Comcast/NBCU Merger, What Can We Expect?
The proposed Comcast/NBCU merger raises significant concerns for consumer protection, small cable providers, and proponents of net neutrality. The potential for anti-competitive behavior from the union of one of the largest content producers and an enormous content distributor could have far reaching effects on the entire broadcast and online video landscape.
What do we already know about Comcast, and what does that tell us about the future? According to Susan Crawford, a professor at Cardozo Law School in New York City and a Visiting Research Collaborator at Princeton's Center for Information Technology Policy:
Comcast is mostly a distribution company with unconstrained pricing power. Its cable customers pay nearly $130/month, up 10% from last year, and its growth area is in high-speed Internet access.
Almost 50% of Comcast's gross revenues from subscriptions are now coming from high-speed data and voice services - a big jump up from 35% in 2006. Subscribers to high-speed Internet access are choosing their local cable monopoly 90% of the time these days - not the phone company, which can't usually offer subscribers the high speeds they want. Where Comcast is doing business, Comcast is or soon will be consumers' only choice for high-speed Internet access.
By edging out the market with its 'bundled' options, Comcast has already shown a strong willingness to monopolize Internet markets. The merger would only fuel Comcast's growth, increasing its anti-competitive behavior and hurting consumers in the long run.
Crawford's concerns about a "Comcast future" range from raising the costs of subscriptions to compensate for new programming, to raising costs for its rivals and online video competitors who would rely on NBC shows. Monopolizing local markets, rerouting competitor's web traffic, controlling ad distribution — all of these problems arise from allowing a fully formed content production and distribution entity to act unchecked.
One area where the merger could has the largest potential for detriment is in the field of online video. With dozens of options, from Netflix to Hulu, the field is set to grow well into the future. Yet, Comcast/NBCU would have the upper hand entering this arena, capable of shutting out competition and eliminating options for consumers.
By tying "free" access to its online TV Everywhere service (made newly powerful through the addition of NBCU content) to a cable subscription, and by charging a premium for "breaking the bundle" to allow consumers to have "naked" Internet access, Comcast will be able to make it very difficult for independent providers of online video (so-called OTT video) to survive — it won't appear cost-effective to consumers to cut the cord, and they'll think of online video as being "free."
With all of these concerns, it's not surprising that a large number of politicians, policy makers, consumer protection groups and others have voiced their opposition to the merger. With this laundry list of offenses, regulators should think hard about the future this unrestrained entity could forge.
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