Comcast, Time Warner Agree to Merge

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psydude: Apr 1, 2008

Comcast, Time Warner agree to merge in $45 billion deal

I did my best to pare it down, but basically everything in the article is important.

quote:

Comcast�s $45 billion bid for Time Warner Cable would create a cable television behemoth in an industry that has steadily increased prices for bundles of channels and services that many consumers dislike but feel forced to buy.

But the merger would have far greater implications for the future of media and communications, with one firm controlling more fast Internet lines into American homes than any other company, along with a huge swath of content through its ownership of NBC Universal.

The combined company would have 33 million cable subscribers and nearly as many broadband users, giving it enormous power in negotiations with networks over licensing fees and in determining what shows reach consumers on mobile devices, laptops and television sets. It could influence whether the next Apple TV or Google device gets a fair shot at replacing cable set-top boxes. Without the second-biggest cable company to help keep pressure on prices for triple-play television, Internet and phone service, Comcast would have flexibility to set the market rates.

The expansion of Comcast�s footprint in the United States would give it greater control of lines known as the �last mile� into homes and businesses, infrastructure that has increasingly become like a utility for consumers who look to the Web for entertainment, education and communications. The company said it would not block competitors on its network or deliver its own video products with better quality than a competitor such as Netflix. Comcast does not overlap with Time Warner Cable in any cities, which means it would not eliminate competition, the firms said.

...

Consumer groups, lawmakers and unions have criticized the proposal, saying it could send many consumers back to the monopoly phone era, when Ma Bell set prices and controlled the kinds of phones consumers were allowed to use.

�This is the future. Comcast is in the driver�s seat on how to define how Internet-enabled equipment, software and applications touch consumers,� said Gene Kimmelman, president of the consumer advocacy group Public Knowledge and a former antirust official at the Justice Department. �And everyone in programming and the television ecosystem will need to be in front of Comcast customers, so they will have to adjust their specifications for Comcast.�

To head off regulatory concerns, Comcast offered to shed 3 million subscribers to keep its ownership of the entire cable marketplace below 30 percent, a figure that television programmers say is the threshold for competition in licensing negotiations.

The company said it is confident it will win regulatory approval because it and Time Warner have no overlapping customers. Time Warner Cable subscribers are in the New York tri-state region and in Southern California, Texas, the Carolinas, Ohio and Wisconsin. Time Warner does not serve the D.C. area. Comcast serves the District and its Virginia and Maryland suburbs.

The merger would build on Comcast�s strategy to transform itself from a cable television business into a broadband and media powerhouse. The company has experienced a slow but steady decline in cable television subscribers as consumers increasingly turn to broadband Internet services for entertainment and communications. Netflix, with 31 million subscribers, has exploded in growth while using as much as one-third of bandwidth on broadband networks during peak hours.

Comcast will argue to regulators that the cable market is fiercely competitive, with new rivals among online video providers such as Hulu, and from television and broadband Internet �providers such as Verizon�s Fios service and Google with its experimental ultra-fast fiber network in a few small cities.

�We believe the transaction will bring pro-consumer benefits,� Comcast chief executive Brian Roberts said in a call with reporters. �That�s because we have no business overlap, so there�s no reduction in competition.�

...

In total, the company said the merger would help reduce costs, or lead to �synergies,� which it estimates at $1.5 billion in operating efficiencies a year.

Analysts generally agree that Comcast is likely to win approval for the merger from antitrust regulators. The lack of overlapping markets means regulators won�t view the proposed merger with the same concerns as in AT&T�s proposed bid for T-Mobile, experts said. That deal, which regulators rejected, would have eliminated a major national carrier and given consumers fewer options.

When it acquired NBC Universal in 2011, Comcast agreed to �net neutrality� conditions that prevent it from prioritizing its online content over a competitor such as Netflix. Comcast is expected to offer similar restrictions in its proposed merger with Time Warner Cable.

Comcast said it expects to win approval within nine to 12 months.

...

�The problem for regulators is clear. Programmers will claim that a merged [company] would simply be too large to be allowed,� wrote Craig Moffett, the head of research firm MoffettNathanson. �From a First Amendment perspective, they will argue that it is simply a bridge too far.�

...

But analysts also note the company�s powerful lobbying operation in Washington. It won approval for the NBC Universal deal even with major protests from consumer groups and some lawmakers. In 2012, a Comcast deal to sell spectrum to Verizon and to cross-market products was approved even though some analysts said the agreement effectively stopped competition between the firms.

David Cohen, Comcast�s executive vice president, is a longtime Democratic insider who has held fundraisers for President Obama and the Democratic National Committee. This week, he and his wife attended the White House state dinner for the president of France.

