Last Wednesday, Comcast agreed to purchase Time Warner Cable for approximately $45 billion. If approved by the government, the largest cable provider and the second largest cable provider will join forces to control almost 30 percent of the entire television market. After the smoke clears, this merger will be a win for everyone except the paying customers.

This broadband alliance establishes a monopoly among the television market that provided few options to begin with. Even though Comcast and Time Warner were not in direct competition and didn’t share any of the same markets, there is one less company for Time Warner customers to compare prices and services to. The days of calling and threatening to leave Time Warner in hopes of getting a bill reduction are now over.

The average monthly cable bill is $86. In 2013, Comcast charged $156 per month on average, according to a Feb. 14 New Yorker article.

Comcast now has all the leverage. “Through this merger, more American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds and the fastest in-home Wi-Fi,” Comcast said in its official press release announcing the merger. The absence of the word “price” in that statement is what most people are concerned about.

It wouldn’t be surprising if Comcast continues to use exclusive contracts for local sports markets to eliminate competition. Imagine being forced to pay an extra fee to watch SU basketball and New York Knicks games you had the luxury of watching under your previous cable service provider. Don’t like it? Good luck finding someone that will listen.

Ironically, with the additional power Comcast could easily reduce the cost of cable for its users, though that is unlikely. It could effectively cut deals with major programming channels and put additional efforts into increasing broadband speeds, giving customers more bang for their buck. With no competition or system of checks and balances, that is also unlikely.

The standard now begins and ends with Comcast. I don’t foresee a dramatic change in monthly cable prices, but the scariest part is Comcast could raise them if it wanted to.

You don’t have to be a math major to realize that 30 percent of the total television market isn’t the majority. Comcast continues to battle competing cable providers, but more importantly, is trying to remain relevant in a multimedia world in which cable has a shrinking role.

Quickly growing streaming services such as Netflix, Hulu and Amazon TV are giving cable providers a run for their money. Cable service providers are essentially combining forces to fight this new breed of competition. Factors such as early customer satisfaction and net neutrality could ultimately decide who wins the war.

Net neutrality, the principle that Internet service providers cannot discriminate or charge differently based on content or site, has been the buzzword around the Internet for the past few months.

Fortunately, the U.S Court of Appeals struck down the Federal Communications Commission’s net neutrality appeal earlier this year, which salvaged what’s left of fair play.

Comcast agreed to abide by the net neutrality rules and not give preferential treatment to its own content or hinder content it doesn’t own. In other words, Comcast agrees to play nice and not intentionally make Netflix or Hulu movies stream slower. Without the ruling, it’s something I wouldn’t put past the dictatorial company.

Before the proposed deal, people were already considering cutting the cable cord altogether and strictly streaming their shows and movies. This Comcast-Time Warner merge may be the move that puts them over the edge.

 

Published on February 19, 2014 at 2:46 am