Comcast recently announced a deal to buy Time Warner Cable for $45 billion. This deal will merge the #1 and #2 cable television companies in the United States, giving them a 57% market share in that market. As a broadband internet provider, the new Comcast-TWC would control 37% of the market. The broadband internet market in the United States is already uncompetitive, providing us with poor internet service for relatively high prices, as the graph below shows.

If this deal is allowed, consumers in the United States are going to suffer. If Comcast has a monopoly on internet and cable television, they have no incentive to invest in infrastructure that would benefit consumers. This will keep prices high, while allowing us to lag further behind other developed nations in internet speed.

Fortunately, there is governmental oversight meant to prevent deals like this. The FCC is supposed to look over any deals like this, and see if monopolistic practices could result. If they decide that is the case, they could disallow the deal. Hopefully this is what happens, but Comcast is very well connected politically and I am concerned they will use their political sway to get this deal through the FCC.

The President appoints the voting members of the FCC, who are in charge of overseeing deals like this. One of Obama’s biggest fund-raisers and a personal friend is David Cohen. Called the most influential person at Comcast by the Financial Times, David has worked closely with politicians throughout his time at Comcast. His personal relationship with the President, as well as the $800,000+ given to the Congressional members of the Subcommittee on Communications and Technology (which oversees the FCC) may help Comcast get this deal through the FCC.

For those concerned with the influence of money in politics, this deal is a useful case study. As the situation progresses, we can see just how much influence money can buy in politics. Only 6% of people polled considered the deal to be good for consumers, so we can see if Comcast is able to circumvent public opinion in their quest to dominate the cable and internet market.

Sources:

Reuters blog post on monopoly.

Consumer survey.

Cable television in the U.S. marketshare.

Maplight on Comcast’s political donations.

Comcast to buy TWC.