The Case Against Time Warner-Comcast Just Got Stronger(tomsguide.com)
tomsguide.com
The Case Against Time Warner-Comcast Just Got Stronger
http://www.tomsguide.com/us/net-neutrality-comcast-level3,news-18739.html
6 comments
It's kinda depressing that if the FCC acted to rein in the companies that have the lowest levels of customer satisfaction in the country, conventional wisdom is that it would be immediately thwarted by Congress. The same Congress which was elected by those same dissatisfied customers.
What's the Congressional action that's feared here? I thought that the FCC merely has to classify ISPs as telecommunications services in order to impose Net Neutrality with authority they already have under existing law, and that their attempts to impose Net Neutrality without that reclassification are what's getting shot down, but shot down by the courts, not Congress. Is there something Congress could do to block or reverse the reclassification in a manner not subject to Presidential veto?
I don't understand the arguments against the merger very well. From what I've read, there is currently very little overlap between the regions of Time Warner Cable and those of Comcast [1]. If this is correct, how could the merger allow either firm to raise the price?
There are also arguments that combining the customer base will give greater buying power when making deals over content (ex. complete broadcasting power over local sports franchises). But the combined customer base is supposed to be less than 30% of households that subscribe to cable or satellite TV [2].
I understand net neutrality is a huge concern, but that seems to be a separate issue from the Time Warner - Comcast merger. It looks like the problem (which is addressed at the end of the post) is higher barriers to entry from local governments. If that's the root cause of net neutrality, that probably deserves more focus than just preventing a merger.
[1] http://www.businessweek.com/articles/2014-02-13/six-takeways...
[2] http://money.cnn.com/2014/04/28/news/companies/comcast-timer...
There are also arguments that combining the customer base will give greater buying power when making deals over content (ex. complete broadcasting power over local sports franchises). But the combined customer base is supposed to be less than 30% of households that subscribe to cable or satellite TV [2].
I understand net neutrality is a huge concern, but that seems to be a separate issue from the Time Warner - Comcast merger. It looks like the problem (which is addressed at the end of the post) is higher barriers to entry from local governments. If that's the root cause of net neutrality, that probably deserves more focus than just preventing a merger.
[1] http://www.businessweek.com/articles/2014-02-13/six-takeways...
[2] http://money.cnn.com/2014/04/28/news/companies/comcast-timer...
I don't understand the arguments against the merger very well. From what I've read, there is currently very little overlap between the regions of Time Warner Cable and those of Comcast [1]. If this is correct, how could the merger allow either firm to raise the price?
Raising the consumer price is only one of many things ComcastWarner could do. Having an even larger marketshare would allow them, for example, to extort more content distributors for more paid peering and hosting, for example.
But the combined customer base is supposed to be less than 30% of households that subscribe to cable or satellite TV [2].
30% is a very big number! No company would voluntarily give up 30% of its income over a distribution dispute, so ComcastWarner would be able to extract far more concessions from content producers.
It looks like the problem (which is addressed at the end of the post) is higher barriers to entry from local governments.
A larger ComcastWarner would have even more lobbying power to ensure those barriers to entry remain high.
Raising the consumer price is only one of many things ComcastWarner could do. Having an even larger marketshare would allow them, for example, to extort more content distributors for more paid peering and hosting, for example.
But the combined customer base is supposed to be less than 30% of households that subscribe to cable or satellite TV [2].
30% is a very big number! No company would voluntarily give up 30% of its income over a distribution dispute, so ComcastWarner would be able to extract far more concessions from content producers.
It looks like the problem (which is addressed at the end of the post) is higher barriers to entry from local governments.
A larger ComcastWarner would have even more lobbying power to ensure those barriers to entry remain high.
"From what I've read, there is currently very little overlap between the regions of Time Warner Cable and those of Comcast [1]. If this is correct, how could the merger allow either firm to raise the price?"
I read an article on this the other day, can't find it right now. The objection is based on the merged company gaining too much power over (potentially competing) content providers, not over their own customers. I think the gist of it was that Netflix (or any similar company that serves content requested by ISP customers) might be able to thwart "extortion" by individual smaller ISP's, because if Netflix stood up to the ISP and ISP responded by cutting off Netflix service, Netflix would still be able to survive and derive sufficient profit by serving the population of ISP's in other areas. If a single ISP serves too much area/population, however, Netflix's negotiating power falls rapidly. In Time Warner/Comcast case, the single merged company would control so much area that as a practical matter Netflix would have to do whatever they demanded, because Netflix would lose too much money if it tried to fight the extortion and lost ability to serve all Time Warner/Comcast customers. (I believe crux of this argument depends on antitrust laws preventing individual ISP's from acting in concert against Netflix, which laws would not apply against Time Warner/Comcast as single entity.)
So basically the argument is that the TimeWarner/Comcast merger would create a company that has too much power over its competitors, leveraging its function as last-mile ISP to gain unfair advantage over content providers it competes with in providing its own content.
