The Proposed Comcast-Time Warner Merger

Some observers are concerned that decreased competition might result if the Comcast-Time Warner merger is approved; here are some recent developments.

Critics dismissed the companies’ claim that such a merger would not drive up prices and stifle the competition, because they already do not operate in overlapping markets. Senator Al Franken said:

“First of all, the fact that they have monopolies in their own markets should say something. Together they will become one big monopoly and have a huge presence. So I don’t think we should feel better about the fact that they’ll just be getting bigger. Combined the companies will exert even more power. Time Warner Cable has acted as a counterweight to Comcast in the market.”

If Time Warner and Comcast merged—they are seeking regulatory approval now and are lobbying for that—they would control 40% of the US internet ISP market.

America’s Sloooooow Internet

The USA average download internet speed today, according to the people who run Speedtest.net, is 24 mbps, which is #30 on the list, right behind Russia.  The top countries regarding internet speed are:

#1 Hong Kong 79.59 mbps

#2 Singapore 68.65 mbps

#3 Romania 55.55 mbps

#4 South Korea 52.47 mbps

#5 Switzerland 50.42

Germany, for example, is a market where most of the ISPs are concentrated in the hands of a few companies.  In that country, their internet limps along at #27 25.48 mbps.

There is appears to be a correlation between market concentration and available internet speed.  Hong Kong is the most capitalist country on the planet according to the Heritage Foundation.

In Japan, you can get 2 gbps home service in some areas, although 1 gbps is more widely available.  In South Korea and Hong Kong you can get 1 gbps almost everywhere.  Here are some prices and speeds for home internet service from one ISP in Hong Kong:

1gbps        HK$598    $77 USD

500 mbps    HK$498    $64 USD

300 mbps    HK$398    $51 USD

Hearings on the Merger on Capitol Hill

Time Warner and Comcast executives testified this week before the House Anti-Trust Committee.  Time Warner and Comcast testified before the House Judiciary committee last month.

There are two major hurdles for Time Warner and Comcast to overcome.  The first is to gain the approval of the Congress, which they can clearly influence with campaign contributions and lobbyists.  The second is to obtain the approval of the FCC, which presumably they cannot.

Regarding the FCC and its independence from the congress, the FCC website says, “The FCC is directed by five commissioners appointed by the president of the United States and confirmed by the U.S. Senate for five-year terms, except when filling an unexpired term. The president designates one of the commissioners to serve as chairman. Only three commissioners may be members of the same political party, and none can have a financial interest in any commission-related business.”