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Comcast, Time Warner Broadband Merger on Hot Seat
Comcast, Time Warner Broadband Merger on Hot Seat

By Jennifer LeClaire
May 8, 2014 1:48PM

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"The sheer size of the merged entity will allow it to exercise control over Internet content in unprecedented ways," said Dave Schaeffer, CEO of Cogent Communications, in a statement on the merger of Comcast and Time Warner. "One company controlling access to so many of America's 'captive eyeballs' should immediately raise red flags."
 


When Comcast announced it would shell out $45.2 billion to acquire Time Warner Cable in a stock-for-stock transaction, some industry watchers were skeptical about the deal going through. Now we can see why.

The American Cable Association, for one, is dead set against the deal. The ACA represents the nation's small- and mid-sized cable operators and testified on Thursday that the acquisition would threaten both consumers and competition.

In testimony prepared for a House Judiciary Committee hearing, ACA President Matt Polka said consumer hopes for lower prices, greater choice and more competition will be dashed, if the FCC and DOJ "ignore or treat lightly the potential harms" of the Comcast-Time Warner Cable deal.

Opposition Rising

Cogent Communications, an Internet service provider, is also against the merger. Dave Schaeffer, CEO of Cogent, submitted a written statement to the panel.

"The sheer size of the merged entity will allow it to exercise control over Internet content in unprecedented ways," Schaeffer said. "One company controlling access to so many of America's 'captive eyeballs' should immediately raise red flags."

Of course, Comcast and Time Warner Cable did not remain silent. Time Warner Cable CEO Rob Marcus and Comcast Executive Vice President David Cohen put out a statement of their own.

"The decision of the companies to combine reflects the increasing rivalry and experimentation among national and global companies, including such powerful companies as AT&T, Verizon, DirecTV, Dish, Amazon, Apple, Samsung, Sony, Google, Netflix, and Facebook in competing for consumer attention and loyalty across the broadband ecosystem," their statement said.

Power Play

Jeff Kagan, an independent technology analyst, said we should remember there was plenty of talk about how hard it would be to get the deal done when it was first announced.

"Now, when the rubber meets the road, we see just how hard it will be get this deal done," Kagan told us. "There are plenty of reasons why Comcast and Time Warner Cable want to do this deal. That goes without saying."

However, he said, there are also plenty of reasons approval will not be easy. To get the deal done, Kagan believes both Comcast and Time Warner are going to have to cough up a lot more to regulators.

"This will be a long and painful process for both Comcast and Time Warner Cable -- and, frankly, it should be anytime the Nos. 1 and 2 industry leaders want to merge," Kagan said. "That would put a hell of a lot of power over this industry in the hands of one company, and that is always one of the biggest concerns."
 

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