Bigger isn’t always better.
Of all the cable, telephone and Internet companies, the one with the most awful reputation is Comcast. Type the words “Comcast customer service” into a search engine and prepare to be flooded with customers using words like “nightmarish,” “embarrassing,” “worst ever,” “epic failure” and “customer service from hell.”
And America is not enduring this for the sake of bargain-basement prices.
Comcast Executive Vice President David Cohen, who is trying to persuade the California Public Utilities Commission to approve Comcast’s acquisition of Time Warner Cable, thus creating the largest broadband service provider in the United States, said when the deal was announced: “We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”
If they had a choice, many of Comcast’s customers wouldn’t be their customers. If the merger with Time Warner goes through, that choice is about to get a whole lot worse.
Economists use a scale called the Herfindahl-Hirschman Index to measure the level of concentration in a market. Anything with an HHI increase of more than 200 points is likely to enhance market power. The HHI increase for the merger of Comcast and Time Warner Cable is a 4,927-point increase in the fixed broadband market.
California customers have nowhere to run.
Some 76 percent of them will not be able to get broadband service at the FCC-defined high-speed download rate of 25 megabits per second from anyone but the merged Comcast-Time Warner Cable. That isn’t likely to change anytime soon. Both Verizon’s FIOs service and AT&T’s U-verse service have slowed new deployments in California, and Google Fiber is developing slowly. The speed gap between DSL and cable Internet connections is growing, and DSL connections are becoming less viable for many users.
No real competition means no real choice to keep prices in line. Cohen is right. Post-merger, consumer bills are not going to increase less rapidly.
And it’s even worse for content and application providers. As owners of NBCUniversal, Comcast has interests in content and power over the distribution of competing content. For example, the company was tagged with preventing customers from streaming HBO Go on Sony PlayStations. Roku, another streaming service, also experienced carriage problems with Comcast.
California’s public and educational channels, as well as some independent foreign-language channels, have complained for years about cable-system menus that move channels into the stratosphere, making them hard for consumers to find or dropping them from cable systems entirely. With Charter Communications systems reverting to Comcast and the removal of Time Warner Cable from the cable market, Comcast’s dominance means its treatment of smaller channels in cable systems and carriage issues with disruptive providers such as Roku and Sony PlayStation would extend throughout much of the state.
While some Internet protection may come from new network neutrality rules, there isn’t much doubt those rules are going to face challenges, both in Congress and in the courts. Without them, in the words of CPUC Administrative Law Judge Karl Bemesderfer: “This is precisely the ‘terminating monopoly’ power that intervenors fear. The power of the terminating monopolist to discriminate or otherwise act anticompetitively could increase the cost and reduce the attractiveness of competing content.”
The federal government must approve the merger, but each state must approve license transfers. The California Public Utilities Commission will vote on whether to transfer certain state licenses from Time Warner Cable to Comcast.
To read the recent 100-plus-page decision from the CPUC, you wouldn’t think this proposed merger is good for anyone. The regulator approved the merger with more than two dozen conditions to mitigate the bad impacts on Californians.
The huge list of conditions is designed to make the merger “less destructive” to digital inclusion, consumer protection and competition in the cable and broadband markets.
Here’s the problem. The public has limited funds and resources to take mega-corporations to court. The commission, under fire for getting too cozy with industries it regulates, is giving itself a mighty big job to proactively enforce 25 different conditions for the next five years. Concerns of Comcast failing to abide by these conditions isn’t just a rumor. On Tuesday, the company filed objections to 20 of the proposed conditions. And fines and other punitive actions won’t really prevent the destructive impacts on Californians suffering from high prices, bad service and limited access.
There’s an easier solution. If something takes two dozen onerous conditions to prevent significant damage, then maybe the public is better off without it. On March 26, the commission will vote on the Comcast-Time Warner Cable merger. A million conditions can’t make this a good enough deal. There comes a time to just say no.
Tracy Rosenberg is the executive director of Media Alliance, a democratic communications advocacy nonprofit located in Oakland. www.media-alliance.org. To comment, submit your letter to the editor at www.sfgate.com/submissions.