Bigger isn't always better. At least that's what a lot of people are saying about the prospect of the nation's two biggest cable companies becoming one, as Comcast seeks a $45 billion takeover of Time Warner Cable.
Comcast is already the largest cable and broadband company, and Time Warner is the number two cable company and third biggest broadband provider. Combining the two would give Comcast access to about 30 million cable subscribers -- or more than two-thirds of the market -- and control over nearly 40 percent of broadband customers.
Naturally, when any one company stands to get that big, it raises a lot of questions. And when it's taking place in a market where most of us already have limited choices, we at Consumers Union, the policy and advocacy arm of Consumer Reports, have some serious concerns.
We think this is a bad deal for consumers, and it ought to be rejected by the federal government. This industry is notorious for price hikes and lousy customer service, and a merger this size doesn't exactly convince us that it's going to change things for the better.
The proposed deal was first announced in February, and Comcast filed its formal paperwork with the Federal Communications Commission on April 8. In its filing, Comcast billed the merger as a boost for consumers, allowing the cable giant to offer faster service and cutting-edge technologies while Comcast "tries" to keep up with growing competitors.
But when you take a closer look at Comcast's claims, it's clear that the market is already suffering from too little real competition, and this merger could make things much worse. A Comcast executive has even acknowledged that the company can't promise that customer bills "are going to go down or even that they're going to increase less rapidly."
Consumers are already down on Comcast and Time Warner Cable. Both earned low customer satisfaction scores in the latest Consumer Reports survey of consumers about telecom services. In particular, the two received poor scores for value for the money and low marks for customer support.
Our concern goes further than Comcast's growing market share as a cable and broadband provider. Comcast is also a major content producer, and it owns a large amount of programming as a result of its previous merger with NBC Universal. Add all of this together and you would have a company with the ability to control the speed, quality, and type of programming for an unprecedented number of consumers.
We recently joined with a coalition that gathered petitions with 400,000 signatures urging the federal government to reject the deal. The petitions will be delivered to the FCC and the Department of Justice, which are charged with reviewing the merger. These petitions come on the heels of a letter from more than 50 public interest groups, including us, asking regulators to give it a thumbs down.
At an April 9 hearing on Capitol Hill, senators from both sides of the political aisle questioned how a mega-merger like this could help consumers. House members will hold a hearing of their own in May, and more hearings could be announced in the months ahead.
A combined Comcast/Time Warner has implications for millions of consumers around the country, so it's no wonder that this issue has struck a chord with so many people. We're committed to ensuring that consumers are heard. The government's review of this merger has just begun, so there's still time to voice your own opinion. If you agree that this merger is a bad deal for consumers, we hope you'll sign our petition.
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