> 2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"
I agree with your first point, but your second point doesn't follow. If anything, Comcast will price gouge Netflix out of business, and we'll be back to being stuck watching their awful "On Demand" instead.
They can do this, because Comcast owns the content (NBC), the delivery mechanism for said content (cable TV), and the only delivery mechanism (broadband Internet) for their competitor (Netflix/Amazon Prime).
On the other hand, the (failed) merger attempt between AT&T and T-Mobile was the best thing to happen to consumers in a long time, due to the breakup fee that AT&T had o pay T-Mobile($1+ billion worth of spectrum).
I'm trying to imagine a similar silver lining that could happen here, though I can't think of any.
And how would this 'FU ComcastWarner' work in America? Anywhere you live you only have the choice of paying your cable provider, your telephone carrier or your wireless carrier for internet.
- DSL infrastructure hasn't evolved in a decade or more. You're lucky to get mid-single digit megabits/sec. I had 0.7 mpbs offered to me in Mountain View by at&t.
- Cable is the only speedy one, but they can price gouge you, limit the amount of traffic (see Comcast) and decide who to prioritize
- Wireless is getting faster, but is severely limited in transfer packages. You'd be paying an arm and leg just to get a few Gigabytes in total per month.
So tell me - how does this 'FU ComcastWarner' gonna work? Move to the one or two towns that have alternative internet (e.g. Fibre)?
Internet providers need to quit playing these shenanigans all the time.
What they do is they build public roads. You wouldn't allow a company to build a public road, and then go:
"Safeway trucks get a free pass, cause we have a deal with them; everyone else, $5 per vehicle. Except for you, Best Buy, you pay $25 - except Saturday and Sunday, when you may not pass at all."
I also see police on the roads, that prevent random lunatics from driving while tripping balls and ramming into my ass at 150 km/h during my morning commute. I think that's also a function of government.
Secondly, if you think the "no trucks over 3 tons" signs impinge on your "liberty", then go ahead and drive a 25 ton truck down that road, see what happens. I'm having this discussion about "liberty" versus common sense with my 3rd grade son all the time.
I certainly never said "no trucks over 3 tons" impinges anyone's liberty. I was implying that "no trucks over 3 tons" is equivalent to saying "no one is allowed to consume more than X amount of bandwidth" on my public pipe, which is exactly how the network providers are going to couch their arguments when trying to strangle Netflix.
There is probably a good technical reason as to why there is a 3 ton limit, i.e. the road (or bridge this road crosses) can't support >3 tons and will probably collapse under the weight of a heavier vehicle. There are also good safety reasons such as not wanting 25ton 18 wheelers using the road past your local primary school as a rat run. That's where your analogy fails.
Well a long time ago I would have been all for public roads, but alas do you really trust the Federal government to dictate what does go down the pipe and who is allowed?
Do you trust the Federal government to dictate what goes down the road and who is allowed to drive?
I recommend blind trust in nobody, as a rule. But with the government, at least there's the option of voting against the current office holders. Whereas when a Comcast-TimeWarner super-juggernaut takes over the whole market, what are my options? My lawyers versus theirs? Yeah, that would end up "well".
With the government, at election time, you have the option to vote between one corrupt asshole or the other. With corporations, you can just choose to not buy from them (therefore starving them of money).
So, in the case we're discussing here (and directly applicable to my own situation BTW, but that's anecdotal), people will have the "choice" between, let's see... Comcast-TimeWarner and... Comcast-TimeWarner. Great choice, I'll take seven!
Or I could choose to not buy, therefore starving myself of the resources they provide. That's even better!
So you really, really have to have Internet/cable, and they must give it to you cheaply and at high quality? If you're not even considering the option of walking away from them, you're giving them enormous leverage over you.
EDIT: This is the behavior of "rational economic actors", IMHO. If the benefit you get from the expensive Internet they offer is bigger than the cost, it's rational to take it. If it isn't, then it's rational to pass on it. If enough people do this, then the corporation realizes they get more customers by lowering prices (if they also act as "rational actors").
Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.
The 'rational actor' model is to economics what spherical cows [1] are to dairy farms. It is a simplifying assumption that is useful for certain general cases, but if you ever find yourself depending upon it in an argument, you're working at too shallow a level.
In this case, though, even if the rational-actor model were valid, you'd be wrong. In the case of monopolies and oligopolies, the rational-actor approach is to, basically, let yourself be screwed by the monopolist.
For example, in my case I'm in an area where I pay more money for worse broadband (ADSL) because I hate monopolists like Comcast. From an economics perspective, I'm an irrational actor, because I'm not optimizing for my own interests.
> Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.
Work and school are economic investments with concrete returns; financially, you get more out of Internet access than you pay. If you didn't need Internet for either of these, and just used it for Netflix or World of Warcraft (or any kind of recreation), would you reconsider paying for it?
Sorry, I'm not interested in jumping through your theoretical hoops. As a non-Comcast user who does need the internet, that doesn't seem like an interesting game to me.
Then do the constituents of your city, county, state, and country a service and either stand for election, volunteer time for a candidate that's not an asshole, or donate money to the campaign of a candidate that's not an asshole so they get on the ballot. Otherwise you get what you deserve.
Keep in mind that in some cases the municipals are sued by the companies that can't be bothered to implement quality broadband for trying to implement quality broadband.
Makes me wonder if it'll have to get to the point that a municipality says fuck you to both the broadband provider suing them and the county/state courts that allow such nonsense to implement their broadband anyway.
I've played many games of Starcraft on a Verizon LTE connection. Many (most?) online games have 250ms of latency "built in" to even the playing field for users with ping times below 250ms. LTE latency is usually closer to 50ms
250 ms for SC2 is a huge handicap and is definitely not added to the game. I can't imagine marine splitting(or really playing BW at all) with that kind of penalty.
That being said, Targa is famous for playing for a while via a 4g connection in Australia. So playing the game well is certainly possible.
It's pretty easy to do lag compensation on RTSs. You have the server run a copy of the game locally and just sync with the clients. Typically, RTSs have a lot of actions, but timing isn't as crucial. So, if things get out of sync, you just buffer until you everything catches back up again. You can even do things like vary the speed of the game (FPS) without the players noticing much. With games that rely on precise timing as a core mechanics (e.g. a shooter, fighting, or rhythm), the player is going to notice that an action took 10ms and then the next time they did it, it took 20, because they'll actually miss their target.
When municipalities offer cable they roll out with a competitive package but often fall behind in technology over time because they are slow to upgrade and have no leverage with content providers. I imagine it would be the same for internet.
Why would they need leverage with content providers? I don't want content from my municipal, I want access to the content of my choosing. Let me deal with content providers on my own terms.
Sure. But how many 'municipal' providers are there in places where a lot of the HN activity lies (i.e. SF/Silicon Valley) in say Mountain View, Palo Alto, Santa Clara, Redwood City, Menlo Park, San Mateo, Cupertino, Los Altos etc?
It's a small patchwork all over the country.
Netflix partnering with, or potentially acquired by, Amazon to take on other platforms makes sense. There needs to be consolidation and I think Bezos could do a better job bringing in bigger licensing deals.
A duopoly might help in America but for the rest of us (at least where I'm from) competition is working fine. I can choose between around 5 different providers for internet and/or TV with prices starting at as little as $35 per month for unlimited internet at around 20mbps download speed. I can also choose online between Netflix, Amazon/LoveFilm, free demand services such as BBC iPlayer, ITV Player, 4OD, and paid on demand services that come with certain TV packages (SKY on demand). In the UK competition in this space has never looked better in my opinion. It always amazes me that America, the champion of the free market, has such a fucked up telecoms (and by extension TV) industry.
If you're in the UK, Zen Internet now offer £25/month truly unlimited fibre broadband. ~80mbps down, ~20mbps up, no traffic shaping / AUP or anything. I am so happy with my internet right now.
