Consumer groups dance on the grave of Comcast-TW deal

They say the deal's collapse is good for customers

Consumer groups are cheering the news that Comcast abandoned its proposed US$45 billion acquisition of fellow cable and broadband provider Time Warner Cable, saying it's good for customers and demonstrates the power of Internet activism.

Comcast's decision, announced Friday, would have taken away a major cable and broadband provider in the U.S., critics of the deal argued.

"The only competition consumers would have had in their living rooms if this mega-merger had gone forward would be who handles the remote control," Senator Edward Markey, a Massachusetts Democrat, said in a statement. "Combining Comcast and Time Warner Cable would have created a corporate colossi, hampering consumer choice, competition and innovation in both the broadband and pay TV marketplace."

The proposed deal was "bad news from the beginning," added Craig Aaron, president and CEO of Free Press, a left-leaning digital rights group. "Giving one company control over so much of America's communications is neither pro-consumer nor pro-competition," he said in a statement. "Comcast finally got the message that people can't be fooled into thinking that this merger would benefit cable customers and Internet users in any way."

Aaron and other activists pointed to public opposition to the deal, including major online campaigns, as a victory for Internet users. Coupled with the U.S. Federal Communications Commission's vote to approve strong net neutrality rules in February, the end of the deal marks "the rise of Internet users as a powerful political constituency that can no longer be ignored by elected officials and policymakers," Aaron added.

The merger's death is a historic victory in a fight to "stop the consolidation of the corporations that control our access to the Internet," Josh Nelson, campaign manager of liberal activist group CREDO Action, said by email. "This victory belongs to the hundreds of thousands of activists nationwide" who asked U.S. and state regulators to kill the deal.

Comcast had argued that the deal didn't violate U.S. antitrust laws because the two companies don't compete head to head in any areas of the country. The deal would have created a communications giant that controlled about a third of the U.S. pay TV market and about 40 percent of the wired broadband market.

Comcast's decision to scuttle the deal came after reports that the FCC had referred the proposed deal to a hearing in front of a judge -- a likely deal killer because of the time and effort a hearing would have required.

The company's decision didn't win universal approval, with conservative and free market groups lamenting government interference in the merger.

The "deck was stacked" against the deal, because Comcast had to win approval from both the FCC and the Department of Justice, said Ryan Radia, associate director of technology studies for the Competitive Enterprise Institute, a free market think tank. While the DOJ has to prevail in court before it can block a merger, "the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge," he said by email. "This process turns the rule of law on its head, and only Congress can fix it."

The FCC's decisions related to the deal strike of an anticapitalist agenda promoted by President Barack Obama's administration, said Mike Wendy, president of MediaFreedom.org, a free market advocacy group.

"The administration wants nothing to do with the private economy shaping ideas and information, which is dangerous," he said by email. "They must always be controlled to its liking. So, if you're unlucky enough to be a successful communications company in America, watch out. The most powerful have been toppled here."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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Tags business issuesU.S. Department of Justicefree presstelecommunicationCREDO ActionRyan RadiaMike WendycomcastCompetitive Enterprise InstituteMergers and acquisitionsEdward MarkeyTime Warner CableMediaFreedom.orgU.S. Federal Communications CommissionCraig AaronJosh Nelson

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Grant Gross

IDG News Service
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