[TriLUG] Fwd: Comcast and Time Warner Cable: The upshot for us [Windows Secrets Newsletter]

[David Burton]

Here's an interesting article about the Comcast/Time-Warner Cable merger --
especially the last part, about data caps (which I've highlighted below).

It seems like a good basis for an email to U.S. Senators and
Representatives, cautioning them about the potential service downgrade
resulting from this merger. Does anyone care to argue for or against any of
the points in it?

Dave


---------- Begin Forwarded Message ----------
> From: Windows Secrets <Editor at WindowsSecrets.com>
> Date: March 20, 2014 at 6:03:46 AM EDT
*...[snip]...*
> Subject: Comcast and Time Warner Cable: The upshot for us [Newsletter
Comp Version]
> Reply-To: Editor at WindowsSecrets.com
>
> If your software garbles this newsletter, read this issue<http://windowssecrets.com/newsletter/comcast-and-time-warner-cable-the-upshot-for-us/> at
WindowsSecrets.com.
>
> Windows Secrets Newsletter * Issue 425 * 2014-03-20
*...[snip]...*

________________________________
Top Story

*Comcast and Time Warner Cable: The upshot for us*

By Woody Leonhard


Last month, cable TV giant Comcast announced it had agreed to buy Time
Warner Cable for U.S. $45 billion, merging the largest and second-largest
cable companies in the U.S.


While the raging debate over the advisability of the merger focuses
primarily on TV, ultimately the far larger question will be our future
access to the Internet.


For cable TV users, the impact of the merger on fees and (cough) service is
clearly of concern. But the more important, complex -- and cloudy --
discussion should be about the future of our connection to the Web. Most of
us could face major changes to how we view content in the Internet -- and at
what cost?


In this first installment of a two-part series, I'll provide some
background on the Comcast/Time Warner Cable merger -- and some of the more
obvious ways it could impact the millions of affected broadband users.


Merging markets: The art of the deal


On the surface, Comcast's proposed purchase of Time Warner Cable looks like
any other billion-dollar merger of an industry's two largest players:
consolidated operations, reduced overlap, economies of scale, and larger
customer base are all supposed to lower customer costs and provide better
service. (Show me one case where all that has come to pass.)


But the Comcast/Time Warner Cable merger is especially complex -- far more
so than, say, the melding of Compaq and HP. Because for the cable industry,
the Holy Grail is to both own and deliver content -- to essentially control
the media you want to watch *and* the pipes that deliver it.


And Comcast has worked on that goal more diligently than most. For example,
it bought NBC Universal a year ago. Watch a show on NBC, and you're
watching Comcast. Pay to see a movie from Universal, and it's Comcast.
Operating under the XFINITY brand, the company has about 22 million cable
customers in 40 states. With about $65 billion a year in revenues, Comcast
is widely recognized as the largest media and communications company in the
world.


Time Warner Cable, on the other hand, has recently encountered some tough
times. It was spun off from Time Warner proper five years ago. So it has no
connection to Time Warner media outlets such as Time Magazine, CNN, HBO,
Warner Bros., or Cartoon Network. Time Warner Cable claims 13 million
customers in 29 states and about $22 billion in revenues. The company, led
by its new CEO, Rob Marcus, is in the middle of a turnaround plan.


But Time Warner Cable was also the focus of a bidding war. Recently, the
much smaller Charter Communications (7 million customers; $7 billion in
revenues) tried to swallow Time Warner Cable but couldn't compete with
Comcast's $45 billion, all-stock offer.


The merger isn't a done deal yet; it's still subject to congressional
oversight (or undersight). If you haven't seen Senator Al Franken's
scathing review of the takeover ("bad for consumers, cable TV, and the
Internet"), it's well worth a look on its YouTube
page<https://www.youtube.com/watch?v=0zMwkFvW_Fo>
.


A recent Forbes op-ed
piece<http://www.forbes.com/sites/realspin/2014/02/27/competition-will-not-survive-the-comcast-time-warner-merger/>
 by antitrust expert Warren Grimes also summarizes the deal well. He
states, "Television distribution in the United States is broken. The system
denies consumers reasonable choices at affordable prices. Comcast's
proposed acquisition of Time Warner Cable will make a dismally performing
and anticompetitive industry even worse."


Personally, I'm not overly concerned about television. I cut the cord years
ago. I've become adept at bobbing and weaving around the Web to get what
entertainment my family and I want. What hasn't been so clearly discussed
is how the merger will impact Comcast's and Time Warner Cable's Internet
business.


The case *for* Comcast and Time Warner


Comcast claims there are few antitrust concerns, primarily because Comcast
and Time Warner Cable (TWC) have very little overlap in customer base;
i.e., places with Comcast don't have TWC, and vice-versa. The takeover thus
wouldn't stifle competition. Moreover, 3 million TWC pay-TV customers would
be cut loose -- moved to rival services -- to prove the point.


If the merger proceeds under those terms, the resulting company would have
less than 30 percent of the pay-TV market. That, according to the
Comcastians, doesn't constitute a move into monopoly territory.


Still, Comcast sees this as a chance to expand rapidly, pulling in a large
chunk of pay-TV market share in what is a relatively slow-moving industry.


