Comcast-Time Warner deal may impact broadband customers

The buyout might improve service for some but give a larger Comcast more control

Comcast's proposed acquisition of Time Warner Cable is partly a grab for negotiating power in the fast-changing video content business, but it might affect broadband users, too.

The US$45.2 billion offer comes as cable TV operators face a growing number of new channels for the kinds of content they used to deliver almost exclusively. Online video providers such as Netflix, Amazon, YouTube and Hulu (part-owned by Comcast's parent company) now offer alternatives to cable that can travel over any reasonably strong Internet connection, and the makers of video content look to them as alternatives to cable operators. If Comcast boasts more customers, it may be able to get better deals.

But alongside its cable TV business, Comcast is already the biggest wireline broadband provider in the U.S., with 20.7 million customers. After the deal's done, it expects to have about 30 million. That's more than Verizon Communications, AT&T or any other cable operator, though mobile data services that can rival home broadband's speed have even more customers.

The direct effects on broadband customers of the two cable companies may be minor, analysts said, but critics of the deal warned it might give Comcast more power to shape consumers' broadband experience over time.

On the positive side, the buyout could strengthen service for former TWC customers, said IDC analyst Matt Davis. Comcast has been ahead of most major cable operators in rolling out new, fast infrastructure, he said.

"From a consumer broadband perspective, if the deal goes through, they would be inheriting a company that's really focused on broadband being a core service," Davis said. The company offers speeds up to 505Mbps (bits per second) on its home service.

Another benefit to Time Warner users might flow from Comcast's negotiations with regulators in order to get the deal approved, Davis said.

Net neutrality rules that Comcast agreed to as a condition of its buying NBC in 2011 would be extended to Time Warner, Comcast Executive Vice President David Cohen said on a conference call Thursday. The rules, which were set to last for seven years, call for all services delivered over the Internet to be treated equally.

"Those Time Warner customers are going to kind of have an umbrella of protection that they didn't have before," Davis said.

With the Time Warner deal under scrutiny, Comcast may also be forced to make other concessions that could help subscribers, he said. Those might include more privacy reporting and more transparency about data caps or network control.

Critics warned the combination would give Comcast too much power over equipment suppliers and other companies involved in broadband and cable, leading to higher prices.

One factor that could shape broadband service is Comcast's bargaining power when making peering agreements, the deals under which core network providers get access to the edges of networks, said Derek Turner, research director at the consumer rights group Free Press. In 2010, Comcast had a content delivery dispute with one such company, Level 3.

Caps on the amount of data that subscribers can use per month, which Comcast is starting to introduce, could also hurt consumers, Turner said.

Comcast's Cohen wouldn't speculate about the deal's effect on broadband services, saying it was too early to say. Asked about monthly data caps, he said the technique is still in trials and only a small minority of Comcast customers are under them. It's not clear where Comcast's trial will be at the end of the year, when the deal would close, he said.

Likewise, he said the effect on prices would be hard to quantify, though merging the companies should cut some costs internally.

"We're certainly not promising that customer bills are going to go down or even that they're going to increase less rapidly," Cohen said.

Comcast's focus in the plan is squarely on video, said Roger Kay, principal analyst at Endpoint Technology Associates. It wouldn't make such an acquisition to grow its pure broadband business, he said. The cable companies face competition in that area from fiber-based services such as AT&T's U-verse and Verizon's FiOS, as well as from fast mobile networks. Those rivals are also competing on the content front, because like Comcast, they fear being beat out by a cheaper bandwidth alternative, he said.

"All of these guys have been trying not to be relegated to just being pipes," Kay said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesTime Warner CablecomcastinternetMergers and acquisitionsInternet service providers

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?