Our View: Customers will pay price in Comcast-Time Warner deal

February 17, 2014 

Private monopolies are like deals with the devil. Everything works fine for awhile, but eventually there’s a price to be paid.

Case in point: As cable TV became popular decades ago, cities were allowed to grant monopolies to cable providers. It worked. Wires were strung to millions of homes and viewers happily plugged into dozens of new channels. The cities were paid “franchise” fees. They had a nominal responsibility to hold cable providers responsible to citizens, but few cities ever took that seriously.

So, in Modesto, Merced and Oakdale your “choice” is Comcast. In Turlock and Escalon it’s Charter. There are other options (dish, antenna), but each has drawbacks.

Forty-something years since the monopolies were granted, cable companies are among the most despised – but profitable – entities in America. Roughly 55 percent of American households rely on cable, often required to subscribe to channels they don’t want and pushed into bundled services on equipment that is a generation behind what is used in Japan, Europe and Korea.

Ever-larger cable corporations have maximized profits without reinvesting in their systems. Where are our fiber optics? Why does the average French household pay $20 for highest-speed Internet when we’re paying $50 for something a tenth as fast?

Last year, Sen. John McCain cited the Federal Communications Commission’s prediction that cable bills will rise 6 percent each year until they’re $200 by 2020.

Simply put, cable monopolies have ceased working for us. They now sometimes work against us.

That brings us to the $45 billion Comcast and Time Warner merger. It’s a bad idea. Not because it limits competition; that battle was lost long ago. A merger between the nation’s two largest telecommunication operators is bad because of the enormous power it concentrates in so few hands – the power to decide what we see, when we see it and how we see it; the power to shut out content the company doesn’t like; the power to charge more but provide less; and, most worrisome, the power to exert a chokehold on an open Internet.

As Sen. Al Franken put it: “Higher prices; worse service.” It’s not funny.

As federal regulators and lawmakers assess this merger, they should apply a broader test than its affect on competition. They should consider this deal’s threat to broadband Internet users. Together, Comcast and Time Warner serve a third of the entire U.S. market, 33 million subscribers. In California that number is 3.7 million, or a quarter of the state’s households, according to Sunne McPeak, CEO of the California Emerging Technology Fund.

McPeak has been fighting to bridge the state’s digital divide between those who have service and those who don’t. These companies both have dismal records for reaching and serving rural, low-income and immigrant residents.

“In California ... Comcast has reached less than 10 percent of eligible participants because they have not made sufficient investment in community partners to inform consumers,” McPeak said. “Time Warner has an even more embarrassing performance … far below 1 percent.”

The real threat is that the Comcast-Time Warner overlords will control what streams through their cables. It might already be happening. Netflix CEO Reed Hastings has accused Comcast of squeezing streamed Netflix content. It’s hard to prove, but many of Comcast’s customers report odd hiccups and delays while watching Netflix.

When the FCC evaluates whether this deal is in the public’s interest, it must work on behalf of customers, and not rubber stamp a telecom industry power grab.

Last month’s ruling that struck down the FCC’s regulations guaranteeing Internet neutrality make this all the more more crucial. That ruling gave cable companies the power to block some information sources from the Net. Eventually, the costs of allowing this merger would become unacceptable.

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