The Case Against Time Warner-Comcast Just Got Stronger

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

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.

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.