Thoughts on Comcast and Time Warner Cable

When I wrote a review of Susan Crawford’s Captive Audience two months ago, I didn’t expect to be revisiting it so quickly. Then came the news that Comcast was planning to buy Time Warner Cable, gaining a few million more customers and several regional sports networks. With the acquisition of NBC, Comcast is clearly making a play to be in the content business. There’s not much growth potential left in being a service provider, so it makes sense that Comcast would want to hedge their bets. That’s why I suspect they’re more interested in acquiring regional sports nets (live sports being one of the main reasons people don’t cut the cord) than the few million subscribers they’d pick up if the deal is approved.

It’s not like Comcast and Time Warner were really competing, despite how “competitive” the FCC and Comcast claimed the industry to be a few years ago. The cable companies largely have agreed not to step on each others’ toes. In most places, customers have exactly one choice for cable TV provider. Individual consumers will see no difference in the competitive landscape, so it’s easy to dismiss this as a non-issue (as I initially did). Where this may get interesting is when it comes time for networks to renegotiate carriage agreements. Comcast would have greater leverage to low-ball content providers, potentially squeezing a few out of business. As long as other modes of TV exist (e.g. satellite, AT&T U-Verse), I expect Comcast will remain somewhat constrained in their ability to harm content providers, but they’ll continue to be able to prevent competition from sprouting up.

Of course, it’s not guaranteed that this buyout will occur. Despite the relative ease with which the FCC and the Department of Justice approved Comcast’s purchase of NBC, the landscape has changed somewhat. Denying AT&T’s purchase of T-Mobile was a surprisingly pro-consumer decision, and it’s possible that this deal is doomed as well. I don’t follow Washington closely enough to say what’s likely. All I know is that I can’t wait for Metronet to extend their fiber offering to my neighborhood. I’ve been told it may happen as early as next month.

Book review: Captive Audience

I recently learned Of Susan Crawford’s book Captive Audience when she was a guest on the “This Week in Law” podcast. In Captive Audience, Crawford examines the merger of Comcast and NBCUniversal. Crawford makes no attempt to hide her feelings on the nation’s largest cable provider getting (further) into the content business. The book is more of an advocacy journalism work than a dispassionate academic report. Comcast’s supporters may object to Crawford’s arguments, but her characterizations are refreshingly fair. She is quick to point out that the players are acting, not like evil madmen, but rational business actors pursuing their self-interests. Her main concern is that these interests do not line up with what she believes to be the public’s best interests.

Crawford does not blame Comcast CEO Brian Roberts for this disconnect, though his company has worked tirelessly to keep the status quo. The root of the problem is that the Internet industry is both unregulated and uncompetitive. Crawford rejects the notion that DSL, cellular, and satellite services are competitors to cable companies. DSL is too slow and satellite too high-latency for modern Internet applications and cellular, while convenient, is limited by lower bandwidth and small screen sizes.

The state of regulation for cable providers is like that of the early days of the rail road and electrical industries, which is to say non-existent. Cable providers lack the common carrier requirements imposed on the phone companies. As a result, Comcast and others are free to turn the Internet into a walled garden of curated channels, much like the current state of cable television. As dire of a picture as Crawford paints, it’s hard to see it as a likely threat. Plausible, certainly, but I don’t see it on the horizon.

Nevertheless, America clearly has an Internet problem. Our speeds and prices are worse than most of the developed world. In an age where high speed Internet access is increasingly important to social, academic, and economic activities, one third of Americans don’t subscribe to high speed Internet service. A strong correlation between non-subscribership and low socioeconomic status. If Internet connectivity is necessary for prosperity, expensive Internet prevents upward mobility.

Absent competitive pressure, the public interest can only be enforced by regulation. Interestingly, it was the Nixon administration that first sought to prevent monopolies in the cable industry. In recent years, Republicans and Democrats have proven equally unwilling to impose regulation on the industry. Municipal and private sector fiber installations seem to be the only near-term hope for keeping Comcast in check.

In short, I found Captive Audience to be an informative and compelling read. Crawford takes the reader through the history of monopolies in the United States and of the cable industry. She examines the technical and political reasons that Comcast became and remains a monopoly. In closing, Crawford looks at the effect that the Comcast/NBC merger had on AT&T’s failed attempt to purchase T-Mobile. I highly recommend this book to anyone interested in Internet policy.