Comcast Argues TWC Merger Would Level Playing Field

Comcast on Wednesday pulled out all the stops in a “public interest” statement on its proposed merger with Time Warner Cable, one day before it has to appear before the United States Senate Judiciary Committee for questioning about the deal.

Hot buttons such as Net neutrality, consumer choice, better and lower-cost services for business, and competition were touched on. Oh, and Comcast cast itself as the underdog against the competition.

The deal will extend network neutrality protection to millions more broadband customers through Comcast’s commitment to the U.S. Federal Communications Commission’s Open Internet Rules, argued Comcast Executive Vice President David Cohen.

“The government should take a good, hard look at this deal,” Jim McGregor, principal analyst at Tirias Research, told the E-Commerce Times. “At the end of the day, companies will look to maximize their profit, so you need to ask what kind of investment they plan to make and what they plan to charge consumers.”

Comcast’s Depiction of the Post-Merger Future

Comcast is predicting a brighter future, mainly for TWC customers.

They will get high-speed broadband services, a fully upgraded network offering highly reliable and secure service, and a nationally acclaimed and comprehensive low-income broadband adoption program.

Companies with offices in several states will be able to get seamless solutions from the post-merger conglomerate, while advertisers will be able to target larger audiences and extend their operations to video on demand and other cable and online programming.

As for competition, “Comcast and TWC do not compete against each other in any area, so there is no reduction in consumer choice in any market,” Comcast’s Cohen contended.

There was no mention of whether the new services would be economically priced, but Maribel Lopez, principal analyst at Lopez Research, expressed doubt.

“They’ll keep spending money, and we’ll keep paying more,” Lopez told the E-Commerce Times.

Fending Off the Outsiders

Meanwhile, non-cable industry companies such as Apple, Google and Yahoo are “competing with each other and us in unprecedented ways” and many of them are “far larger than our combined company would be,” Cohen said.

The cable industry is “a natural oligopoly. It’s basically a battle of the giants; there are no underdogs in this space,” Lopez pointed out.

“When a company like Comcast gets too big, it becomes difficult for emerging services like Amazon and Netflix to break through,” Rob Enderle, principal analyst at the Enderle Group, told the E-Commerce Times. “On the other hand, if Comcast didn’t merge with TWC, it might not survive.”

Reactions to Comcast’s Pitch

The American Cable Association and NTCA: The Rural Broadband Association have written the Judiciary Committee stating the proposed merger would harm consumers and competition.

Comcast claims it will serve less than 30 percent of the multichannel video market after the transaction closes and it divests about 3 million customers, but that is wrong, said Mark Cooper, research director at the Consumer Federation of America.

“That’s the cable market,” Cooper told the E-Commerce Times. “Comcast have 50 percent of the broadband market and that’s what’s at stake here, because that determines whether or not I can get true broadband.”

Comcast did not respond to our request for further details.

On Net Neutrality

Comcast fought the FCC over Net neutrality, winning on a technicality earlier this year.

Comcast then squeezed money out of Netflix, supposedly to ensure the consumer experience. Netflix subsequently complained that the deal undermined Comcast’s proclaimed adherence to Net neutrality.

“Comcast degraded Netflix’s service and raised their costs,” charged CFA’s Cooper. “These are classic anticompetitive tactics.”

Richard Adhikari

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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