Making a Cable Merger Safe for Consumers

http://www.nytimes.com/2016/04/27/opinion/making-a-cable-merger-safe-for-consumers.html

Version 0 of 1.

Telecommunications companies often use mergers to limit consumer choice and raise prices. That’s why federal regulators are right to seek tough conditions before approving a deal that would combine three cable companies.

The proposed deal involves Charter Communications’s $65.5 billion acquisitions of Time Warner Cable and Bright House Networks. The new Charter would be the country’s second-largest broadband company, after Comcast, and the third-largest cable and satellite-TV company, after Comcast and AT&T, which last year acquired DirecTV. There is no question that these acquisitions would give Charter significantly more power over millions of consumers, media companies and Internet businesses like Netflix and Amazon.

To limit potential harm, federal regulators are seeking three conditions. The chairman of the Federal Communications Commission, Tom Wheeler, would require Charter to sell consumers high-speed Internet service without limiting how much data people can download. This should make it easier for customers to stream TV shows and movies over the Internet — instead of buying cable TV service from Charter — because they would not have to worry about how much data they were using. The commission would also require Charter not to charge Internet streaming companies for access to its customers.

As the third condition, the Justice Department’s antitrust division proposes that the new company not be allowed to sign exclusive deals with media companies like Disney and Fox. That would leave content providers free to sell programming to Internet streaming companies. Many of Time Warner Cable’s contracts with media companies include exclusive deals that would no longer be permitted.

All three conditions would be in place for seven years. The F.C.C. still has to vote on this plan and the Justice Department has to get the approval of a federal judge.

Critics of the proposed deals, like the statellite-TV company Dish Network, want regulators to block the Charter deals altogether, as the government did last year when it stopped Comcast from acquiring Time Warner Cable. But it would be hard to convince a judge that the Charter deals should not go through. If Comcast had been allowed to acquire Time Warner Cable, the company would have clearly dominated the industry in a way that the new Charter would not. Comcast’s proposal would have given it control of about 60 percent of the national broadband market, along with outsize influence over how Americans use the Internet. The postmerger Charter would have only 23 percent of that market.

That said, the Charter acquisitions clearly pose antitrust problems. They would increase consolidation in an important industry where power is already concentrated in the hands of a few companies. Regulators should fully enforce these merger conditions if the deals go through and come up with other policies to encourage more competition.