Comcast’s decision this week to abandon its bid to merge with Time Warner Cable was a victory for consumers. The cable giant’s desire to grow even bigger offered little upside for traditional television viewers while posing a significant threat to the rapid development of a free-flowing, Internet-based video future.
After a year of bluster and millions spent lobbying for the deal, Comcast apparently concluded that it couldn’t convince federal regulators that one of the country’s most hated companies should control the cable service and Internet connections to more than half the nation’s homes.
Good for the Federal Communications Commission for doing what a regulatory agency should do. The government’s push-back against the merger was a reflection of the public’s collective disgust toward a big, powerful company with a record of using its network of local monopolies to abuse its own customer base. No matter what arguments Comcast presented for the merger – and some of those points had merit – it was hard to believe that cable or Internet service would improve under the new regime.
While most of the frustration consumers feel toward Comcast focuses on the company’s notoriously bad cable television service, the bigger issue raised by the proposed merger was its potential effect on the future of broadband Internet and what that would mean for video.
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It was telling that Internet video pioneer Netflix was the most outspoken industry opponent of the merger. Last year Comcast used its market power to force Netflix to pay increased fees for the privilege of sending movies at high speeds over the Internet to its customers, who themselves were already paying Comcast for the right to receive those same movies.
Comcast also flexed its market power in dealings with Apple when the world’s most powerful tech company tried to stitch together a package of television programming that it could deliver over the Internet at a price below the typical cable company offerings.
The Apple service, set to roll out later this year, will include all the major networks except NBC Universal, which is owned, surprise, by Comcast. The absence of NBC in the Apple package will make it that much harder for Apple to compete with Comcast’s cable service.
But the defeat of Comcast’s expansion does not by itself ensure a free and unfettered future for the Internet. The company still controls a huge swath of the country’s Internet connections and will no doubt continue to use that power to try to preserve its fading cable business.
And the federal government’s intentions remain unclear. While the FCC was right to adopt its “net neutrality” rules earlier this year and to question the Comcast-Time Warner merger, the commission is not guaranteed to remain a force for good.
Regulating the Internet like a public utility, which the FCC has given itself the power to do, could do more harm than good if it blocks innovation or leads to excessive litigation among companies looking to use federal rules to hinder competitors.
What consumers need most is robust competition on a level playing field that encourages new ideas and services and leaves customers free to choose among them.
We’re most likely to get that by hemming in behemoths like Comcast – and by using the government’s regulatory powers with discretion, and only as a last resort.