The biggest News of the Week is the that the Time Warner Cable (TWC) and Comcast shareholders have voted to approve the merger of the two companies. The question is what this will mean for consumer and other Internet Businesses.
At least to start with, consumers will probably not notice any difference. By the nature of the business TWC and Comcast did not compete directly for consumer business. From a consumer standpoint, the number of choices for Internet Service or Pay TV service has not changed. It seems unlikely that there will be a regulatory objection to the merger for competitive reasons.
The more interesting side is for other Internet Businesses. I have seen studies that pet the combined company of having 57% of the market in the US. A couple of caveats. I can not confirm this from multiple sources nor can I tell you how the share was measured (endpoints, bandwidth, $$). But directionally, the market share seems about right. The next biggest players have under 10% of the market in the same source. Again, this sounds about right.
The challenge presented by this is to a business like Netflix or Google. Having a huge concentration of subscribers in a single company may shift the balance of power in any negotiations. On top of that, Comcast is a content producer (through NBC-Universal). There will temptation for Comcast to take advantage of that concentration of power.
Of course, Comcast states that it plans to abide with Net Neutrality as a merger condition. Given the dispute earlier this year with Netflix, I think that this will require ongoing scrutiny. I have posted earlier that the merger conditions imposed by the FCC in the past don’t seem to do much good. I think that will remain true here unless the company is required to divest some number of assets. I would say that the most obvious entity to spin out is NBC-Universal. I think having a significant content arm as part of a ISP/MSO company is a challenge to the industry.
Just to be clear on this, we need to go back to 1948. The Large Movie Studios had bought up a number of Theaters. An Anti-Trust case was brought and eventually came to the Supreme Court. In a decision in the US versus Paramount Pictures, the Court forced the separation of Content from Distribution. Today, that is not something Comcast has to worry about. But it could be in the future. If Comcast spun off NBC-Universal, this would no longer be a potential issue. Something that we should all think about.
Have a great weekend!
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