Said Jeffrey Silva, an analyst at Medley Global Advisors: �Comcast has a strong track record on transactions pursued during the Obama administration, and we believe the company is quite capable of once again negotiating a successful path forward on this deal.�

TLDR: Comcast and Time Warner are proposing a merger that will give them around are 30% share of the market. Comcast claims that this will give them leverage to deal with programming companies (for television) and do "synergize" various sectors of the industry to drive down costs. Comcast has made a pledge to support network neutrality in the past when it acquired NBC and claims that FiOS and Google Fiber provide sufficient competition in the marketplace. Consumer rights groups point out how this will give Comcast a "Texas Textbooks" influence on multiple sectors, basically allowing them to dictate standards for hardware and services as well as control market rates charged by Tier 2 and 3 service providers.

I think we're definitely headed toward another national telecom monopoly here, just like AT&T and Bell before them. And while I really don't give a poo poo about cable television, the implications for media control and the obvious threat to net neutrality are worrisome. I know that, at least in the Mid Atlantic, Comcast has managed to stamp out almost all local competition. At this point you're basically left with Verizon, Cox, and Comcast, with Cox servicing a much smaller area.

# ¿ Feb 14, 2014 11:57

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# ¿ May 14, 2024 19:16

psydude: Apr 1, 2008

The profit margin on bandwidth is ridiculous. I'm not really buying their argument.

# ¿ Feb 14, 2014 15:19

psydude: Apr 1, 2008

HalloKitty posted:

Not even true. Uploading YouTube videos, for example, backing up your personal data to an online service (extremely popular now, and I'd do it if I had amazing upload), online gaming, streaming, etc.

Good upload speed is one thing I'm really sad isn't more widespread.

Traditionally, upstream was kept lower relative to downstream just because there were limited frequency bands on the wire and people use downstream bandwidth more often. These days, there's basically no excuse not to have symmetric lines.

# ¿ Feb 14, 2014 16:05

psydude: Apr 1, 2008

Don Lapre posted:

Except docsis isn't symmetric. The standard itself has higher downstream than upstream. You would have to dedicate more channels for upstream then you have for downstream.

Also pretty much every cable modem allows for way more downstream channels than upstream.

Yeah, I should have clarified that I was speaking about fiber.

# ¿ Feb 14, 2014 17:08

psydude: Apr 1, 2008

The biggest contributing factor is that ISPs aren't regulated as utilities, so they aren't obligated to allow competitors to use their lines. Electric companies are required by law to do this, which is why you can usually choose from 4-5 different ones in your area. This was actually the reason why the recent ruling on Net Neutrality wound up the way it did: the FCC never bothered classifying them as such.

# ¿ Feb 15, 2014 02:23

psydude: Apr 1, 2008

brothertim posted:

What. the. gently caress.

So, creating the monopoly is legal, but using your market domination to then charge people $200/month for internet access would be illegal?

edit: I gotta know where the line gets drawn by the gov.

The merger will have to be approved by the FTC, which it probably will be. Monopolies aren't illegal, but once your market share grows large enough that you begin to stamp out all competition (in the case of AT&T back in the 80s), they government can step in. Gross abuse of market dominance will also sometimes spur the feds to action, as was the case with Microsoft in the late 90s.

# ¿ Feb 16, 2014 03:42

psydude: Apr 1, 2008

Well, in Comcast's defense, they never really enforced the cap when they had it in my area.

If you're pushing enough data where you're constantly hitting the cap and getting shut off, you should probably just cough up the extra money (I believe it's 10-15 a month) for a business line so you can at least get some form of SLA and less-lovely support.

# ¿ Feb 16, 2014 10:57

psydude: Apr 1, 2008

The advent of VoIP and VTC applications and services like Skype and Google Voice can be hamstrung by poor upstream bandwidth, especially since they often operate over port 80/443 and most home routers and ISPs don't actively support CoS or QoS handling (unless you're paying for their separate VoIP service).

# ¿ Feb 16, 2014 16:16

psydude: Apr 1, 2008

computer parts posted:

And over time speeds *are* increasing, they just don't need to be equal to download speeds (again, from most people's perspective).

e: A situation where working from home is effective is in itself an edge case scenario as well, though (less edge case than video game streaming but still).

WFH is becoming huge in major metropolitan areas, so I wouldn't call it an "edge case".

# ¿ Feb 16, 2014 17:02

psydude: Apr 1, 2008

brothertim posted:

There should be no reason anyone's internet activities are affecting others. Don't offer a 100Mbit service if your infrastructure can't handle it. Seems as arbitrary as being forced to pay extra to use your cell phone as a hotspot when you already have a data plan.

Service providers always oversubscribe their lines, just ask anyone who owns a cell phone inside of a major city. That's why they get you with the "SPEEDS OF UP TO" line. DOCSIS is a pretty outdated technology, but good luck convincing Comcast et al to switch.

