Turns out it’s Comcast, rather than Charter, that will be buying Time Warner Cable.
Whenever the largest companies in an industry decide to merge, it’s obviously going to raise eyebrows among those suspicious of corporations in the first place. Some of us see corporations as a way that free people choose to organize and pool their efforts in order to produce products and services that consumers want. Others seem to view corporations as, well, some kind of invading alien force from another planet hell-bent on harming consumers and destroying civilization. (There may be a bit of hyperbole in that description, but . . . )
A more informed analysis would begin by setting aside any prejudicial assumption that bigger is bad. We frankly expect a lot these days of our broadband providers. It takes a lot of capital to build out and maintain broadband networks, and bigger companies are better able to do that. Otherwise, of course, Time Warner Cable would probably not have been in play. In an economy that has otherwise been plagued by a lack of sufficient private investment, it is precisely companies like Comcast that have been making those infrastructure investments.
But what about the merger reducing the number of broadband competitors? Well, remember, since Comcast and Time Warner Cable generally do not overlap each other’s footprints, they don’t compete against each another now, which means that the merger will not result in fewer competitive choices for consumers. For almost all consumers, the choice will remain between a cable provider, a telecom provider, or an all-wireless solution. Consumers will still generally have the same number of choices, so the merger will have almost no impact on the competitive marketplace for video and broadband.
In fact, the merger may actually be a boon to consumers. The evidence is clear that consumers prize the convenience of mobility over blazing fast speed at home. The newly combined Comcast\Time Warner Cable may be better positioned to become a competitor in the wireless space, creating new competition and choice for consumers.
The merger will certainly be a feast for regulators, and this highlights a real problem in our executive branch agencies: Both the Department of Justice and the FCC will conduct largely duplicative reviews of the merger, and both agencies will see it as an opportunity to force policy conditions and concessions onto Comcast in exchange for approval. This policymaking under duress is, frankly, a despicable way to behave. Policies should be determined through legislation or at least through rulemaking—not just opportunistically during merger reviews.
Those who believe in free markets believe that companies should be free to merge as they see fit, and that the only role for antitrust should be to address clear evidence of consumer harm. But the Government Class doesn’t agree, so we should brace ourselves for the ugly spectacle of regulators deciding how many pounds of flesh they can extract from two companies simply deciding to join their forces so that they can better serve consumers. It won’t be pretty, but for consumers and for the overall economy, it should be worth it.