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Elliott Morss | June 30th, 2016

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Reasons the FCC Should Block the Comcast/TW Merger

Reasons the FCC Should Block the Comcast/TW Merger
© Elliott R. Morss, Ph.D.

Introduction

The Charter of the FCC sets forth the following objectives:

  • Promoting competition, innovation and investment in broadband services;
  • Supporting the nation’s economy by ensuring an appropriate competitive framework for the unfolding of the communications revolution;
  • Revising media regulations so that new technologies flourish alongside diversity and localism.

So far, it has failed miserably at these tasks. Table 1 indicates that the US, ostensibly the global leader in technology, has broadband speeds of only one-third those of Hong Kong (Table 1).

Table 1. – Broadband Speeds of Leading Nations

Source: Ookla Net Index

Why such miserable performance? In a key 2002 decision, the FCC ruled that instead of what was patently obvious: that internet service is a utility just like landline phone service, it decided that Internet providers were “information service providers” and not “telecommunications carriers.” That was critical: it meant that unlike common carriers, these service providers did not have to open their lines to all. The result is an oligopoly (a limited number of companies colluding together) to keep competitors out. Why would the FCC make such a decision? A decision that is clearly in violation of its “competition mandate”.

Understanding FCC Decisions

It could not be simpler: According to Open Secrets, the Communication/Electronics industry ranks third behind only the finance and health industry in lobbying outlays – $391 million in 2013.

The Comcast/Time Warner Merger

Table 2 provides customer data on the leading Internet providers. It also compares market shares if the Comcast/TW merger goes through with shares if the rumored Charter/TW merger took place. One would think the FCC decision should be straightforward:

  • Block the Comcast/TW deal because it would reduce competition;
  • Find a TW partner that would offer a competitive challenge to Comcast’s already dominant position.

That is what should happen, but will it? Rest assured, Comcast’s lobbyists are working overtime.     

Table 2. – Internet Market Shares

Source: Yahoo

Comments

  1. What happened?”A Note to Google Users on Net Neutrality: The Internet as we know it is fancig a serious threat. There’s a debate heating up in Washington, DC on something called “net neutrality” and it’s a debate that’s so important Google is asking you to get involved. We’re asking you to take action to protect Internet freedom.In the next few days, the House of Representatives is going to vote on a bill that would fundamentally alter the Internet. That bill, and one that may come up for a key vote in the Senate in the next few weeks, would give the big phone and cable companies the power to pick and choose what you will be able to see and do on the Internet.Today the Internet is an information highway where anybody no matter how large or small, how traditional or unconventional has equal access. But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.Creativity, innovation and a free and open marketplace are all at stake in this fight. Please call your representative (202-224-3121) and let your voice be heard.Thanks for your time, your concern and your support.Eric Schmidt” –Summer 2006

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