americans pay far more than people in other rich countries for slower Internet. Comcast will have extraordinary power over what content is delivered to consumers, and at what speed.