Comcast & Time Warner = Bad News

It is not often that NYT columnist and respected economist Paul Krugman and I agree.  His core assumptions about the benefits of Federal intervention in people’s lives are vastly different than my desire for more localized politics and less federal powers.  I sometimes consider his version of socio-economic policies in the context of how I interact with my children who want to use the iPad, or are demanding to wear a summertime, princess dress outside when it is winter.

I could let them have their way and stop them from crying now (to the detriment of their long-term benefit of discipline, flexible thinking, and considering consequences) as Krugman often argues.  Or I could work to help them understand that some short-term unpleasantness can benefit them in the future.  But I digress….

Krugman’s piece in the NYT today hits on many of the important points against a Comcast/ Time Warner merger;  Decreased competition in an already concentrated industry does not historically lead to lower prices for end users; Increasingly concentrated power leads to less and less innovation; near monopolistic power leads to greater economic benefit to the small set stakeholders at the top of the monopoly (aka: medi-eval warlords taxing those who pass by their castles).

Krugman is correct on all his points.   I would add that or companies that act as a utility to consumers, there should be unfettered access to the choices that are linked to the “utility”.  Could you imagine if Comcast/Time Warner controlled the interstate highway system?  What if they installed tolls at both entryways and exit ramps for drivers.  What if tolls were increased to exit at towns that Comcast did not like?  What if Comcast informed the small towns they must pay exorbitant fees just to allow drivers to exit the highway into the town?  Effecting the business district of that town and the personal lives of it’s residents?

This last question/point is already happening with the Comcast deal.  Rather than act as a neutral utility, Comcast is changing the pricing structure and availability of websites/products.  Content companies now have to pay Comcast for the right to allow subscribers to access their product!  The fact that this Comcast / Time Warner deal comes on the heels of the Net Neutrality (as exemplified by Fred Wilson of AVC.com), is no surprise.

While I do not doubt that the FCC is following the letter of the laws surrounding the Net Neutrality act and will follow the letter of the law surrounding their assessment of the Comcast/Time Warner proposed merger, it sure would be great if a Washington DC bureaucrat would, for once, state the obvious, opine that this proposed merger would not benefit consumers, and kill the deal.

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