The best way I can explain it is that it's putting the accent more on "free" than on "market", and it's a 14-year-old's definition of free: "You can't make me do anything! YOU'RE NOT MY DAD!"
However, I worry that the more accurate explanation is that it is a neofeudal structure cloaked in free-market terms.
The $35 includes most calls (all local and ten most-called/chosen national and mobile numbers are free on my package from the last three providers) and line rental. Add another $15 for TV licence.
The competition here is from Local Loop Unbundling [1], where the non-ISP part of BT, BT Openreach, works on the exchanges and cabinets. Rollout stats [2], compare Scotland and London for the rural/city development. There's up to 9 choices in London, I would expect iPlayer would work on all of them.
> They can do this, because Comcast owns the content (NBC)
You forgot Universal, which together still amounts to only a fraction of Netflix's content. There's a reason that Netflix doesn't carry many titles in their streaming service: it's already too costly to acquire the rights to stream them all. If Comcast were to raise the price on that content, Comcast could simply stop streaming those movies/shows. Given the size of their library at this point, I doubt any of this would be missed. The "content" you mention is no longer as critical to Netflix's business strategy as it used to be, especially as they move to more original content.
Netflix's original content only amounts to a fraction of the content available on Netflix. They do and will continue to be dependent on licensing this content.
They might want Netflix to survive in some form so as to avoid awaking the sleeping antitrust dogs. Same way as Microsoft found the Mac a useful argument against the "desktop monopoly" argument in the 90s.
What happened to MS in the alternate universe where MS openly vowed to crush Netscape and were as good as their word, after Apple went bankrupt in the early 90s?
They lost their antitrust case, which most of the harshest judgements were reduced or overturned later in appeal. In the end it was determined that they were a monopoly, the results of which include the things you mentioned, and some of their long held business practices had to be changed. After that Netscape eventually came back, and better, as Firefox and Apple doesn't seem to be doing so badly these days.
I'm not understanding your point about an alternate universe in your statement. I must be missing something.
To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry. iApps running on iOS running on an iPhone using an Apple A7 offers the ability to optimize the user experience and integrate the layers that vendors doing things piecemeal can't match.
If Netflix et al want to survive, they have to evolve from being mere middlemen, funneling someone else's content through someone else's pipes.
> To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.
That is devil's idiot. I can choose between 4 different cell carriers and dozens of smartphone makers. Many people only have one option if they want >10Mbps internet.
Fortunately I get to choose between Optimum and FiOS. Optimum gives me 60/25 for the basic rate to keep me from switching to FiOS.
I was addressing chimeracoder's point about vertical integration. There might be tons of Android manufactures peddling phones, but Apple and Samsung are eating up all the profits because they are verticicaly integrated. That's the major play Comcast is making.
I wouldn't be surprised to see this coming soon to wireless. Imagine movie caching servers integrated into the backhaul network instead of going over the public internet. The improvement in QoS would make being a Netflix type entity untenable.
He wasn't making a point about vertical integration, but rather about monopoly power. Perdue and Tyson are vertically integrated. They own feed mills, hatcheries, grow farms, packing plants, and distribution. No one cares because you can always just pick the package of chicken that costs $3.29 instead of $3.59.
I also don't see how Samsung is vertically integrated. They don't make the OS, the App store, or have content/DRM. They have in-house manufacturing, but Apple doesn't. The two companies are vertically integrated in totally different ways, thus vertical integration is a weak argument for their success.
That was also about monopoly power. If NBC were an independent entity, they would license their back catalogue to the highest bidder. Given that NBC is owned by a cable company, the strategy changes. The current dynamic for NBC is, if we license to Netflix, then some people will cut the cord, lowering Comcast/TWC cable revenue. The bigger Comcast is, the less likely NBC is willing to license content to Netflix. If NBC were independent, they would maximize their own revenue, but because they are owned by Comcast, NBC's decisions are to optimize profits for the combined company which is likely not in the interest of consumers.
This is the case regulators should make for putting conditions on the merger. Comcast should be forced to divest from NBC/Universal and agree not to acquire additional content. That would create a significant benefit for consumers.
That describes a vertical monopoly, which is not prohibited. If Apple hadn't acquired PA Semi, they would be selling their products on the open market to the highest bidder, etc. Same situation.
Google has threatened to go nuclear over net neutrality and open up their dark fiber network should things get ugly. Google has more fiber than most any one single company in the us and could be a legitimate threat should comwarner try to call their bluff. I have a feeling google would win that fight
There is no use for Google to participate in long-haul wholesale. There is a lot of supply there. The real issue is last mile, where consumers have no choice.
But the rules just changed. It remains to be seen what those guys will do. But I agree that the last-mile competition, or lack of it is far more important.
Really? The last time I checked, the cost for fiber optic back-haul was ridiculous! I need to get some new quotes within the next few months, though- we shall see.
I would love to see Google enter that fight instead of trying to regulate their competition away. Not because I'm that anti regulation, but because I don't appreciate the irony of Silicon Valley always bitching about regulation, but then demanding that the government create an artificial reality where owning the pipes doesn't give you a natural competitive advantage.
Would you appreciate it if one supermarket bought all the food and then price gouged you 100 dollars for meat?
I don't see how a monopoly helps anyone but the corporation, and even then just in dollars today. Strangling the entire market doesn't help anyone in the long run.
I'm not denying the antitrust concern of the union. I'm pointing out the hipocrisy of certain generally anti-regulation Silicon Valley companies trying to use antitrust law to preserve the viability of their role as middlemen. At the end of the day, Netflix's business model is inherently fragile. Amazon is somewhat better positioned, because they at least provide the upstream infrastructure. I think they know they need to play the last mile game, just as they're exploring doing on the physical goods side with drones and special deals with USPS.
I know. That's why Amazon is better positioned. They at least own the upstream infrastructure. Netflix is utterly dependent on three other industries, but is itself pretty easily replaceable. The had a first mover advantage in getting favorable content licensing deals before anyone thought it would matter, but that's fading fast as those deals are renegotiated. And its value add is totally fungible. People care about the content and will happily use another provider if they have the content. Netflix' foray into original content is an existential move.
Except it's not really that dependent on Amazon - there are nearly perfect substitutes for every AWS service.
Comcast is different because it already operates as a monopoly in many areas, and it's trying to change the rules so that it can leverage that monopoly, to the detriment of everyone but themselves, and there's not really anything that anyone but the regulators can do about it.
I wonder if torrent/p2p would be a viable business model for Netflix. Think about it : they have a massive install base inside comcast where they can run programs and on most such programs they can run code, and store data.
P2P isn't a good architecture for something like that. You pull data from a leaf node, through the core network, back to another leaf node, traversing the relatively slow last mile coax part of the network twice. Meanwhile, a relatively small number of movies and shows will dominate the demand, which Comcast can easily cache near the edges of its network. There is a reason Netflix is vying to get equipment in those spots.
Actually, they wouldn't arbitrarily price their products that way. Companies engage in a little thing called price discrimination. The only difference in a monopoly is that you are the sole price leader. That doesn't mean you can arbitrarily set the price high. Most cable companies have monopolies thru license in municipalities.
Somehow that doesn't work this way. In israel monopolies and price gouging of food is pretty common(not 100X, but maybe 2x), and i haven't seen no violent acts.
You'll get your stores raided if you control and gouge something like food and water though, possibly ending with a head in a grocery cart. Police might even help.
Cable has a bit more leeway with the crowd I'd imagine, though there'd still definitely be consequences. Just not as dramatic consequences. I'd hope people protest gouged cable prices peacefully.
If utility natural monopolies weren't regulated they wouldn't exist because local governments wouldn't allow them to dig up roads to put in their infrastructure.
Comcast has a huge advantage owning the pipes into my house, but they squander it. Rather than provide services, they become highway robbers on their own toll road. Comcast could have been netflix, akamai and so much more years ago. So tell me how they don't have advantage?
