Welcome to Comcastworld

My guess is that John Judis doesn’t understand the problems that monopolies cause any better than the regulators do. The problem isn’t merely that monopolies raise costs or that they “slow innovation”. Imagine a world without modems, highspeed Internet, fax machines, or mobile phones smart or otherwise, and in which long distance phone calls—whether a call to the next county or to the coast let alone overseas—were incredibly expensive, the expense having little to do with the cost. That was the world that the Bell System imposed on us. The system insisted that all equipment that connected with their telephone equipment be approved by them and that raised the cost of all of those essentials of modern life beyond what most people could pay.

That didn’t just “slow innovation”. It blocked whole technologies altogether. The world of today would have been impossible without breaking up Ma Bell.

However, this he’s got right:

Monopolies can also have a corrosive effect on related industries. The big cable companies have been able to squeeze cable content providers—even to cut off access to customers, as Time-Warner did with CBS last fall. If they also own content providers, as Comcast does, they can harm rival content providers—as Comcast seems to be doing to Netflix.

And this should give us pause:

In short, the only beneficiary of these merger will be Xsanity’s management and stock holders. Consumers will get screwed. The American telecom/broadband industry, already lagging behind South Korea and other upstarts, will fall further behind. Of course, the FCC or the Justice Department could block the merger. But what has happened before does not inspire confidence. Obama’s Justice Department did threaten to block the merge of AT&T and T-Mobile, USA, but Comcast has strong ties to the administration—Comcast’s CEO Brian Roberts is one of Obama’s golfing buddies and Cohen has been a major fundraiser—and in the past, the administration has been soft on the company. The FCC approved the merger of Comcast and NBC and the agreement between Comcast and Verizon.

If I were king, I would treat the cable companies as common carriers and prohibit them from expanding their business beyond the delivery of cable service. They are, after all, government-granted monopolies. I would further demand that they ratchet their prices down until their net revenues reach a reasonable level of profit above operating expenses, keeping a wary eye on executive salaries. I’m not king and never will be and what’s more likely to happen is that crony capitalism will prevail and soon we’ll all live in Comcastworld.

4 comments… add one

  • One thing I didn’t realize during the last conversation is that Comcast is actually legally obligated to honor net neutrality until 2018. It seems to me that extending that deadline would be a reasonable precondition of allowing any merger.

    Also, I think it’s actually more likely than not to be advantageous to customers if cable companies and the like squeeze content producers. One of the reasons cable bills are so high is the leverage that the producers have.

    I am sensitive to the concerns, but I just think this is the wrong hill on which to die. The energy devoted to it would be better devoted elsewhere (for instance, passing a law requiring net neutrality). It reminds me of the Keystone pipeline objections in this regard.

  • The energy devoted to it would be better devoted elsewhere (for instance, passing a law requiring net neutrality).

    That’s the implication of my remark about treating the cable companies as common carriers.

  • Will Truman

    Which i forgot to mention i agree with entirely.

  • ...

    So I was correst to assume the approval of this deal hinges on who has paid off whom. Good to know cynicism still provides a most reasonable guiding light.

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