Cable Mergers: Bad Deals for Maine Consumers?

Jul 2, 2014

The Comcast Building in Philadelphia's financial district.
Credit Knight725 / Creative Commons

Earlier this year, cable giant Comcast announced a deal to acquire competitor Time Warner Cable. A few months ago communications giant AT&T announced a deal to acquire Direct TV. All four companies operate in Maine, and the new media behemoths would control large shares of both the multichannel TV market and Internet services.

Both deals face federal regulatory scrutiny, and members of Maine’s congressional delegation worry that either one would be bad news for consumers.

First District Democrat Chellie Pingree says the creation of larger cable and Internet providers will do little to appease consumers who are already frustrated with the rates they're paying, and the service they're getting.

"For the average consumer, they are just tired of their cable company," Pingree says, "and they can’t imagine making it bigger will give them better service or better rates."

And Pingree says it’s not just consolidation of cable television services that worries her. She says all of the companies are major Internet providers. Sen. Angus King, an independent, says that may well be more important in the future as more and more consumers turn to streaming.

"Media companies have gone from sort of, you know, movies and entertainment, but now they are delivering essential services," King says, "and I think Internet services are now like water and electricity. And to allow these levels of concentrations is very dangerous and a big mistake."

And King says he's concerned about the impact these mergers could have on businesses that rely on Internet access. Second District Congressman Mike Michaud, a Democrat, shares that worry, and says there are examples from recent history that illustrate the dangers.

"I’m really concerned about any time you have large companies actually merge and become even larger, and whether or not it will end up in a similar situation where we saw with the banks too big to fail," Michaud says. "So we are keeping a very close eye on the mergers."

The companies are arguing that the mergers will not result in an undue concentration of either Internet or TV service. David Cohen, ex-vice president of Comcast, made that case at a congressional hearing.

"Americans are benefiting today from robust competition. Ninety-seven percent of the homes in America are in census tracts where at least three competitors offer fixed or mobile broadband Internet services," Cohen said. "And almost 99 percent of American homes have access to at least three multichannel video providers."

But Republican Sen. Susan Collins, says there are impacts beyond diminished competition for Internet or TV services. She says the companies involved in the proposed mergers also own content providers - including over-the-air, and cable and satellite, channels.

"For example, Comcast owns NBC. Does that mean that Comcast is going to give preference to NBC content that is generated if it does not have to compete with Time Warner anymore?" Collins asks.

Collins says there are bills in both the House and Senate that would direct regulators to block the mergers. She says she's not ready to support it, a that would undercut the regulatory process, but she believes the mergers should not be approved.

"Based on what I have seen, it’s hard for me to see a case for allowing these mergers to go through as they are proposed right now," she says.

But Sen. King believes that Congress should intervene, and Pingree goes so far as to suggest that Congress may act to block either or both of the proposals because consumers are tired of poor service and increasing rates. And she says the effort could have bipartisan support.

"The Republicans don’t like their cable companies either," Pingree says. "They don’t want to pay too much for their service, they want to get somebody at the other end of the phone when they can’t get their Internet to work."

The mergers are subject to proceedings before the Federal Communications Commission and the anti-trust division of the Department of Justice. Both could act this summer, possibly triggering a major debate in Congress.