> Comcast could have been netflix
Netflix offers incredible value. Don't you think it's irrational for Comcast to offer up this value at the expense of their own profits when they are not being threatened? They are going to milk it for as long as they can.
Milking it is not a rational choice, expected but not rational. Comcast should have make the Roku, but due to a fixation on the analog cable infrastructure they did not. The amount of analog bandwidth they devote on their networks to digital traffic is a ridiculously small percentage of their capacity.
Comcast should have created the caching infrastructure that Akamai did. Comcast should have implemented cloud backup services. They have the capability to have 50+ Mbps from the customer to their datacenters. This is freak'n huge.
Why didn't comcast create a colo system so that providers could get as close as possible to the customer?
No, Comcast will go down with the Titanic with all of their riches. They have squandered more than they have protected.
Why precisely does Netflix need to "evolve"? I like Netflix just fine as it is, thank you very much. The totality of current online businesses are using "someone else's pipes", so framing that as a criticism strikes me as distinctly hollow.
Online businesses by and large use other people's pipes and that inherently makes them all vulnerable. Its like apps on iOS. Apple will always capture most of the value created by the ecosystem as a while, because they control the platform. App developers have little leverage. Its not profitable to be a sharecropper, but that's what online businesses largely are. Regulating and commoditizing the communications infrastructure into "dumb pipes" (I.e. net neutrality) is the only around that. Its regulation that picks winners and losers by telling an entire industry that they have to produce a commodity product so that online businesses can be protected from a flaw intrinsic to their business model.
This, I believe, is why Netflix is producing original content. Outside the US they license it to traditional networks as well (I've seen adverts for House of Cards recently through Sky here in Germany).
>To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.
what?? Does Apple or samsung have any control on how much carriers charge?
By your logic, ATT wireless, verizon wireless, and other cell carriers have to make their own cell phone and not just be a middlemen that funnel someone else's content on someone else's smartphone.
Another problem is that Comcast is an internet provider for a lot of people. It's actually my only option right now, so if I want to access that Netflix subscription, I still need to pay Comcast, so point 1) will make that all the worse since it's already clear they throttle heavily on Netflix, this will only make the degraded experience even more expensive.
> 2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"
Not when they're direct competitors to Comcast, Comcast is the only ISP for most people, and Comcast can legally charge Netflix et al out of the market.
I don't think your second premise is entirely true, since Comcast doesn't provide enough bandwidth for streaming services like Netflix and YouTube already. Those services are going to become harder and harder to use if anything.
This would be a perfect point for the regulators to harp on for approval... No need to divest, just require a condition of the sale to provide a neutral network.
>the AnitTrust people would have to be really asleep at the wheel for that
Call me a pessimist but I think this will go through. Why? The lobbyists already sounded out (lobbied/paid-off/promised-job-in-future) enough people in govt to feel that this will go through, or at least there is enough chance of it happening.
I bet this will go through, especially using the point that they don't compete against each other (which would be stupid reason to accept by AntiTrust people). They were NOT designed to compete against each other in the first place. They were given geographic divisions by regulators for that very reason.
> The lobbyists already sounded out (lobbied/paid-off/promised-job-in-future) enough people in govt to feel that this will go through, or at least there is enough chance of it happening.
I don't think that follows. AT&T / TMobile gave it a shot a couple years ago, and that was shot down.
In the end ATT ended up paying hundreds of millions of dollars as a fine to TMobile. I doubt Comcast would repeat the same mistake.
This will largely go through with the ironic claim that they don't compete against each other, when they were NOT designed to compete in the first place.
Was that a fine? I thought it was a breakup fee common in merger contracts so that you can't have the other company show you all their internal details then you say "nah nevermind" and you walk away with their roadmap/customer numbers/etc.
I don't think they compete directly in vast majority of markets and for this to go through they will surely forfeit those smaller contested ones.
I think this will go through. Then they will have a huge "content and subscriber" stick to wave around at Aereo, Netflix, Apple and anyone else wanting to play the net content hero.
> Then they will have a huge "content and subscriber" stick to wave around at Aero, Netflix, Apple and anyone else wanting to play the net content hero.
That's really the play here. Get a ton more captive users in order to better extort Netflix et al for access to those customers, and beat that stick until all their over the top service competitors are either out of business or uncompetitive. Then the real screwing of customers can commence in earnest.
I think people are overly optimistic about the ability to endlessly increase the performance of wireless networks. The existing networks make fairly efficient use of the spectrum they're allocated. That means you really only have two options to make it go faster.
1) More spectrum. But it's massively in demand (read: expensive), nobody wants to give any up, and even if you had "all" the spectrum there are still practical physical limits about how much data you can transmit without using a wavelength that won't penetrate walls.
2) More towers that each use lower power. This is the one that can get you almost arbitrarily large amounts of wireless bandwidth, but it's also the one whose cost converges on the cost of building a new fiber optic network as the number of towers you need approaches the number of users you have.
Neither one of those is going to make for an inexpensive roll out of a wireless network capable of handling Netflix's video traffic to millions of customers simultaneously in the same city.
Worth noting that this is illegal to some extent in ~19 states. The broadband oligopoly already thought of this, and has been working to pre-empt it for a while.
The difference between the sewer and broadband is that the price of giving sewer district a monopoly is regulation as a public utility.
So if whomever runs your sewer decides that they will not accept solid waste anymore, there is a regulator who will prohibit that from happening.
In many states, the Public Service Commission or similar entity has lots of regulatory authority over cable television, landline and electric rates, but no authority over cellular or broadband. Shockingly, the utilities have invested nothing in the regulated markets for 20 years.
Err, simple physics ensures mobile will never have the bandwidth of copper wire. Every band and protocol can be transmitted over the wire to each node independently.
This is what I was wondering. I live in an area that only had comcast an no other option. When I visit places it seems to be either Time Warner and Comcast but not usually both.
As someone who bailed cable/satellite a long time ago in favor of OTA broadcast, I'm personally less concerned about the impacts this will have on cable vs. the impacts this would have on cable broadband internet (though I definitely agree with concerns expressed over the impacts of cable).
For cable, we have Netflix, Amazon, etc. as a possible alternative. And I guess for broadband internet, we always have DSL to fall back to.
I wouldn't say it won't happen, but I don't know how much of #1 impact there will be considering it's already not practical to pull competing cable operator to begin with. (Unlike, mobile carriers, for instance.)
Obviously, I'm just speaking out from my experience, but how common it is that certain region is served by multiple cable operators? (And that you get to choose from?)
It would be insane to let this go through. They're both effectively monopolists in most markets they serve; allowing them to combine just allows them to exert more political influence to make sure they keep their monopoly and high profit margins. Their core business is very much a low-value-added, rent-seeking concern, which doesn't benefit from economies of scale except for in as much as they can increase their market power by reducing competition - a fundamentally zero-sum game.
Political influence is a major and underexplored negative externality of monopolies.
Building the expensive infrastructure that Silicon Valley depends on to get its cat videos and advertisements to users is a low value add, rent seeking concern that doesn't benefit from economies of scale? Its exactly the opposite.
The most valuable infrastructure that Comcast and Time Warner run is ye olde copper coax lines in the "last mile", often built a long time ago and at a large public subsidy (either explicit or implicit via a grant of monopoly). What little infrastructure investment they do make (eg, laying fiber) is a result of actual competition, which would be lessened by the merger.
By way of analogy, having clean water is important, but water infrastructure is not high-value-added ("buy Water Premium Max Plus! only 79.99/month!"); it's a basic utility. The alternative to Comcast isn't "no internet", it's a public utility wire-owner. Which would provide roughly the same level of service that Comcast actually provides, in the vast majority of areas.
And exploiting a monopoly on infrastructure is almost the Platonic ideal of rent-seeking.
