Six Myths About the Comcast-Time Warner Cable Merger

Comcast’s proposed merger with Time Warner Cable would create the most powerful cable company and Internet service provider this country has ever known. And as Comcast has demonstrated in its new agreement with Netflix, the company has the power to force content providers to enter into secret and anti-competitive pricing deals that hurt consumers.

What does this mean for you and me? Fewer choices, higher prices and less diversity in our media. Below we break down the biggest myths and misconceptions about the deal.

Myth: Cord cutters have nothing to worry about.

Fact: Online video and innovation will suffer most.

Your cable company doesn’t want you getting your Scandal fix from Hulu or Amazon Prime so it’ll do everything it can to keep you as a subscriber even if you watch all your TV online. That’s what happens when your Internet company is also your cable company.

Comcast has a history of blocking applications and capping its customers’ data usage; the company is also in the process of rolling out a system of overage fees for customers who stream or download “too much.”

Most communities have two choices at best when it comes to broadband Internet — the super-slow DSL from the phone company or the high-speed connection over the cable company’s wires. When you can’t walk with your wallet, you have to put up with steep fees and bad service.

Read more about the impact on cord cutters.

Myth: Comcast and Time Warner Cable don’t compete anyway, so this deal doesn’t change anything.

Fact: This is all about competition and market power.

The fact that we have almost zero competition for cable and Internet service is a problem in and of itself. And while Comcast and Time Warner Cable don’t go head to head, both do offer services in various markets, including New York City.

But this isn’t just about direct competition; it’s also about market power. A merged Comcast-Time Warner Cable will offer service to two-thirds of U.S. households. That means that anyone who has to negotiate with Comcast is going up against a behemoth.

This dominance is precisely what forced Netflix to strike a deal with Comcast to ensure continued high-speed connections to Comcast’s subscribers. So now Comcast charges you a fee and it charges Netflix a fee — that’s a win-win for Comcast and a loss for everyone else.

As online video companies like Netflix and Amazon see higher costs, those could trickle down to consumers, who get squeezed at every turn.

It’s also worth noting that if the merger goes through, it knocks out the company most likely to enter (and therefore diversify) the virtual cable market (given Time Warner’s stagnating pay-TV business, its best path to growth is through the over-the-top market).

The merger will instead bring us one giant company that controls marquee television and movie content, as well as the primary vehicles — a major television broadcast network, a major cable system operator and a major broadband Internet access provider — for distributing that content.

Read more about Comcast’s growing power.

Myth: The Comcast merger is a boon for Net Neutrality.

Fact: Comcast has to obey the FCC’s Open Internet Order but only until 2018.

Regulators were so worried about Comcast’s history of bad behavior that when the company merged with NBCUniversal it was forced to abide by the Open Internet Order. This means that even in the wake of a federal court ruling that overturned the Net Neutrality rules, Comcast can’t mess with any of the data that crosses its network. But there’s a hitch: The deal expires in January 2018.

Those in the pro-merger camp point out that Comcast would carry those Net Neutrality protections over to Time Warner Cable customers. Again, those protections come with a clear expiration date. And Comcast’s empty promises aren’t any consolation given how the merger will erode our online rights over the long term.

Read more about the risks to Net Neutrality.

Myth: Time Warner Cable will improve with Comcast’s help.

Fact: Comcast is routinely at the bottom of customer-satisfaction lists.

Time Warner Cable, the country’s second-largest cable and Internet company, serves 11 million households. It has long received terrible marks for customer service.

So who do customers dislike even more? Comcast, which has ranked among the worst companies in America and has even tried to manipulate employees into saying good things about it in online polls.

If Comcast can’t serve its existing communities well, how will expanding help? If anything Comcast will have even less incentive to provide good, reliable service.

If the merger goes through, Comcast will be the only provider of video and Internet services for 120 million of its customers, or about 36 percent of U.S. households. Comcast can afford to have subpar customer service when customers have no other way to get online.

Read more about how the bad could get even worse.

Myth: There are plenty of sources for content and information.

Fact: Comcast already has too much control over content.

Besides being the nation’s largest cable and Internet company, Comcast also owns NBC, tons of cable networks, 24 local TV stations, and stakes in companies including Hulu and the Weather Channel. And if the company acquires Time Warner Cable, it will control the pipes going into more than 60 percent of American homes.  So yes, there’s a lot of content out there — but your Internet and cable company is the gateway to all that content.

Because a bigger and badder Comcast would control both content and distribution on a grander scale, it would have both the incentive and the power to limit access to competing content on the distribution platforms it owns. Comcast would have the power to enforce anti-competitive bundling and pricing of its own programming. It would also be able to outright deny its competitors access to its content.

Comcast’s expanded market power would have a huge impact on independent media makers and diverse voices that don’t fit the Comcast mold and priorities. Already any new cable network essentially has to get picked up by Comcast if it has any chance of staying afloat because Comcast is the gateway to so many homes.

Read more about why the Comcast deal hurts diverse voices.

Myth: I don’t subscribe to Comcast or Time Warner Cable, so this deal has no impact on me.

Fact: This deal isn’t just about dollars. It’s about democracy.

Comcast already wields a great deal of power in Washington: The company spent more than $18 million on lobbying in 2013 alone. The merger would give Comcast even more political muscle, meaning it would have an even better shot of ensuring that future communications policies favor its bottom line.

Katrina vanden Heuvel said it well in the Washington Post:

The merger doesn’t just affect the marketplace of cable; it threatens the marketplace of ideas. The protection of free speech under our Constitution depends on citizens having access to many ideas, many sources, many ways of getting ideas and information. Letting mega-corporations consolidate control of key parts of the media infrastructure directly threatens that access.

Read more about the big picture of this merger. And take action to stop it.

People + Policy

= Positive Change for the Public Good

people + policy = Positive Change for the Public Good