Comcast's (CMCSA) $45.2 billion takeover of Time Warner Cable (TWC) would place too much power over the nation's cable and broadband markets into the hands of one company and should be blocked by regulators, according to a New York Times editorial.
The merged company would control 30 percent of the U.S. pay television market and service about 40 percent of high-speed Internet users. Though Philadelphia-based Comcast has argued that consumers won't be hurt by the merger since it doesn't compete directly with Time Warner Cable in any markets, the Times and other critics aren't buying that argument. For instance, as the newspaper notes, FCC data shows that 64 percent of U.S. homes have at most two choices for broadband service. Consumers are at a disadvantage as a result.
"Wireless services can handle streaming video, but many customers of Verizon or AT&T would blow through their monthly wireless data plan by streaming just one two-hour high-definition movie, at which point they would have to fork over extra fees," the newspaper says.
Another fear of the merger's critics is that if the deal was approved Comcast would try to prevent the distribution of content that competes against its NBC Universal business, a charge the companies reject. The newspaper also points to the agreement that Netflix (NFLX) recently signed with Comcast to get "better access" to its broadband network as a harbinger of things to come since it would put "start-ups and smaller companies without deep pockets at a competitive disadvantage," the newspaper notes.
Opponents of the deal have argued that it will also do little to improve Comcast's dismal customer service record.
"Consumers are beginning to see exciting new online services that give meaningful alternatives to the excessive prices and poor service they've come to expect from Comcast and other providers," says Gene Kimmelman, the head of Public Knowledge, a non-profit opposed to the deal. "However, this merger would give Comcast the incentive and ability to stifle competition, thwart innovation from online services, and impose higher costs on rival video and online services, which will eventually be paid for by consumers."
Wall Street analysts have argued that the Comcast-Time Warner Cable deal will usher in a wave of consolidation among telecommunications providers that has already begun with AT&T's (T) planned $48.5 billion acquisition of DirecTV (DTV), the second-largest satellite TV provider. Sprint (S) and T-Mobile (TMUS) have been mentioned as potential merger partners as well. Verizon (VZ), however, has refuted speculation that it was interested in buying DirecTV's rival Dish Network (DISH).