Cable companies spend $17 billion a year on CapEx, and telecom services, excluding wireless, spend another $46 billion more. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/.... That's a lot of money for companies that are just resting on the publicly subsidized networks they built in the 1980s... Snark aside, most of the modern hybrid fiber-coax network that cable companies actually use today were built after deregulation in the 1990's. And it continues to be upgraded, which is where that massive CapEx comes in.
Utility (general), which I believe ~ electric co's, spends $31 billion. Absolute numbers don't tell you anything; maintaining even a completely static infrastructure costs something.
You said "what little infrastructure investment they do make" which is directly contradicted by the enormous infrastructure investments they make. Also, electric companies are in the middle of a huge push to replace aging coal plants with gas and renewables. There is a ton of value being added in that sector right now.
I was going to ask what revenue they were bringing in with that CapEx. Am I right in thinking this means they're bringin in $34,000 million from sales and spending only $17 million on infrastructure. That doesn't look like "a lot of money" in relative terms - I must be misreading those figures?
There's no practical reason why there needs to be say more than one team of cable network architects in the whole country. If an architecture works okay in Philadelphia, it should port pretty easily to Chicago. The stuff that needs boots on the ground, laying cable, doing installations, and servicing them, is already outsourced to local companies.
I'm not going to look around for balance sheets of these cable companies but they are doing FINE, even after building the expensive infra. Why? Because they charge BUCKS for it.
Does it strike anyone else as curious that the two largest cable/internet providers merge, and it doesn't matter because they already don't compete? It might be a sign that something's odd if the premise is that there's no competition between identical products to harm in the first place.
I believe in the concept of a natural monopoly for most utilities though - Building outside plant is horrendously expensive - it to me makes as much sense to have multiple cable providers as it does multiple sets of power/telephone/water/sewer infrastructure.
I'd even like to see a fewer wireless carriers (consider that each for carrier are spending billions of dollars to roll out what amount to essentially identical network infrastructure often even from the same vendors - how on earth does that even begin to make sense? We - the rate payer ends up paying for it in the end thru higher rates - economy of scale is a thing, and it works.
Having been in the industry for about 2 years now, looking at the spectrum, I believe that we have enough for two, possibly three really competitive national wireless carriers - as in a complete nation wide footprint. That means 20x20 LTE even in rural areas, plus whatever 2g (CDMA 1x or GSM) tech you need for circuit switch voice, and whatever legacy 3g you need too (EDGE and HSDPA or EV-DO), with the eventual goal of multiple 20x20 or 40x40 carriers once we can replace all the legacy stuff - but consider the current for a moment, that Sprint in Seattle on 1900 mhz only has 20 mhz duplex, and nothing on 800 at all - this is excluding the acres on 2.5, because of the obvious limitations of use with atmospheric issues.
That said - the only way natural monopolies do not become abusive natural monopolies is thru intense and careful regulation - mostly by setting a fixed rate of return for the infrastructure, and then building rates from that.
If think if there is a natural monopoly on a resource used as a lifeline or by more that half of the citizen, the infra should be under the government's oversight and the service privatized and open to competition.
Your wireless carrier example would be a single wireless network with as many as wished service providers.
This would slow down new technology deployments, but the market might be mature enough to get it's evolution slowed down two or three times without major inconvenience I think
(for instance, we'd be stuck with LTE for a while if we go this way now ?)
We're going to be stuck with LTE for at least another 10 years - the big four can't really afford to upgrade the network again sooner than that - LTE for most of the carriers is a forklift upgrade - not just adding some cards and calling it good.
Consider that for the carrier that I work for - the equipment was installed originally in the 1996/97 timeframe, and while there has been some upgrades for EV-DO - the equipment and cabinets are largely of that generation.
> That said - the only way natural monopolies do not become abusive natural monopolies is thru intense and careful regulation
Or by getting the fed' to build and handle the infrastructural side, and lease it to service providers (see: interstate).
Then the expansion and improvement can be added to other infrastructural projects e.g. digging for a new interstate or rail line? Put that nice big bundle of dark fiber along will you? It'll serve.
I used to install internet for Comcast. I appreciate the natural monopoly line of thought, but I would love to see solutions that worked around it.
I'm not an expert municipal telecom policy, so I'm interested in your perspective, but I would propose a finite number of lines that companies bid for.
There's definitely benefit from a natural monopoly in cable, but I'm not convinced they outweigh the costs of alternative solutions.
It would be to take something like what the UK did - have an entity that doesnt own the network itself do the retail sales, and lease a portion of the network, or simply build multiple networks, its a much harder thing to do with cable than phones.
Wireless (cellular/radio/tv/...) affords some competition.
Wired (power/water/sewage/copper/fiber) affords little last-mile competition it seems like. Unless municipalities made a real effort to make adding wire a simple proposition which does appear to happen in some places (Scandinavia springs to mind for some reason).
These are real issues that keep cropping up and it would be nice to do some actual social and economic simulations and historical analysis to see which models benefit whom.
The classic blunder in my neck of the woods was the British Rail privatization fiasco. Network Rail owned the tracks which suddenly ceased seeing any innovation and funding (so no high-speed-rail like practically everywhere else on the European continent). Train providers get their own non-overlapping corridors just like cable providers in the USA. Don't know if there is a limit to the train provider's size though. Same happened with water. Please correct me if I am wrong or painting this in too negative a light.
Agreed - and if spectrum were unlimited - there would be no limits to the number of providers in the wireless markets - beyond the obvious - multiple sets of hardware most often at the same cell sites as other providers hardware.
You just nailed it, I think yours is possibly the most important comment on this page. Roads, bridges, education, prisons, electricity, water, managing public lands/other commons, the postal service, and now communication infrastructure are all things that should be owned by the public. Putting control of communication in the hands of a few large oligopolies is undemocratic.
Since the most common objection to this is privacy, I propose that the government provide the infrastructure (fiber, airwaves, satellites, etc) and that the use of that infrastructure have strong privacy guarantees and the protections of the existing unalienable rights in the forth amendment of the constitution:
“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
ISPs already have strict privacy guidelines, and if anyone thinks that corporations act to insulate users from government surveillance, they are fooling themselves. The protections must start with government itself and require constant vigilance. With regard to the commons, the profit motive should be limited to government contractors in service to the people, not the other way around.
The public telephone company here, "state owned", was de-regulated decades ago.
What was once a state of the art network, the first all-digital telephone system, is now worse than what they're deploying in Eastern Europe. Prices have never been higher for a service that should be cheaper.
How do they even charge for long-distance voice calls these days? It's borderline criminal.
> That said - the only way natural monopolies do not become abusive natural monopolies is thru intense and careful regulation - mostly by setting a fixed rate of return for the infrastructure, and then building rates from that.
Or better yet, having the natural monopoly infrastructure, narrowly defined, run by local government and rented out at standard rates to all private service providers.... You know, have the city run roads, not taxi cabs.
The same thing could be done here regarding the internet component. City and local governments could set up last mile infrastructure and rent out access to these lines to ISP's....
I don't like government monopoly owned telecommunications infrastructure - I'd rather see something larger scale and privately owned, regulated monopolies are OK, unregulated ones are not.
> it to me makes as much sense to have multiple cable providers as it does multiple sets of power/telephone/water/sewer infrastructure.
That's how things work here in Brazil, some cities have 2 DSL providers or 2 cable providers. Big capitals may have both, and fiber. Also, there are a bunch o local radio providers.
It is way better for the consumer, as all of them suck and at least you can choose the least sucking one.
Telecom infrastructure is very different from electricity/gas/water/sewer infrastructure.
> I'd even like to see a fewer wireless carriers (consider that each for carrier are spending billions of dollars to roll out what amount to essentially identical network infrastructure often even from the same vendors)
The identical network infrastructure argument only works if you assume it's a big part of the cost. I don't think that's true, only a fraction of your cell phone bill is spent building or maintaining the network.
