The American Antitrust Institute (AAI) today filed comments encouraging the Federal Communications Commission (FCC) to reject the merger application of Comcast and Time Warner Cable (TWC).
“This deal is not in the pubic interest — it raises potentially serious problems for competition and consumers,” said AAI Vice President and economist Diana Moss. “They range from how Comcast-TWC could exclude video distribution rivals, use its position as ISP “gatekeeper” to limit competition from content, edge, and middle market providers, to exercising greater buyer power.”
The AAI comments to the FCC sketch a troubling landscape against which the proposed deal would occur, including high levels of consumer dissatisfaction with Comcast and TWC and a history of swaps that have enabled large cable TV and broadband ISPs to divide markets and solidify their dominance.
“We are looking at this merger through the lens of sea-changes in the landscape of the cable TV and broadband ISP markets,” explained Moss. “Multiple deals are on deck, including AT&T-DirecTV, which pose unusual burdens and challenges for the resources of the U.S. Department of Justice and FCC.”
The AAI analysis is critical of Comcast-TWC’s claims that the merger will produce benefits. “It doesn’t pass the cost-benefit test,” said Moss. “Based on our analysis, the claimed cost savings and other efficiencies are either not specific to the merger, are unlikely to materialize, or are contradicted by Comcast’s previous conduct.”
The AAI comments explain why grafting the conduct remedies from Comcast-NBCU onto Comcast-TWC is a losing proposition. Merged companies have incentives to develop ‘workarounds’ to avoid or minimize remedies. Moreover, Moss noted of Comcast-TWC that “this is a different deal that poses new and different competitive problems. Comcast-NBCU remedies won’t work here.”
The Comcast-TWC deal also comes at a critical time when telecommunications regulators are grappling with open Internet principles. More powerful merged companies with economic and political clout could shape those outcomes. The AAI comments suggest competition enforcers adopt a ‘step back’ or a ‘go slow‘ policy in light of rapid and significant consolidation in the cable TV-broadband ISP space.
Contact Diana Moss at 720-233-5971 or dmoss@antitrustinstitute.org.