For Time Warner Cable, the merger is a chance to clean out the deadwood.
The turnaround hasn't gone as well as expected. Charter Communications has
been nipping at TWC's heels and pulling some embarrassing stunts -- such as
nominating a new set of directors for Time Warner Cable's board, as
reported in a New York Times
story<http://dealbook.nytimes.com/2014/02/11/charter-names-its-13-nominees-for-time-warner-cable-board/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1&>.
A deal with Comcast would effectively eliminate the threat from Charter
along with TWC's other problems.


Comcast's liberal donations of money to congressional members might also
help consummate the deal. In a recent Politico
report<http://www.politico.com/story/2014/03/comcast-cash-spread-wide-on-capitol-hill-104469.html>,
Tony Romm described Comcast's congressional net this way: "In fact, money
from Comcast's political action committee has flowed to all but three
members of the Senate Judiciary Committee. ... the cable giant has donated in
some way to 32 of the 39 members of the House Judiciary Committee, which is
planning a hearing of its own. And Comcast has canvassed the two
congressional panels that chiefly regulate cable, broadband, and other
telecom issues, donating to practically every lawmaker there. ..."


At this point, if you truly think the U.S. Congress will block the
takeover, I have some offshore investments I'd like to discuss with you.


The merger's implications for broadband


In his Feb. 12 Gigaom
post<http://gigaom.com/2014/02/12/comcast-and-time-warner-cable-forget-tv-it-is-all-about-broadband/>,
"Comcast and Time Warner Cable: Forget TV, it is all about broadband," Om
Malik (one of my favorite tech writers) dissected the deal. He surmises --
correctly, I believe -- that what we're witnessing isn't so much a
relatively technology-addled cable-TV play; it's a battle for the future of
broadband itself.


Malik quotes one of his analysts, Stacey Higginbotham, as saying, "So the
cable industry, if it can consolidate, gets access to the most important
pipe coming into people's homes (after power and water), and the fewer
cable companies there are, the more unified the rate structure might
appear."


It seems obvious that the intention of a combined Comcast/TWC, long-term,
is to quickly consolidate control over fast Internet access to about a
third of U.S. households. And they'll accomplish that goal in the simplest
possible way: they'll own the digital pipes into the house.


Today, DSL is on the decline and fiber on the rise. AT&T and Verizon are
the only companies that have*widespread* broadband pipes into consumers'
homes -- and they're both switching from DSL to fiber as quickly as they
can. There's also a handful of much smaller players -- such as Google and
regional carriers -- filling the void.


In the TV sphere, providers such as DirecTV offer stiff competition. And
for wireless, LTE (more
info<https://en.wikipedia.org/wiki/LTE_(telecommunication)>)
gives good speeds at small volumes.


But for the increasingly important task of stuffing bits into peoples'
houses, a combined Comcast and Time Warner cable could gain a huge
advantage.


Let me give you an example of why that worries me. I have a Comcast
broadband line (DOCSIS; more info <https://en.wikipedia.org/wiki/DOCSIS>),
and it works well -- up to a point. Comcast has started rolling out data
caps. If you go over 300GB per month, you get hit with a $10 surcharge for
each additional 50GB. The caps started in Nashville about a year ago, moved
to Atlanta in December, and are now poised to roll over much of the South.
If Comcast gave me a warning about data caps when I signed up, I sure
missed it. But there's no missing the fact that the caps are in force.


(Heaven help you if you want to talk with somebody inside Comcast to ask
about your data usage. By reputation and by personal experience, service is
not Comcast's strong suit.)


If you believe that ISPs have placed data caps in response to network
congestion due mostly to customer overuse, a
DSLReports.com<http://dslreports.com/>
 article<http://www.dslreports.com/shownews/Cable-Industry-Finally-Admits-Caps-Not-About-Congestion-122791>
 states that caps are about profits -- not congestion. It notes, "Does
raising rates on a product that already sees 90 percent profit margins
sound like 'fairness' to you?")


If Comcast absorbs Time Warner Cable, more customers might see their
Internet use capped. And that might be only the beginning of new
limitations.


So what can you, the consumer, do? If you agree that the merger is not in
our best interests, you might want to see whether your congressional reps
(both senators and representatives) oppose the merger. A quick Google
search will usually unmask their proclivities. Better yet, sign up for the
Free Press effort (site <https://act.freepress.net/sign/consol_comcast_twc/>
 ) to block the merger. You can also join Consumers Union
(site<http://www.marketwatch.com/story/consumers-union-opposes-comcasttime-warner-cable-merger-citing-serious-concerns-about-pricing-and-service-2014-02-13>),
the group behind Consumer Reports. And check out Senator Al Franken's
video<https://www.youtube.com/watch?v=0zMwkFvW_Fo&noredirect=1>
 -- pass it around and give it a thumbs-up.


Finally, if you have a chance to help bring one of the alternate fiber
companies to your area -- Google Fiber comes immediately to mind, but there
are regional providers, too -- do it!

In my next column, I'll discuss further the consequences of the
Comcast/Time Warner Cable merger -- and stir in thoughts about the recent
Comcast/Netflix deal and its impact on net neutrality.


> Feedback welcome: Have a question or comment about this story? Post your
thoughts, praise, or constructive criticisms in the WS Columns forum.
>
> Woody Leonhard is a Windows Secrets senior editor and a senior
contributing editor at InfoWorld. His latest book, the comprehensive
1,080-page Windows 8 All-In-One For Dummies, delves into all the Win8 nooks
and crannies. His many writings tell it like it is -- whether Microsoft
likes it or not.
*...[snip]*