The tiny cost savings we would get by eliminating competition in Wireless aren't worth the huge increases in cost we'd undoubtedly have to pay in extra profit to those same organizations.
We only have to look at Cable / DSL to see how that ends. Or look at wireless carrier pricing before T-Mobile woke up and actually started to compete. It's not a coincidence that Sprint, AT&T and Verizon all dropped their prices as soon as T-Mobile woke up. They aren't eating those costs, every non-Sprint carrier can drop prices and still record millions of dollars in profit, even with their existing spectrum footprint, because their primary infrastructure costs are actually very low in comparison to the rates they charge for service.
- - -
> Having been in the industry for about 2 years now, looking at the spectrum, I believe that we have enough for two, possibly three really competitive national wireless carriers - as in a complete nation wide footprint
I don't know where you get that. We have four carriers now, and none of them are hurting for spectrum, except in a handful of specific markets that are interrupted by other players or outside forces.
Seattle, for instance, has plenty of spectrum. However, some of it is being hoarded for speculation (Allen/Vulcan Inc sitting on 700a in Seattle and Portland comes to mind, or Dish sitting on nationwide AWS, or Sprint sitting on tons of 2.5ghz). If the unused spectrum becomes used, and the smaller carriers like US Cellular / Leap / Cincinnati Bell merge into T-Mobile / Sprint, everyone has a pretty decent playing field in every market nationwide, and there's plenty of spectrum for 4 nationwide carriers nationwide.
- - -
> but consider the current for a moment, that Sprint in Seattle on 1900 mhz only has 20 mhz duplex, and nothing on 800 at all - this is excluding the acres on 2.5, because of the obvious limitations of use with atmospheric issues.
If your in the industry, you know that Sprint's problems are not spectrum related, they're all execution related. Sprint's got plenty of capacity on spectrum, they are just too cheap to deploy it properly. Seattle is a perfect example of this.
There are no "atmosphereic issues" with 2.5. There's no issues with 2.5, period. The only issue is Sprint trying to pretend 2.5ghz is 800mhz, and deploying 2.5 as if it is as low as 800mhz. The spectrum is not at fault, Sprint is.
Seattle's a major market, there's no reason downtown Seattle doesn't have Sprint small-cell 2.5 radios on every street intersection in the whole city - it would allow Sprint to offer multiple 20x20 LTE carriers on 2.5ghz to work properly, even indoors, throughout the majority of the city. Sprint phones shouldn't be using data over PCS in the urban area, except in the most strenuous of situations (deep underground).
Seattle's density supports this deployment, the tech is easily available, off the shelf equipment. Sprint's just not executing properly. Hopefully, SoftBank forces them to wake up and care about fixing their service.
>> I'd even like to see a fewer wireless carriers (consider that each for carrier are spending billions of dollars to roll out what amount to essentially identical network infrastructure often even from the same vendors)
> The identical network infrastructure argument only works if you assume it's a big part of the cost. I don't think that's true, only a fraction of your cell phone bill is spent building or maintaining the network.
> The tiny cost savings we would get by eliminating competition in Wireless aren't worth the huge increases in cost we'd undoubtedly have to pay in extra profit to those same organizations.
> We only have to look at Cable / DSL to see how that ends. Or look at wireless carrier pricing before T-Mobile woke up and actually started to compete. It's not a coincidence that Sprint, AT&T and Verizon all dropped their prices as soon as T-Mobile woke up. They aren't eating those costs, every non-Sprint carrier can drop prices and still record millions of dollars in profit, even with their existing spectrum footprint, because their primary infrastructure costs are actually very low in comparison to the rates they charge for service.
You missed the other argument I made, you know at the bottom. If pricing was regulated - as in the old days, based on rate of return - this strategy would work, if the carriers are left up to their own devices, they will just try to extract the greatest dollar they can out of the rate paying public.
- - -
>> Having been in the industry for about 2 years now, looking at the spectrum, I believe that we have enough for two, possibly three really competitive national wireless carriers - as in a complete nation wide footprint
> I don't know where you get that. We have four carriers now, and none of them are hurting for spectrum, except in a handful of specific markets that are interrupted by other players or outside forces.
> Seattle, for instance, has plenty of spectrum. However, some of it is being hoarded for speculation (Allen/Vulcan Inc sitting on 700a in Seattle and Portland comes to mind, or Dish sitting on nationwide AWS, or Sprint sitting on tons of 2.5ghz). If the unused spectrum becomes used, and the smaller carriers like US Cellular / Leap / Cincinnati Bell merge into T-Mobile / Sprint, everyone has a pretty decent playing field in every market nationwide, and there's plenty of spectrum for 4 nationwide carriers nationwide.
2.5 works great in a dense metro area, where you have the customers required to support the density to pay for the much higher required number of cell sites, clearwire has done wonders with it. 2.5 doesnt work anywhere near as well outside the urban core. I read a study that right now there is 350 mhz of spectrum nation wide for cellular/mobile - I did a back of the napkin and figure you need about 100 mhz in a market (the largest ones) to make it really viable (by viable I mean wired equivalent speeds).
I personally believe in something of a use it or loose it concept for spectrum, either offer service on it, or you loose the right to do so, it's a public resource, not private property.
- - -
>> but consider the current for a moment, that Sprint in Seattle on 1900 mhz only has 20 mhz duplex, and nothing on 800 at all - this is excluding the acres on 2.5, because of the obvious limitations of use with atmospheric issues.
> If your in the industry, you know that Sprint's problems are not spectrum related, they're all execution related. Sprint's got plenty of capacity on spectrum, they are just too cheap to deploy it properly. Seattle is a perfect example of this.
> There are no "atmosphereic issues" with 2.5. There's no issues with 2.5, period. The only issue is Sprint trying to pretend 2.5ghz is 800mhz, and deploying 2.5 as if it is as low as 800mhz. The spectrum is not at fault, Sprint is.
Seattle's a major market, there's no reason downtown Seattle doesn't have Sprint small-cell 2.5 radios on every street intersection in the whole city - it would allow Sprint to offer multiple 20x20 LTE carriers on 2.5ghz to work properly, even indoors, throughout the majority of the city. Sprint phones shouldn't be using data over PCS in the urban area, except in the most strenuous of situations (deep underground).
> Seattle's density supports this deployment, the tech is easily available, off the shelf equipment. Sprint's just not executing properly. Hopefully, SoftBank forces them to wake up and care about fixing their service.
There are most certainly more atmospheric issues with 2.5 compared to 1900, in so much as higher frequency brings more atmospheric attenuation. That aside - Sprint has not even begun 2.5 deployment yet, not even close, none of the NV sites have 2.5 on the tower, and the only 2.5 is the legacy clearwire network, and if you look at the NV documentation thats been leaked/released it shows that Sprint is expecting a lower overall footprint for 2.5 compared to either 1900 or 800 (in the markets that have enough 800 mhz spectrum to be viable) - without the PCS G-Block Sprint would have a hell of a time deploying LTE.
Another factor complicating the LTE deployment, I've been told that EV-DO Carrier demand is well outstripping LTE demand - even in areas where LTE is fully turned up - I suspect this is because of the demand MNVO's place on Sprints network - I was also told that something like 20-40% of the devices on the network are 1x only (I wish I could remember the exact number, I know it was large enough to surprise the hell out of me).
Supposedly microcells are part of the future planning for Sprint, but nothing is past the post yet, which will solve the problems in the downtown core. The problem of course is out in the suburbs which is where the majority of the population lives - the density is simply not present to make microcells pay, you need more spectrum at 1900 or 800 to really make it fly, and even if you had more 1900, in many places you'd still need more infill sites to make it really work.
For what its worth, no one up here is doing wide deployment of microcells, unless you count all the in-building systems out there, they are sort of the exception.
