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Comcast's Costly Package

The proposed takeover of Time Warner Cable is misguided, monopolistic and bad for the U.S. economy.
 
 
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This article originally appeared on Al Jazeera America, and is reprinted here with their permission.

If you’re wondering why ordinary Americans aren’t even close to achieving economic prosperity nearly five years after the official end of the Great Recession, you should pay close attention to the proposed $45 billion takeover of Time Warner Cable by Comcast.

The deal, which was announced last week, would create a monopolistic behemoth, reducing competition in the telecommunications sector and granting the consolidated companies more power to simultaneously raise prices and depress wages. It would reduce the number of jobs on the market, weaken smaller businesses and restrain the deployment of technology — especially the high-speed Internet access that’s necessary to support economic growth in this digital age.

If the deal goes through, it will serve as the latest example of the bad economic policies that have prevented the U.S. from thriving in recent years. In the words of the Writers Guild of America West, the labor union that represents workers in the movie, Internet and TV industries, it would be “bad for everyone: content creators, programmers, suppliers and consumers” because “media consolidation leads to already too powerful companies limiting competition.”

The guild’s concern lies in what’s commonly referred to as antitrust laws, which govern competition in the marketplace. Under the proposed takeover, the combined cable company would dominate in 19 of the top 20 television markets, enhancing Comcast’s power over program suppliers that want not only to be on Comcast but also to have a place in the channel lineup that helps attract viewers — say, Channel 9 instead of 949.

With regard to its Internet services, Comcast would emerge from the takeover in a similarly dominant position and thus have no economic incentive to upgrade its own and Time Warner’s outdated cable systems — veritable two-lane toll roads with potholes, compared with the Internet superhighways in Europe, Japan and urban East Asia. In Chattanooga, Tenn., for example, Comcast’s triple-play package — cable, Internet and telephone —  costs 10 times what South Korean firms charge in Seoul, albeit with a slower Internet connection for the cheapest Korean deal.

And when there’s only one game in town, its players set standards for wages and working conditions — meaning these are unlikely to improve.  

Corrupting influence

The reason companies even fathom proposing deals like these is also part of the reason the United States is lagging behind its economic competitors: U.S. campaign finance and lobbying rules favor big companies that seek to thwart rules requiring robust competition in the marketplace. This may be good for the companies in the short term. But what Washington and the state capitals overlook is that in the long run, competition benefits businesses, and reducing the amount of it ultimately hurts workers, consumers, innovation and the economy.

Last year Comcast was the seventh-biggest lobbyist in the United States, investing $18.8 million in influencing Congress and relevant regulatory agencies, according to disclosure reports collected by the Center for Responsive Politics. That was in addition to more than $100 million spent lobbying in the previous 15 years. This sum does not include Time Warner Cable’s lobbying. Comcast has given politicians $25.7 million in campaign contributions since 1990, of which $2 million was spent last year — again, not counting what Time Warner Cable spent to spread its own influence. If the takeover is approved by federal regulators, it will certainly show, once again, that investing in government policy can be exceptionally profitable.

Consumer lobbies, on the other hand, are few in numbers, lightly funded and often snubbed by lawmakers — a sharp contrast to the easy access to senators and representatives that Comcast’s donations afford the company in the capital. Many consumer groups, including Good Jobs First, the Consumer Federation of America, the National Consumer Law Center and the Utility Reform Network, struggle to keep their lights on while trying to restore rules that encourage competition or balanced regulation of utilities.