The news that the Comcast Time Warner Cable merger will not be pursued is good news for consumers. But it’s no reason to celebrate.
Comcast saw how the proposed merger was going to be received by the FCC, so it backed out of the $45 billion merger before the regulatory body could say no.
The Justice Department and public interest groups had rallied against the merger because it would have given the proposed cable company 60% of the broadband business in the US. That would have created a near monopoly and everyone would suffer, from me to you, and to streaming services like Netflix and Hulu. It’s consumers who suffer most from mergers.
The newly merged company would have charged higher rates for Internet services and probably would have charged a premium for streaming services to reach you because they take up so much bandwidth.
So, yeah, the news that Comcast is backing out is good news. But it’s not all peaches and cream out there. Comcast and Time Warner Cable rarely compete against one another, so those dangers still exist.
Streaming services should also be on alert.
Cable companies know they are going to be more Internet Service Providers than they are cable TV companies in the future. Another report by MoffetNathanson Research found that Netflix accounts for 6% of all viewing in first quarter 2015, with more than 10 billion hours streamed.
Many estimate that those numbers will continue to rise and, while I suspect those numbers are generally right, Netflix is notoriously protective of its own viewing data. (Meaning that MoffetNathanson did a projection based on consumer surveys.)
What this means is that, while the Comcast Time Warner Cable merger is not happening now (don’t think they won’t re-group with a better strategy down the road), it doesn’t stop them from controlling the Internet to stay afloat. They know they will not be the TV viewing powers that they once were, so they are going to control the medium by which their competitors reach viewers.
So, yes, the failed merger is good news for consumers. But it doesn’t mean that we can now dance in the street.