Comcast and Time Warner Cable took the stand on April 9 to defend a proposed merger that would make them by far the largest cable service in the United States. Heads of the two companies, Comcast Executive Vice President David L. Cohen and Time Warner Cable Chief Financial Officer Arthur Minson, brought their case to a largely skeptical congress, fielding questions surrounding how the merger intended to benefit customers.
Comcast argues that with ever-increasing competition from content providers like Apple, Amazon, Google, wireless broadband services and set top options like Xbox and Roku, the merger would allow the company to be competitive in the face of the new on demand options that the average customer has access to.
Wall Street Journal reports that during the three hour long hearing, Cohen said that consumers, “are in the driver’s seat, both for broadband and in particular for video. There are a vast number of competitive choices.”
However, this argument belies the fact that many of video on demand services cited would use Comcast’s broadband infrastructure to connect to customers. At the end of 2013, Comcast was estimated to have 20.7 million broadband subscribers, with TWC counting around 11 million, making the number one and two providers of broadband for the nation respectively.
Though Cohen assured Congress that the deal would not cause anyone’s cable bill to go up, the presiding members were lukewarm to the proposition, according to reports. Democrats were most vocal during the hearing, with Minnesota Senator Al Fraken saying “I believe this deal will result in fewer choices, higher prices and even worse service for my constituents.”
Because Comcast and TWC do not directly compete in any markets, they argue that a conglomeration of their infrastructure would not reduce provider options in any one location. They would also offer TWC customers many of the advancements and perks currently enjoyed by Comcast subscribers, such as faster Internet, more on-demand services, better customer service connection options.
While ultimately the congressional panel does not have the final say on whether or not the deal goes through, the Department of Justice (DOJ) and the Federal Communications Commission (FCC) will need to weigh whether or not the expansion of service area constitutes a competition risk. The merger would give Comcast the largest swath of broadband infrastructure in the U.S., a disconcerting thought when the slipping speed of Internet service is considered.
The house judiciary committee will hold a similar hearing on May 8, The FCC and DOJ are still in the ancillary phases of their review with a decision not likely until later this year.
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