Why Comcast's Time Warner Cable Purchase Could Choke Internet Access

Why Comcast's Time Warner Cable Purchase Could Choke Internet Access

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Net neutrality is shaping up to be at the center of the debate on whether to allow the communications merger

Comcast's deal to acquire Time Warner Cable would give the communications giant unprecedented control over America's broadband network, allowing it to serve as gatekeeper to the internet, according to critics of the deal announced last week.

If regulators approve the $45.2 billion purchase, Comcast will service one-third of U.S. broadband households and almost half of the bundle market for internet, television and phone service.

The specter of one company monopolizing the digital lanes the country uses to access the web has open internet advocates spoiling for a fight. They warn that if a deal is allowed to go through, Comcast will have the power to stifle innovation, making the path steeper for the next Google or Facebook. They are betting that the same community that rallied to prevent the passage of anti-piracy legislation such as SOPA and PIPA will get engaged again.

“We hope that the grassroots network that was activated and motivated by SOPA and PIPA and net neutrality will see that these issues are all connected with what Comcast is doing,” Craig Aaron, president and CEO of Free Press, told TheWrap. “This is not a business story. This is a democracy  story. It's about how does Comcast entrench itself at the nexus of all of the big debates of our day and position itself as the dominant force in determining what we read or watch or download.”

Also read: What the Comcast Purchase of Time Warner Cable Means for Cord-Cutting – and Consolidation

Activists such as Aaron contend that Comcast will be able to levy higher fees on companies to get faster connections to customers and will have the power as a web service provider to favor certain content, in essence creating a tiered internet system. That concern has been magnified by last month's  U.S. Court of Appeals for the District of Columbia ruling that overturned the Federal Communications Commission's 2010 net neutrality regulations.

“Any business that requires lots of bits or video is at risk,” said Susan Crawford, a visiting professor at Harvard Law School, former Obama administration technology advisor and columnist for Bloomberg View. “The country's largest cable operator is in a position to thwart the development of new jobs and new services that depend on high capacity communications and that's a terrible risk to the country's future.”

Also read: Angry Reactions Greet Comcast Acquisition Of Time Warner Cable

Comcast, which own NBCUniversal, is the rare internet service and cable provider that it also a content creator, meaning it could favor its channels and services such as Streampix, its version of Netflix, or its home security system over the high capacity services of others.

“If we re-establish the gatekeeper control in a digital world that we had in an analog one, all sorts of problems will emerge,” Michael Bracy, partner in the government affairs firm Bracy Tucker Brown & Valanzano and co-founder of the Future of Music Coalition, said. “Anything that moves the internet farther into corporate control threatens the ability of new economic models to emerge.”

Also read: Big Win for Net Neutrality? How the Comcast-Time Warner Deal Can Help Save the Open Internet

Comcast counters that the risks of internet domination are greatly exaggerated. It notes that it is currently the only cable provider subject to the FCC's net neutrality regulations, barring it from favoring its digital content over competitors.  When Comcast made its deal for NBC Universal in 2011, it agreed to embrace the FCC's open internet rules until January 2018, whether or not they were overturned in court. It may agree to extend that deadline in order to get approval for its latest merger.

“Time Warner Cable is not subject to net neutrality rules, but these rules apply to any company we acquire,” Sena Fitzmaurice, vice president for government communications for Comcast Corporation, told TheWrap.  “These groups always say terrible things are going to happen and the reality turns out to be much different.”

Should Comcast defy open internet guidelines after its agreement with the government terminates it will take a big risk.  Fundamentally altering the status quo on the internet would invite government scrutiny and potentially could lead to stricter regulations, something Comcast and other service providers would like to avoid.

Yet open internet advocates note that Comcast's agreement to adhere by the FCC's rules has an expiration date and its acquisition of Time Warner Cable and its 8 million subscribers does not.

Also read: Comcast’s Time Warner Cable Deal Will Be ‘Excruciating Wrestling Match’ With Regulators

If that day comes and companies are forced to pay more to have their content flow unimpeded along Comcast's pipes it will make the internet less meritocratic. Companies such as Google or Netflix have the resources to pony up for better service, but the next generation of entrepreneurs may not and that uncertainty, in turn, could make venture capitalists and financiers less willing to back digital projects.

“I’m really concerned with having a marketplace set up so new entrants can come in and thrive and that may not be able to get done in a payola internet,” John Bergmayer, senior staff attorney at Public Knowledge, said. “It's important not to be too utopian about the internet  it has its own set of problems — but I'll take openness and YouTube any day over public access TV, which was the best the cable companies could do when they controlled everything.”

The sheer size of Comcast will give it inordinate leverage over content providers who need broadband access to move goods, putting them at a competitive disadvantage, open internet advocates claim.

Also read: Comcast Confirms $45.2B Time Warner Cable Purchase

“The worst nightmare for any provider of any goods is to have only one potential buyer,” said Stuart Benjamin, a professor at Duke University School of Law and co-director of its Center for Innovation Policy.  “If you only have one buyer that buyer has you over a barrel. With this merger you have a massive company that controls all of the broadband access to a larger number of customers. That's an enormous amount of buying power. The more any company bulks ups, the stronger its negotiating power will be.”

In a conference call with media last week, Comcast's chief lobbyist David Cohen deflected claims that merging with Time Warner Cable would create a negotiating juggernaut, noting that the two companies had never operated in the same geographic region before the deal.

“The difference between having 22 million customers and having 30 million customers, in a market that has more than a 100 million customers is simply not going to be enormous in terms of our leverage around programming,” Cohen said.