I've been in the industry for about a decade. All of the issues you're talking about stem from the confusion about whether telecom networks are private or public assets. If telco assets are public, net neutrality and network unification are obvious. If they're private, they're not obvious at all. The industry position is to be public when it's beneficial and private when it's not, which is totally rational and emulated in almost every infrastructure company.
The solution is to nationalize the infrastructure and privatize the access but this is politically a non-starter. We will always have a compromise because of the quasi-public/private partnership that is infrastructure. It is better to treat this as a condition of the game theory that governs our universe than it is to complain about the lack of fairness in the system.
As far as microcells, they don't really solve the problem of spectrum in aggregate only for individuals and they're, at best, a stopgap solution. Proximal networking is a potential alternative worthy of consideration, but that's at least a few years away right now.
In my opinion are privately owned, public assets, and while the network is privately owned, the spectrum is held in trust for the public, and duly licensed to the carriers to provide service.
I don't believe in nationalization - I do believe private ownership with open access requirements is a better answer.
I agree in re microcells - frequency reuse only gets you so far - and is only helpful at the levels proposed in very very dense places - like NYC/Tokyo/SF/London
One of the benefits of working with government agencies is they can pull strings that make regulators look the other way. This is a clear monopoly position, and it's being ignored. That's no accident.
This is crazy I don't see how this can get past any sort of anti-trust. Particularly with Comcast's stake in NBC. Comcast would own both the content and distribution of too large a chunk of the broadcast industry.
Or even better, I setup Chrome to use a referer of "google.com" for all requests to online.wsj.com--no paywall or need to search for headlines. I'm sure there are other ways, but the extension Referer Control makes this easy as can be: https://chrome.google.com/webstore/detail/referer-control/hn...
As a TWC customer I've been long certain based on conversations with others that I have the second worst cable company in the country. So my reaction to this announcement is approximately "FUUUUUUUUUUUUUUUUUUUUUUUUUUCK."
The baseline I had from years of living in a Comcast market is so rotten that I really was deeply, fervently in love with TWC for the first year or so after I moved to a market that they own. It was hard for me to believe that a cable company could really be that awesome.
Upshot being. . . yeah, Comcast is so heinous that simply spending any amount of time in contact with them will actually warp your mind.
We had Comcast in Cali, in Texas TW was a breath of fresh air, about 3 years ago all these weird fees kept showing up. A year ago we were fed up and dropped all but Internet, went digital TV OTA (over the air) plus Roku and Netflix (my brother clued me in that Netflix actually had streaming now). Roku has some interesting channels we never got on any cable.
Now we could be back with ... Comcast? Yuk. Hey as long as they don't mess with our current unlimited plan with TWC, I guess we can deal with them.
Have you ever noticed the prices on the TWC site for new subscribers? How they say something like "down from." What does that mean to you? To me, it means the regular price is one thing but that new subscribers get a deal.
As it turns out that is incorrect. The higher price is an arbitrary number, not the retail value of the package.
I asked a TWC representative once where on their website I can find the retail price of their plans and his response was "You won't find them anywhere."
Just wait till Aereo gets screwed in their Supreme Court case. Then we really will be.
In fact no matter which way they rule in Aereo's case we are screwed. If they rule in favor of Aereo the content companies (Comcast owns NBC) will just start taking content "cable only".
I think the grandparent is saying we need a new law to replace the current one.
The courts having upheld a decision on what the current law says doesn't really preclude the passing of a new law - the only time court decisions trump legislation is when the Constitution comes into play.
Unless I'm misreading this decision it merely upholds the FCC's right to classify ISPs as "information services" instead of "telecommunication services" because the Telecommunications Act is a bit fuzzy and leaves a lot up to the FCC. The FCC could decide to reclassify them as telecommunications services due to industry changes and I believe that this case would serve as precedent for them to legally do so.
I hate TWC with a great and fiery passion. I literally shake when I think about the company. And from my understanding, most Comcast subscribers feel the same way about their service. This sort of thing makes me angry, not because I think the monopoly will be worse than it currently is. But because these mega-companies have so much power and influence that they can make their own laws. A free and open internet simply doesn't stand a chance against that much money. Because all of the protests will happen online. And if I'm ComWarner and I see a site protesting me what am I going to do? I'm going to ban hammer them. And if the public complains about it the I'll slip some judges a few mil each to get them to interpret the law in my favor. And that's the simple fact: America is one of the most corrupt countries. If not the most corrupt. Because our law makers at every level are in the pockets of billionaires.
There seems to be a lot of buzz around that technical solutions won't dig us out of this hole; and while I agree that we definitely need some dramatic power shift to happen, I feel like there are technical solutions on the horizon. There are a lot of compelling mesh network/darknet projects going on, fast forward wireless tech a few years, it may be more feasible than ever. Use your anger as motivation.
and now, they never will, which would be the focal point of any antitrust attack.
Also, the DOJ does not have sole authority to challenge.
Here is the breakdown for telecommunications (taken from DOJ website, http://www.justice.gov/atr/icpac/3b.htm)
Telecommunications. Mergers involving telecommunications
service providers usually are subject to competition policy
review or challenge by:
One of the federal antitrust agencies (only the DOJ has
jurisdiction to review mergers involving telephone
companies; both the DOJ and the FTC have reviewed mergers
between cable television firms);
The Federal Communications Commission (FCC);(8)
The PSC of each state in which the parties do business
(although most state PSCs lack jurisdiction over cable
television mergers and some lack jurisdiction over mergers);
In the case of cable television, county and municipal
authorities with responsibility for granting and overseeing
cable franchise agreements;
The attorney general of each state in which the merging
parties do business; and
Private entities such as competitors to the merging parties.
As with mergers involving electric power firms, review by
any of these entities is nonexclusive. Approval of a
transaction by one entity does not preclude a separate
challenge by any of the other entities, nor does it bar
another entity from seeking adjustments that exceed
concessions that resolved the concerns of other bodies.
I suspect the DOJ (who has sole jurisdiction in telecommunications) will object, and that comcast is just willing to fight it out in court.
Isn't that simply because they have a "gentlemans agreement" not to have overlapping coverage, so that (to an individual customer) they are essentially a monopoly?
The physical network is absolutely a natural monopoly - the cost to run copper out to every house in a region is fixed, and any player in the market would need to do just that in order to compete effectively. From a cost efficiency perspective, the ideal number of such networks is one, just as it is for electricity and water.
What's different is that electricity tends to be heavily regulated, and water is generally a public utility. Cable providers are historically under no such constraint, because we tend to think of them as television content providers first and foremost, and the TV bit of the business is not a natural monopoly. Unfortunately that is where they make their money, and that leads to some really obnoxious behavior, including price gouging people who want their network services but not a TV content subscription.
Probably the best solution would be to go the same route that many other countries do and require network operators to share network bandwidth with anyone who can pay for it. That would allow us to re-instate market competition on top of the bit where it cannot occur naturally, while still allowing them to maintain their regularly scheduled TV industry whatever-ness.
Cable TV also seems like a natural monopoly for the same reason as cable Internet — the cost of running the cable itself. Even before cable modems, most places only had one cable company. And my understanding is that cable franchise agreements were written with that assumption. Maybe I don't understand your argument, though.
Different layers of the OSI model are different. Everything up to layer 3 on the local network is a natural monopoly. But above there it's not, and outside that local network it's not.
In the US, this fact was pretty clearly demonstrated when the regulatory overhaul of the telephone industry in the 1990s introduced competition by requiring owners of the local copper to share it, and also by how people are able to choose their long distance carrier. The latter would be analogous to being able to choose among any number of ISPs while still using the same copper to handle the last mile.
I'm not an expert, but I think what you describe is exactly what happened with telephone service in the United States (i.e, the breakup of Ma Bell, etc.)