# ¿ Feb 18, 2014 02:47

psydude: Apr 1, 2008

Install Windows posted:

I'd LOVE to hear why you think DOCSIS 3.0 is outdated!

Because FTTH doesn't have the same shared bandwidth or symmetry issues and is becoming much more widespread than it was even 5 years ago.

# ¿ Feb 18, 2014 02:55

psydude: Apr 1, 2008

Google actually got creative in that regard by utilizing existing utility conduit and piggybacking on new installations. It's what allowed them to keep their rollout costs and times so low.

# ¿ Feb 18, 2014 02:59

psydude: Apr 1, 2008

I used to live in a neighborhood where I was practically the only person on the local loop and actually enjoyed speeds well above what I was supposedly paying for. On the other hand, when I moved to an apartment building in a densely populated urban area I quickly saw the other side of the coin.

# ¿ Feb 18, 2014 03:08

psydude: Apr 1, 2008

In related news, Comcast and Netflix reached a financial agreement whereby Netflix will pay Comcast a premium as a part of a peering and interconnect agreement for better handling of their content, effectively circumventing the net neutrality agreement Comcast signed.

# ¿ Feb 24, 2014 08:51

psydude: Apr 1, 2008

I think some of you are missing the big issue here: Comcast is one of the biggest ISPs in the US. Netflix NEEDS to peer directly with them to ensure that they can reliably reach all of their customers, which is around 30 million customers (keep in mind, the actual number of people using comcast is likely 2-3 times that number). Comcast is a content provider, as well as a content carrier, who competes directly with Netflix. As such, they can raise prices as they deem fit and Netflix will have no choice but to pay whatever they want. In this way, it effectively circumvents Net Neutrality by forcing a competing company to potentially pay more.

# ¿ Feb 25, 2014 02:46

psydude: Apr 1, 2008

Install Windows posted:

I just wonder how many of the people upset about Netflix direct peering are aware that Microsoft, Google, and Facebook among others already participate in direct peering with Comcast and other ISPs?

None of those companies are in direct competition with Comcast. Most YouTube traffic on the East Coast is delivered from addresses owned by Level 3, and even then I wouldn't really call YouTube a competitor to Comcast.

psydude fucked around with this message at 08:29 on Feb 25, 2014

# ¿ Feb 25, 2014 08:23

psydude: Apr 1, 2008

Install Windows posted:

The "double charging" bullshit was disproved months ago. And why are you white-knighting a 20 billion dollar company that disagrees with you?

Netflix doesn't actually like it, BTW.

Also how exactly is Netflix getting free access? They already paid Congent to carry their traffic and Comcast customers paid Comcast to receive it. If you're an ISP, your customers will wind up downloading poo poo. Don't like it? Don't become a service provider.

# ¿ Mar 26, 2014 10:53

psydude: Apr 1, 2008

adorai posted:

I am curious what you think the advantage to that is. I know that in my house, I have three options for high speed internet today, and expect at least one more in the next 3 years. For reference, the three are cable, DSL, and 3g/4g (technically I have a choice in carriers there as well). There is plenty of fiber going into the ground all over the place, so I expect some kind of fiber to the premises, or at least fiber to the street scenario soon. Given all of this, why is treating it like a utility, which has little to no competition, useful to me? If you regulate in such a way, what incentive do the fiber carriers have to build to me, when they may not actually be able to compete any longer, due to tariffed rates for their services. Even if you do regulate it that way, how does that prevent carrier hijinx? One of the things I have heard opposition to is "sponsored wireless data". If I access service X, the data used for that won't count against me. I can understand how that benefits the big guys, but how is it any different than a toll free number?

In many states, treating it like a utility opens the possibility of forcing them to lease their infrastructure to their competitors to deliver their service to your home. So any ISP can use Comcast's cable or Verizon's fiber optic network to serve you.

# ¿ Nov 12, 2014 04:32

psydude: Apr 1, 2008

computer parts posted:

The US actually has a greater >10Mbit penetration rate than Europe.

Europe is a pretty broad generalization. Are we talking about Spain, where most people still haven't heard of the internet? Or Sweden, where 100mbps is as cheap as DSL?

# ¿ Nov 13, 2014 02:07

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# ¿ May 14, 2024 19:16

psydude: Apr 1, 2008

Are people in here seriously suggesting that people wouldn't want a faster internet connection for less money? Most people use their internet connection to check email, look at Facebook, and stream music and HD/UHD video. See that last one on there? People are getting tired of paying $100/mo for television. That's the driving force. It's also the reason why Comcast has an incentive to throttle or engage in anticompetitive practices with regards to services like Netflix, which compete directly with them not only in the service arena (offering on-demand streaming television on the cheap instead of scheduled programming), but in the content arena (NBC's programming has completely tanked since Comcast bought it, and many of their writers are jumping ship to companies like Netflix and HBO).

# ¿ Nov 13, 2014 13:12

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