Those 8 million customers are shaping up to be the focal point of a battle royale pitting cable and internet advocates against each other. Get ready for round one.

  • Jim

    I use to have Comcast, and then switch over to TimeWarner. I don't see any changes in the monthly bill when Comcast takes over.

    Comcast needs the money, badly! “Universal Pictures.”

  • davyjc

    Comcast will slow down Netflix's connectivity and push their own service. Complaints will mount against Netflix and customers will flock over to Streampix. It is not an unheard of corporate strategy.

    • http://www.facebook.com/anthony.carl.caudill Anthony Caudill

      If they do that I'll lead a team directly into Comcast's offices and we'll throw them out their own windows.

  • RUCBAR

    OMG. It's IOI!

  • http://outinthestreetfilms.com/ Out in the Street Films

    Comcast doublespeak: “Comcast counters that the risks of internet domination are greatly exaggerated. It notes that it is currently the only cable provider subject to the FCC’s net neutrality regulations, barring it from favoring its digital content over competitors….”

    In a monopoly there are no competitors. It can legally favor any area, any source, or any service of it's own jurisdiction over any other.

  • I AM Patrick

    “They warn that if a deal is allowed to go through, Comcast will have the power to stifle innovation, making the path steeper for the next Google or Facebook.” How about the next COMCAST? I dare anyone try and start your own media company! Comcast will be there to CRUSH YOU!

  • I AM Patrick

    Comcast's main argument is that adding Time Warner's 8 or 10 million customers is not that much. My argument is that Comcast is already too big and should be broken up into smaller companies NOW.

  • dodadodayDONE

    I smell a HUGE price increase. . . Comcast/Xfinity has the worst CUSTOMER SERVICE EVER, now . . . the bundle is already so OUTRAGEOUSLY OVER priced, makes ya feel as though we should ALL just “DROP THEM… the sooner the BETTER!!” Is all about that almighty dollar. . . just another way the administration (DC) is passing on additional regulations to those who WORK and PAY their bills RESPONSIBLY. . . sickening!!! I'm done with them, nothing worth the watch on television, anyway. . . THANKFULLY we have several other choices for internet and phone service!!! IT'S all a part of “THE PLAN” for the payers!! SIMPLY as that!! No bundles are the BEST bundles of all!!! Screw Comcast, that's my opinion… I'm SWITCHING …. NOW!!! Wow the comical “rewards,” you reap as a “loyal customer, right!!” GOING, GOING, GONE!!!

    • person

      I object.. not to your point, but to your apparently arbitrary use of punctuation. . Have you ever read a book, or perhaps attended a grade school English class?

  • goawayNOW

    Comcast has the WORST equipment, WORST service, WORST equipment, already…. need I say more? SKY HIGH pricing and with absolutely NO loyalty to former LOYAL customers… NO CUSTOMER SERVICE, period. . . and “they” will dictate to even more sheeple, not happening for me!! I've already DUPED this bunch of scammers, I changed back to OLD faithful, so HAPPY, Happy, Happy!! GET ready folks, the price is about to SKY ROCKET, and for WHAT? seriously WHAT do they offer, their equipment is the WORST, exactly like the “100% customer SATISFACTION?” OMG. . . hope they go BANKRUPT, if everyone would just SAY NO, the results would be nothing short of AMAZING!!!! Switch before “they” Switch or they will OWN you. . . simple as that!!!

  • http://www.facebook.com/anthony.carl.caudill Anthony Caudill

    Yeah I think if the government isn't going to do something about this then the people should make a citizens arrest of the top execs. Wait until they demonstrate their bad faith. Then attack.

  • Daniel Sterling Sample

    Dear Ignorant, Myopic, Asleep-At-The-Wheel America, We are rapidly losing our basic rights to free and open communications in America and all I see in these posted comments are a few disgruntled souls who cry about increased costs in delivery services. The clock is turning back to “1984”! Daniel Sterling Sample in beautiful downtown Hollywood sample.daniel@gmail.com

  • Daniel Sterling Sample

    It is past time that our government, including the Justice Department, the IRS and the FBI delved into the convoluted record keeping system that has allowed the Hollywood Studios to shortchange the IRS of tens of billions of dollars in revenue. This will be a very difficult task because President Obama has very obviously been “bought off” by the Hollywood Studios, save one studio, because it is foreign owned, never learned the art of hiding assets, “Hollywood style”. I suspect that if enough hidden assets were uncovered, all of the Hollywood Studios, save one, would be required to hand over the keys to their studios to our tax collectors and walk away. Bribing Congress and the President, off shore bank accounts, two sets of accounting ledgers, I say that enough is enough! Daniel Sterling Sample in beautiful downtown Hollywood sample.daniel@gmail.com
    “But first of all, you gotta get mad! You gotta say to yourself, I'm a
    human being, Goddamn it! My life has value!”
    -Howard Beale in NETWORK

  • Daniel Sterling Sample

    I think I forgot to mention one of the Hollywood Studios most famous accounting tricks, a juggling of studio costs called “CROSS COLLATERALIZATION”. It is a nightmare that has continually baffled and confused IRS auditors for decades. Daniel Sterling Sample in beautiful downtown Hollywood. sample.daniel@gmail.com
    P.S. The 2016 Presidential Election will be here before you know it! On the Demo slate, Hillary means more Obama style “payola”. The Republicans, having offended every minority in America, must forget the White House until 2020. Who is left? I have a suggestion, but you gotta email me for the answer……