Look for Bills to Rise (Again)
When asked point-blank by Senate Judiciary Committee on the matter, Comcast Vice President David Cohen replied “There is absolutely nothing in this transaction that will result in increase in prices for Comcast customers. Nothing.”
Indeed, the two companies have both suggested that their combined technologies and know-how will actually improve the customer experience. Yet, somehow it seems impossible to believe that a for-profit monopoly is going to let an opportunity to cut costs and increase prices (or both) pass it by.
And make no mistake, a monopoly — whether legal or de facto — is exactly what Time Warner and Comcast would be in most of its markets. As it stands now, 30% of the country only has one broadband choice, and 70% of the country only has access to two or fewer broadband service providers. Moreover, the company would own the aforementioned 30% of the U.S. cable TV market, and roughly 40% of the broadband market once combined.
There’s little incentive to price a cable and internet service competitively in such an environment. Given time, motive, opportunity, and the usual lack of regulatory oversight, why would the company not put its own interests first?
If you’re a CMCSA shareholder, this might sound like good news. But to everyone else, the Comcast and Time Warner Cable merger looks like a big headache.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.