Comcast says it needs to get bigger to compete

Comcas customer service center in California

A sign stands in front of a Comcast customer service center on August 3, 2011 in San Rafael, California. 

Before a Senate hearing on Comcast’s proposed merger with Time Warner Cable, the company dropped a lengthy memo to the Federal Communications Commission, summed up in a blog post. In part, it argued that the merger would be good for competition in broadband, since Comcast’s rivals— including telecoms like Verizon and AT&T— are so big

Which is a different question from whether they offer broadband services that actually compete with Comcast. Andy Hargreaves, a Pacific Crest Securities analyst who looks at both TV and tech, thinks Comcast already dominates, with other companies unable to consistently offer similar speeds.

He estimates that the merged company would have the best-quality service in about 70 percent of the U.S. market. He thinks that’s a problem -- it gives the company power to keep jacking up prices.  “They are exceptionally good at raising rates,” he says.

However, he doubts these questions will sink the deal. Merging the companies, he says, doesn’t actually make it much harder for a real competitor to emerge.

“It’s already near impossible,” he says. “So raising the bar from really, really, really, really, really, high to really, really, really, really, really, really, REALLY high is not that big a deal.”

David Balto, an anti-trust lawyer and a former Federal Trade Commission official, thinks the merger will likely be approved. Comcast and Time Warner haven't been competing with each other before the merger in existing markets, so consumers aren’t losing choices.

“You may not like the competitive environment,” he says, “but there are scores of mergers that the FTC and the Justice Department have approved because they could not find a loss of competition.”

About the author

Dan is a sustainability reporter for Marketplace.

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