Big cable companies want to merge. What's in it for you? Take a look in our crystal ball.
Have you heard?
The two most hated companies in America are trying to merge. That’s right. Comcast and Time Warner Cable are planning to combine forces and, presumably, lock out the competition so no other company can ever steal their coveted spot at the bottom of the American Customer Satisfaction Index. They’re seeking federal approval to do so.
They aren’t the only big names looking forward to merging either. The Department of Justice just green lighted an AT&T takeover of satellite TV provider DirecTV. While the Federal Communications Commission still needs to sign off, that deal is looking like it might be close to being inked.
With some of the biggest names in the industry set to merge, what have you got to look forward to other than longer hold times? Our crystal ball is hazy, but here are a few educated guesses.
Mergers may expand your service options, lower your rates and improve customer service
Don’t laugh. That’s what cable executives say will happen.
In his June testimony before the U.S. Senate Committee on the Judiciary, AT&T CEO Randall Stephenson said combining with DirecTV will give his company greater ability to negotiate lower rates with programmers and also expand or enhance broadband services to at least 15 million mostly rural customers.
When it comes to customer service, Stephenson had this to say to the committee:
By combining complementary services and generating deep cost savings and operational synergies, the merger allows AT&T to price more competitively and to provide a higher quality experience. Customers will get a single bill and a single installation. They will have a single point of contact for placing orders, answering questions, and solving problems.
Mergers may increase your rates and reduce your options
Of course, not everyone is buying the idea that mergers will lower prices. At that same Senate committee hearing, Ross Lieberman, senior vice president of government affairs for the American Cable Association, said, “The proposed AT&T/DirecTV transaction will increase the incentive of DirectTV-affiliated programmers to charge higher prices to their rivals.”
Some mayors have similar concerns about the Comcast/Time Warner Cable merger. Both Los Angeles Mayor Eric Garcetti and New York Mayor Bill de Blasio have submitted comments to the FCC questioning whether the merger would actually reduce costs and improve services.
De Blasio had this to say in his letter:
If the transaction is allowed to move forward, the company will assume control of an estimated 40 percent of the national broadband market and will become the provider to 30 percent of subscription television customers. This will consolidate in the newly merged entity inordinate influence with respect to key service features — most notably rates. With few alternatives available to consumers, the expanded Comcast will have incentives to drive rates further upward.
Meanwhile, Garcetti said a Time Warner Cable channel has effectively blocked other cable carriers in his city from airing Dodger baseball games, a move he said stifles competition and may mean higher customer rates. The LA mayor questions whether a Comcast merger would simply make these types of turf wars worse.
Mergers may mean fewer jobs for writers and less-interesting programs
Not only could cable mergers reduce your access to certain programming, they could also reduce the overall quality of TV shows. Fewer writers are finding work in the current market as it is.
Writers Guild of America West president Christopher Keyser said this in his Senate testimony:
In this consolidated market, independent programming has been all but eliminated. According to WGAW analysis of the broadcast network schedules, only 10 percent of the 2013 fall prime time lineup was independently produced. This is down from 76 percent independently produced in 1989. … In addition, most of the independent programs airing on broadcast television are reality series such as “Dancing With the Stars” and “American Idol.”
He added, “The proliferation of cable channels has not increased competition; the five companies which own broadcast networks also own most of the major basic cable networks.”
Mergers may make streaming movies an utter pain
Finally, some say cable mergers could make it more difficult to stream your favorite movies.
Netflix filed comments with the FCC in opposition to the Comcast/Time Warner Cable merger, saying Comcast already has a poor track record of allowing access to third-party streaming services.
In his letter to the FCC, de Blasio said Comcast hasn’t been too awesome when it comes to providing fast speeds to low-income customers. The mayor says Comcast points to its Internet Essentials service as part of its commitment to serving the public interest.
However, individuals signed up for the program are regulated to speeds of 5 Mbps (megabits per second) for downloads and 1 Mbps for uploads. For comparison, most people get faster service with their phone. Web publication SmartPlanet says Big Apple residents can get average download and upload speeds of 6.7 Mbps and 8.4 Mbps, respectively, with a 4G LTE device.
While the AT&T/DirecTV merger is looking like a done deal, the jury is still out on the Comcast/Time Warner Cable proposal. If you were the FCC, how would you rule? Do you side with the executives who say consumers will benefit or do you think the naysayers have it right?
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