You're probably already thinking that the merger of the two biggest cable companies in the United States isn't going to turn out great for regular people.
Guess what? You're on to something. If Comcast's proposed $45.2 billion acquisition of Time Warner Cable actually happens (and that's a big if), then the giant company would have 30 million customers and dominate cable and Internet service throughout the U.S.
Here are some fairly terrible things that could happen if the deal goes through:
1. The End Of Unlimited Data At Home:
As Gigaom notes, Time Warner Cable broadband customers don't have monthly data caps -- they can stream as much video, download as much content and surf the web as much as they like without worrying about going over any sort of monthly allotment. Comcast, however, is testing out data caps in cities in at least six states.
Customers in these areas who pay for Comcast's Xfinity service are limited to 300 gigabytes of data per month, meaning they can only use 300 GB worth of Netflix, YouTube, Facebook and iTunes. For many people, that's enough. But considering that an hour of HD video on Netflix uses about 2.8 GB, or an Xbox One game download can be a whopping 44GB, the allotment can go pretty quickly for some people. If they go over that, they are charged a fee of $10 for every 50 gigabytes used. With control of even more markets through the Time Warner Cable acquisition, data caps for Time Warner Cable customers could be on the horizon.
"The era of abundance in the broadband market is over," said Derek Turner, the research director for Free Press, a nonpartisan advocacy group. "The era of artificial scarcity is now upon us."
2. Slower Netflix:
For months, the average speed of Netflix video during primetime has been slowing on Comcast and Verizon networks, leading some customers to complain about poor quality and long load times. This is the result, experts say, of congestion: Comcast and other ISPs are not investing in enough network infrastructure to handle the massive amounts of data Netflix is sending them.
Netflix has a program called Open Connect that gives ISPs the option to connect to Netflix-dedicated servers, which would help with congestion -- but neither Time Warner nor Comcast participate. A company like Comcast, which has its own video-on-demand and pay TV services, and says Netflix is a competitor, may not be interested in improving Netflix quality. ISPs also don't want to cede control, and according to the Wall Street Journal, say Open Connect is a way for Netflix to get around paying fees.
If Comcast doesn't address network issues, and people continue to stream more and more, the quality of Netflix on the network could continue to suffer.
Because of its merger with NBC, Comcast for now has to follow the Federal Open Internet rules, also known as net neutrality, which say that it can't treat traffic from one service, say Netflix, Google or Facebook, differently from another service. A Comcast takeover would extend those open Internet protections to Time Warner Cable customers. But if Netflix, or any competing service, for that matter, is streaming poorly on Comcast -- not because of net neutrality, but because of congestion -- or the competing service doesn't offer what people want to watch, then customers could be more likely to turn to Comcast's service.
3. Fewer Good Choices On Netflix, Amazon and Hulu:
Comcast would much rather have you watch a show on its own service than on Netflix, Amazon or Hulu (Comcast owns part of Hulu, but as part of the conditions of the Comcast NBC merger in 2011, doesn't have any control over it.) It even called out Hulu, along with Netflix, Apple, Amazon and Google as a reason for the Time Warner merger.
The giant company would not only have the money and leverage to outbid streaming video sites for content, but the ramifications of doing business with a Comcast competitor could also lead to what Michael Weinberg, a vice president at the advocacy group Public Knowledge, called self-policing.
A TV network, for example, may be hesitant to license its content to Netflix because it could be worried about Comcast punishing it by putting it in a really obscure area of its cable offering -- "in cable Siberia," as Weinberg said. The network could also be worried about getting stiffed in lucrative carriage fees, the money that cable companies pay to channels to carry them.
"Because they are in their position to punish people -- because they control a massive part of the market -- people are less likely to cross them," Weinberg said of a Comcast-Time Warner Cable behemoth.
"No matter how much money you would get from the deal [with Netflix], the cost of alienating a buyer of the size of a merged Comcast-Time Warner Cable just wouldn't be worth it," he said.
4. Even Less Choice In Cable Providers:
Prior to the announcement of the merger, Time Warner Cable was in a good position to offer a "virtual TV" option -- a product that would allow people in areas controlled by just one cable provider to potentially watch Time Warner cable over the Internet, said Turner.
That's probably over. Comcast may not feel the same pressure as smaller cable companies to come up with a virtual cable offering, as it makes a lot of money off of the other cable companies by selling its content to them, Turner said.
"The future of cable video competition is going to be much worse because you're taking away a company that would have likely entered the virtual cable market in the future," Turner said.
5. Higher Prices:
Brian Roberts, Comcast's CEO, called the potential deal "pro-competitive" and "pro-consumer," and talked about the "synergies" that would save the company over $1.5 billion if the deal goes through. But don't expect those savings to be passed along to the customer -- the price of pay TV has gone up dramatically in the past few years, and broadband hasn't gotten any cheaper. There's no reason to think that the joining of corporate titans in a quasi-monopolistic business would be for the benefit of anybody but their management and shareholders.
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