the Beacon Journal editorial board
Perhaps federal regulators could have found a way to support the plans of Comcast to purchase Time Warner — if the discussion had been limited to cable television. The two cable giants were quick to note that their territories barely overlap. Yet, as things evolved the past year, or since the announcement of the takeover plan, regulators increasingly focused on the future of the Internet.
In that way, the purchase did not serve the public interest. A combined Comcast and Time Warner would be too big, with roughly 60 percent of the country’s high-speed broadband customers under its control. So the Department of Justice and the Federal Communications Commission acted appropriately last week, telling the two companies they were not looking favorably on the deal. Comcast then withdrew its offer.
The collapse of the merger stemmed, in large part, from how quickly the market has been changing. Customers, here and elsewhere, have been moving in greater numbers to streaming services such as Netflix, watching their favorite events, movies and shows via the Internet, even abandoning cable subscriptions.
And more networks have been following customers there. HBO and CBS have launched streaming services. Apple, Amazon and others are producing their own shows. Regulators did not have to stretch their minds much to see the potential in play, the Internet becoming the primary path for content to enter homes. They also grasped the potential harm, a combined Comcast and Time Warner with the opening and the clout to restrict competition.
The two companies insisted they wouldn’t behave so. Yet regulators cannot take such a risk, especially with entrepreneurs and creative types now so engaged in exploring and developing new ideas for broadband streaming. Allow such a powerhouse to serve as the gatekeeper of the Internet, and innovation would be jeopardized. Once joined together, Comcast and Time Warner would have immense leverage over television companies and other content producers.
The proposed merger encountered resistance on Capitol Hill, according to news accounts, because the many Comcast lobbyists failed to provide enough persuasive answers for House members and senators with questions. The two companies already suffered from a lack of goodwill, reflecting poor customer service ratings and concerns about Comcast failing to keep pledges made in its earlier deal involving the purchase of NBC-Universal.
Talk has surfaced about other routes to consolidation, Time Warner and Charter Communications perhaps reviving a deal they weighed. For regulators, the apt principle holds, reflecting the concept of net neutrality defined by President Obama last fall. The president called for treating the Internet like a utility to ensure fair and unfettered access to something essential in so many lives. When analysts look at why the speed of broadband here lags behind the pace in other countries, they cite our lack of competition, or just what regulators had in mind in sinking the plans of Comcast and Time Warner to merge.