I did find the article, and there's a lot more to it than what I wrote in previous paragraphs: http://www.vox.com/2014/5/6/5678080/voxsplaining-telecom
I read an article on this the other day, can't find it right now. The objection is based on the merged company gaining too much power over (potentially competing) content providers, not over their own customers. I think the gist of it was that Netflix (or any similar company that serves content requested by ISP customers) might be able to thwart "extortion" by individual smaller ISP's, because if Netflix stood up to the ISP and ISP responded by cutting off Netflix service, Netflix would still be able to survive and derive sufficient profit by serving the population of ISP's in other areas. If a single ISP serves too much area/population, however, Netflix's negotiating power falls rapidly. In Time Warner/Comcast case, the single merged company would control so much area that as a practical matter Netflix would have to do whatever they demanded, because Netflix would lose too much money if it tried to fight the extortion and lost ability to serve all Time Warner/Comcast customers. (I believe crux of this argument depends on antitrust laws preventing individual ISP's from acting in concert against Netflix, which laws would not apply against Time Warner/Comcast as single entity.)
So basically the argument is that the TimeWarner/Comcast merger would create a company that has too much power over its competitors, leveraging its function as last-mile ISP to gain unfair advantage over content providers it competes with in providing its own content.
I did find the article, and there's a lot more to it than what I wrote in previous paragraphs: http://www.vox.com/2014/5/6/5678080/voxsplaining-telecom
Net neutrality aside, there's still the separate issue of providers not paying to upgrade their peering equipment. How would that best be handled (assuming that increasing competition will never happen)?
How could it be handled? Perhaps a class-action lawsuit on behalf of the broadband customers who are not getting the service they paid for.
Of course, this is not without great difficulty.
I'd estimate that roughly 100% of US consumer broadband providers have written into their customer agreements clauses that a) provide no guarantee for any level of service and b) require customers to wave their right to file a lawsuit for any reason, class-action or otherwise. So, first these provisions would be challenged, and then the case could continue.
What is the outcome? Cynically, 10 years later, the broadband company settles out of court, admitting no wrong-doing and changing nothing in their business, and the lawyers get paid millions, the consumers sort of just plod on.
On a larger scale, I think the biggest mistake that we've made as a culture is that we no longer expect the government to be the final arbiter of justice. Indeed, the political winds on the matter of hated "regulation" shifts so frequently that regulators themselves must be a bunch of basket-cases. My sense is that in other countries the issue of fairness and acceptable behavior is more deeply understood. There is no doubt that it is the government who is the ultimate boss, and the folks that work there see it as their noble purpose to prevent large companies from taking advantage of everyday people. But for some reason people that figure out how to get away with it are admired, respected, and feared by government.
It ain't right.
Of course, this is not without great difficulty.
I'd estimate that roughly 100% of US consumer broadband providers have written into their customer agreements clauses that a) provide no guarantee for any level of service and b) require customers to wave their right to file a lawsuit for any reason, class-action or otherwise. So, first these provisions would be challenged, and then the case could continue.
What is the outcome? Cynically, 10 years later, the broadband company settles out of court, admitting no wrong-doing and changing nothing in their business, and the lawyers get paid millions, the consumers sort of just plod on.
On a larger scale, I think the biggest mistake that we've made as a culture is that we no longer expect the government to be the final arbiter of justice. Indeed, the political winds on the matter of hated "regulation" shifts so frequently that regulators themselves must be a bunch of basket-cases. My sense is that in other countries the issue of fairness and acceptable behavior is more deeply understood. There is no doubt that it is the government who is the ultimate boss, and the folks that work there see it as their noble purpose to prevent large companies from taking advantage of everyday people. But for some reason people that figure out how to get away with it are admired, respected, and feared by government.
It ain't right.
30-some years ago the courts broke up the Bell System (original AT&T) monopoly on the basis of monopolistic behavior.
Perhaps a judicial finding that present day ISP practice constitutes a de facto, /necessary/ monopoly, forcing wholesale access to competitors to the incumbent ISPs' customer access facilities.
Perhaps a judicial finding that present day ISP practice constitutes a de facto, /necessary/ monopoly, forcing wholesale access to competitors to the incumbent ISPs' customer access facilities.
We could slightly broaden the definition of net neutrality to prohibit such selective non-upgrading. Or maybe the FTC could consider "high-speed" broadband with persistent packet loss to be some kind of false advertising.
bait and switch? They sell you product they cant, or more precisely actively work to NOT deliver.
Appears to be a dupe of https://news.ycombinator.com/item?id=7699862.
I wonder what that company in Europe is.
A public comitee manages servers located precisely at exchange points, and, thus at network borders. These servers are used by applications which anybody can run that are used to measure speed from clients to them.
Of course, there's always a chance of selective QoS based in packet origin, but this is now illegal (we have a net neutrality law now) and not that hard to investigate if needed.
[1] The speed is also rated, but at 30% at any measurement and 70% at long term average.