It wasn't the breakup of Ma Bell, but the telecommunications deregulation bill of the mid '1990s did include a provision that required local phone service operators to sell access to their network to newcomers at wholesale prices.
Unfortunately, cable companies live under a different set of regulations, so the same rules don't apply to them. Meanwhile the industry progressed to the point that in many markets companies that were once just cable and phone companies now offer the same menu of services. But the law hasn't changed to keep up with that, so the net result is that we've got a regulatory regime that cripples an already anemic competitive environment by arbitrarily giving an enormous advantage to only one of the players.
Right, by design, which is the reason I have crap internet service and no real choices. It's collusion, pure and simple, I don't know why it has been allowed to go on for so long.
It's definitely not, these companies trade territory, and when an upstart that's not part of the collusion (like Verizon FIOS) comes in, they finally upgrade and cut prices on that part of their network to be competitive, so that it's not profitable for them to come in.
If you're wondering how this could possibly go through, see another WSJ article on the topic: "Comcast, Time Warner Deal to Spark Regulatory Debate, Outcome Uncertain"
Summary: On the one hand, there are the obvious consumer concerns
about the impact on pricing and service if the two largest cable
companies were to merge. Besides Justice Department and Federal
Communications Commission review, Congress will likely seek hearings
where they can be seen being involved in such a high profile matter.
On the other hand, Comcast successfully practiced completing the 2009
acquisition of NBCUniversal from GE by agreeing to a wide array of
commitments with the Justice Department, FCC, and state attorney
generals.
Article concludes that the acquisition may well go through: "This is
the first major merger review under new FCC chairman Tom Wheeler, who
once served as the cable industry's top lobbyist. Mr. Wheeler
suggested in 2011 the Commission should have allowed AT&T to buy
T-Mobile in exchange for agreeing to a new slate of
regulations. Lawyers and analysts in Washington believe Comcast could
similarly secure the Commission's approval by expanding its existing
regulatory commitments."
That's why the cable industry put this guy into that job, to make deals like this easy as pie. Soon we will have The Cable Company and The Phone Company. Or maybe just The Company.
Competition Theory does suggest every market tends towards a Monopoly position. As companies get bigger and bigger, they acquire one another, until eventually there's only one huge 'Company' left.
Of course, that's one reason why the free market is regulated.
"Who benefits from large corporate mergers like this?"
You might think the share holders. Not correct. Though they don't lose.
Think: the law firms handling the deal. This type of deal is worth millions in fees; banks - both investment (for finding the cash) and traditional (for providing the cash); and the governments which would levy taxes and fees. And of course anything below the public view (kick-backs, trips, outright campaign donations). I mean it's no surprise they picked a campaign year to merge. ;) The companies have probably been talking about this for at least a year.
It might not go through. If there is enough back lash from other companies. Happened with ATT recently. What will matter are other content providers (Disney, Fox, Viacom, etc etc) - though it wouldn't surprise me if they get certain guarantees they we won't know about.
Netflix doesn't really have any muscle on the ground to fight this. But if they could form a coalition of sorts, with the likes of Amazon, Google, Apple, FB, Twitter, (maybe even) MS and Sony (they have a stake in this too), etc, etc - combined they'd be a formidable force that Commcast/TM would have to deal with.
And then there's us. But I hold little hope for the american public to rally around any cause. Plus too many are too easily swayed.
My hope lies in a the coalition of net companies I mentioned.
At a minimum you can expect to fire some staff. You don't need two marketing departments coming up with ads, for instance. It won't quite be half the staff, but salaries are expensive (health care too).
Well, they're still competing with your local telco (AT&T / Verizon), DirecTV, Dish Network, and Google Fiber and/or others in some areas. (Though granted some of those are TV-only, not Internet.)
Not really much different than how Comcast and TWC are individually competing right now (as their service areas don't overlap). Though I'm not suggesting either one is a shining paragon of customer service or fair pricing (I don't have any first-hand experience to speak of there; I'm in Canada).
Classic peak of the market bozo move. Comcast is massively overpaying for a dying business that will be valued at 1/3 this price in three to five years. I'd mark this equivalent to the HP / Compaq deal, and the AOL / Time Warner deal (in which Time Warner allowed a soon-to-implode dial-up player to eat them).
TWC has a mere $1b in cash, and negative $22.8b in net tangible assets. Comcast shareholders just bought a massive black hole.
With this announcement we as a community REALLY need to get behind Net Neutrality as much as we did w/ SOPA -- Companies like Google, Netflix, et al - should block all access to their sites from D.C. IP addresses as a protest to show them what 'Throttling' feels like.
This is yet another reminder to check out your local DSL options, like Sonic.net and Megapath. Hopefully the ones in your area haven't gone out of business yet from everyone getting duped into "faster" cable.
Will this really matter in the long run? I mean don't most cable companies have a local monopoly anyway? I don't think there are many Comcast subscribers who can switch to TWC. I know there's still a diversity of offerings across the market that will change, but that seems a minor thing compared to the fact that most broadband users don't have a choice who they get their broadband from anyway.
The future isn't cable though, it's internet, and even the cable companies know this. In most places the best internet is still via cable. Having such a dominant monopoly would put them in prime position to gouge everyone in every direction.
Gouge downward by charging the consumers higher prices. Gouge upward by charging companies like netflix to have their content not be horrendously throttled over your pipes. With such a large customer base, it becomes much harder for folks to resist.
And, of course, with more customers they have more revenue, which better positions them for future acquisitions. Comcast already owns NBCUniversal, so they are already positioned to become an even larger media conglomerate.
Suppose there weren't any official monopoly grant from way-back-whenever to your existing local telco and cable companies. There would still be a de-facto monopoly or duopoly: The easement permitting process, currently entirely blocked due to the monopoly grants, would exist, but as a sham... with the (mono|duo)polies coercing city politicians not to let upstarts dig up roads or string new cables. I've lived in a city with lots of fiber being put in. It's a nuisance, and without vocal public support it's easy for entrenched ISPs to argue that the nuisance isn't worth the increased choice, particularly in markets where there is already "competition" between one [horrible] "cable" provider and one [horrible] "telco" provider.
One thing I find stupid is franchise. In NYC Comcast, TWC, Verzion and RCN get franchises. Sometimes living a block away from where one used to live means a different provider and you are locked. TWC isn't so badly in the last 2-3 years after the major pool expanison and relatively stable, but in the end, why the hell is FiOS still not available to me when they promised they would have it complete by now?
As far as I know the Verizon FiOS buildout is complete and there are no plans to expand availability. Last time I read about FiOS expansion, Verizon's official position was something like this:
Customers in areas not currently served by FiOS may be able to get 4G from Verizon Wireless, which is up to four times faster than Verizon High Speed Internet (DSL).
Your options in NYC tend to be driven by the deals your building has made. My building has TWC, RCN and after Sandy destroyed the copper infrastructure FIOS. From what I understand about getting FIOS, it comes down to your building being big enough and receptive to having them wire it up. Most are not very receptive.
I don't have access to Time Warner or Comcast. I currently have Cox and I have never had Time Warner or Comcast my entire life. I have only read online from sites like Hacker News or Ars Technica in the comments about how bad it is.
Could someone enlighten us with some points of how this possibly could benefit consumers?
Will they have more capital to build out fiber networks like Google has been doing to compete with that? If this goes through how much control can be put in place by the regulators to make sure pricing is not increased, they don't throttle or block out certain content providers such as Netflix?
Even though they server different markets it seems insane that this gets approved from the knowledge I have.
In the past, I haven't seen much about how the "last feet" problem will be addressed in dense metropolitan areas. In multi-unit dwellings, often the wiring is still owned by the provider. So, even if you were to run fiber (municipal or otherwise) right up to the doorstep of a building, you wouldn't be able to cheaply run drops to every unit. In my previous readings, the laws in my area at least allow for provider "abandonment" or a buyout of the wiring, but I doubt those would help very much. I'd be interested in hearing if folks have seen otherwise, however.
