While I wasn’t paying attention to it, the FCC’s latest moves may have doomed the merger between Time-Warner and Comcast:
So why is the Comcast-Time Warner Cable deal doomed? Even before the FCC decided to change how it regulates broadband service providers, the commission redefined what qualifies as a high-speed Internet connection — from 4 megabits per second to at least 25 megabits per second for downloads. Here’s the significance of the new definition: If speeds don’t hit that benchmark, an Internet service provider isn’t allowed to call the connection “broadband.” (The average connection speed in the U.S. is about 10 megabits per second.)
This new standard completely redrew the U.S. market-share map because only cable operators like Comcast, as well as other companies such as Verizon FiOS, AT&T U-Verse and Google Fiber, can currently meet that standard. In this new world, the broadband end of the Internet services spectrum is dominated by just a handful of companies. In the regulatory world, market dominance translates into a lack of competition.
That’s a bitter pill for Comcast, because it’s been saying that there is so much competition for Internet services that consumers have plenty of options before them. Hence, a merger with Time Warner Cable wouldn’t be anti-competitive. The FCC just redefined that notion into oblivion.
It will be interesting to see whether that analysis pans out and what its implications might be for the shape of the Internet service business and its relation to content providers. As I’ve said any number of times, I think that government-granted monopolies (like cable companies) should be barred from the content business but I seem to be in the minority in that view. The whole “net neutrality” issue has certainly created strange bedfellows with anarcho-capitalists rising to the defense of government-granted monopolies while big government fans point out the evils that have been created by big, activist government.
“Net neutrality” has many different definitions. If you mean keeping content providers and content deliverers separate, I am not opposed, but it is not what I define as net neutrality.
AOL/Time-Warner should have proven that this was a bad idea, but as opposed to capitalist theory, capitalism is mostly one idiot building another version of a dumb idea and thinking he is a genius. The genius part is the selling the idea to other idiots.
Here we go again. The cable company is the only horse in the pasture. It can have relatively free roam in the pasture, but the pasture has a fence around it. It does not have to worry about wolves ripping its guts out, but it cannot leave the pasture.
Requiring cable companies to upgrade equipment in all areas is not outside of a regulatory requirement. The local regulatory agency can determine a schedule. Allow the best equipment to be installed into the wealthiest areas first, and upon 75% saturation, the poorer areas must begin to have equipment upgrades with no increase in price.
In technology, the first users pay a premium, and the technology filters down. It becomes too expensive to support older technology as it becomes obsolete, and it is cheaper to upgrade the low end. This is why the cable company will replace a purchased modem with a new modem, but the regulatory body can oversee this process. The downside is that everybody is a hustler, and your guys are no better.
I like firewalls, but otherwise, I do not like a lot of regulations. If you want to play in the safe zone, you will be required to abide by the rules (regulations) that make it safe.
The big issue in analyzing anti-trust law is defining the relevant market. This is an interesting argument, but I’m not entirely convinced that it is conclusive that there is a separate market at the “high-end” any more than there is a separate market for 1 pound hamburgers.
TastyBits:
No. The definition of “net neutrality” I would use would be that all ISPs would be required to provide content to its subscribers at the speeds for which the subscribers have paid without regard to the source of the content. However, that ISPs would be predisposed to favor their own content over that of other providers is a foreseeable outcome of ISPs getting into the content business.
I would have a G-S between content providers and deliverers.
When you are watching Netflix, would you pay extra for guaranteed bandwidth for your Netflix movies, or would you rather wait while it buffers because you are sharing it with the latest Youtube cat video?
I still remember dial-up, and you will pry my cable from my cold dead hands.
While I’d be happy to see this merger fall apart, I’m a bit bothered that it may hinge on a rather arbitrary definition. Why 25? Why not 20 or 30?