"All Amazon hosted websites have been blacked out from Comcast Warner Cable while we undergo contract negotiations. Thanks for your patience, here's a free Video on Demand for the inconvenience"
I think I'm seeing some people here upset with the possibly deal because service already sucks (for both companies).
If that's how you feel, then this deal is good. One large company can be taken down much easier than two large companies. Just one less competitor Google Fiber (and other up-and-comers) have to deal with.
The part that irks me is that Comcast will own everything from the content, network all the way down to the subscribers. It just doesn't feel right that one company has that much power.
But then again, as a business owner, controlling your own destiny is your utopia.
It's not like you ever have any choice with a cable provider anyway, the way it works is a cable company gets in bed with the local government and that's who gets to provide you with cable service.
I must be one of the lucky ones because I've had Comcast for over 10 years and the quality of service (customer service and cable/internet) has always been great. Pricing could be better but if you call they're always willing to give me promotional pricing deals, and there's always satellite TV and/or internet, DSL, or cellular.
This might be an opportunity for the antitrust agencies, to force Comcast to open up their network to the competition like Netflix. I would not be so pessimistic about the deal.
This merg will be the worst thing that could happen,
1) Prices of the packages will go up what will that do with the people who already have a package with TWC. Will it make there prices go up?
2) Who would trust comcast will all the talk of them throttling internet. Its will casue full chaos and they would end up losing more money then they would gain from the merg.
Dear HN: I'm not too familiar with the situation over there, and have what might be a dumb question.
Are there any companies that will benefit from this because they're already on their way to roll out their own lines? I'm thinking about things like Google Fiber, companies that are providing their own network to deliver internet over.
Cable and Internet suck in American The Land of Free. I have TV Box from comcast which I have not switched on for year because it is absolute shit. It plays may be 10-15 channels and for any good channel I need to shell in so much money.
I am 100% sure that someone like Google will shark behind these people and drive them out of business.
I really, really want the regulators to stop this, but most people only have the choice of a single cable provider anyway. Where in the US do Comcast and Time Warner compete head-to-head? It feels as though they have divided up the country similarly to how the baby bells were after AT&T was broken up in 1984.
Can we get a god damn amendment to the constitution that enforced net neutrality and prohibits ISPs from doing anything but being ISPs, already?! The net is part of the infrastructure of our country and needs to be neutral! Anyone who fucks with that should be charged with terrorism.
Damn! I finally got an acceptable deal from Oceanic Time Warner @ $60 a month for "up to 30 Mbit/sec" with no data cap. (I often see speeds over 50 Mbit/sec)
I hope this deal doesn't throw a wrench in my net connection. I live in a rural area with few options.
Since Time Warner was rumored to be the partner of AppleTV TV content, ponders how this deal affects that. Was it a plan to stop that Apple deal to happen or will they benefit from that?
Ponders if this will pass the antitrust authorithy
This is either good news or bad news for municipal ISPs. Good news in that you could hardly ask for a better catalyst. Bad news in that Comcast will have even more motivation to murder the entire concept in its sleep.
Please don't let this happen. I hate Comcast and I hate it even more that it's really the only cable option where I live. I'd hate for that to be the case for everyone everywhere.
This really stinks. Just suffered through a transition to TWc from insightbb. Haven't been happy with the way twc operates. I can't imagine one mega cable company.
Less competition, higher prices and worse service for those who will be unlucky enough to be in the area where there is no choice but to use these cable ISPs...
I must talk to all my libertarian friends now. I need to get explanation what free market means when right now my only options for network would be one ISP.
No other company can legally lay cable in the same areas as these companies. Same "natural monopoly" deal that governs the electric, phone, and water utilities.
That being said, I don't think that's true in Germany (where the balance in your bank account is pretty much the only limiting factor for getting some cables into the ground) and still the ISP market is not to doing too well. Regional ISPs are pretty much the only ones capable of delivering a decent service (if you are lucky enough to live close to one).
Not a chance. The Republican Party/side of the country would probably be more likely to rebel at the idea of such “government interference in the private sector”, especially on such a grand scale.
As others have mentioned, it's not clear that this would increase the market concentration in any way that matters, because it's not clear that Comcast and Time Warner meaningfully compete with each other. How many households can choose between one or the other?
Is there another way in which they will materially reduce consumer choice and gain new pricing powers? (Some people have said Net Neutrality and putting the pressure on Netflix, which is Interesting; it's not clear the extent to which third parties like this are covered by said Act.)
> Some people have said Net Neutrality and putting the pressure on Netflix, which is Interesting; it's not clear the extent to which third parties like this are covered by said Act.
Why wouldn't it be? There is a market for residential internet service, but if Comcast wants to charge Netflix et al for bandwidth then there is also a market for that "service" where Netflix et al are the customers, and the merger would have quite a strong effect on competition and market power in that market.
"Just about dead" is quite the overstatement. They did $32B+ last year in advertising revenue. I hope they do die a quick death, but it's going to be a while before most people cut the cord.
You're dead wrong. U.S. TV ad revenue is shrinking fast > 3% year on year and totals only $67 Billion USD for the entire industry. Also, you're looking at the wrong attribute as a proxy for relevance. The quality of the eyeballs (monetization worth, net worth) and sustained interest are far better on the web and in mobile games. Only a few rare people that don't have computers or smartphones are UHWNIs. So I'll leave that as an exercise for the reader to figure out what kind of customers watch TV.
It doesn't violate anti-trust laws to buy another company you do not compete with. And there are very few, if any, territories where Comcast and TWC directly compete at present – depending on where you live, you can subscribe to one or the other (or some other cable company), but not both.
Originally (and perhaps still in some specific areas), yes. Most regions have deregulated though, which is why FiOS, U-Verse and Google Fiber TV are able to exist.
But the infrastructure costs for Comcast to build out a brand new network in TWC territories (or vice-versa) on a mass scale would be pretty high.
"pretty high" but they've got $45b to 'invest' in buying out competition, instead of spending a fraction of that to compete head to head in specific markets, then eventually more markets?
If it's deregulated, then they can enter the market and compete on service and price, not buy up the competition so there's no chance of anyone else ever being able to enter. TWC has been pretty active in trying to prevent municipal fiber in NC, and I suspect with even more money/muscle/lobby power behind them, it will be easier to squash any semblance of competition in any form.
It's an all-stock deal though. Comcast isn't actually paying any money (in fact I believe they still have a significant amount of debt from buying NBC), instead they're proposing giving TWC shareholders the equivalent of $45B in new Comcast shares in exchange for giving up their collective ownership of TWC.
But yeah, Comcast and TWC's recent lobbying efforts in general sound pretty suspect. Not defending that aspect by any means.
Indeed. This is not a good thing for consumers. Comcast is way too big as it is and does not need to dominate the market any more than it already does.
My former company was the market leader and acquired the #2 player and gov't eventually stepped and force sold off a significant part of the acquired company including allowing the new buyer to give hire offers to anyone in that company which probably 75% of them took (or left). My guess is Comcast has better lobbyists and nothing will happen and execs will be congratulated by the regulators.
We should be taking these guy's monopolies away. Competition is the key to not only good value (i.e. low price/value) but also economic fairness.
Ever notice how many of the biggest fortunes were built on top of government granted monopolies of some form, such as exclusive licenses, highly regulated industries, copyrights, trademarks and/or patents? Just look at the list of the world richest people:
1. Carlos Slim - telecom monopolies
2. Bill Gates - software copyrights
3. Amancio Ortega - clothing trademarks (brands)
4. Warren Buffet - highly regulated businesses
5. Larry Ellison - software copyrights
6 and 7 - Kock Brothers - highly regulated businesses
1) Americans can expect some of the worst Cable price gouging they have ever seen
2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"