The demise of the Comcast Corp.-Time Warner Cable Inc. merger doesn’t mark an end to the consolidation of the cable and Internet-provider market — analysts are saying it’s likely the beginning of what will be a new rush of mergers that will make an already consolidated market more so and likely cause prices to rise.
Comcast, the largest cable and Internet provider in the United States, announced today that it was dropping its $45 billion bid for Time Warner Cable, the second-largest cable and Internet provider. The Justice Department, which was analyzing the deal’s effect on competition, had raised concerns about the combined company controlling 57 percent of household Internet connections nationwide, making it “an unavoidable gatekeeper for Internet-based services.”
The decision followed a move by the Federal Communications Commission to turn the matter over to an administrative law judge to rule on the merger, which effectively would have killed the deal. FCC Chairman Tom Wheeler said Comcast’s decision was “in the best interests of consumers.”
While the mega-merger failed, cable companies have indicated a series of smaller mergers are likely shrinking what is already a consolidated industry. Charter Communications Inc., which was close to acquiring Time Warner Cable before Comcast stepped in with a better deal, has said it would go after Time Warner Cable again.
Charter, which is in a distant third place among cable providers, had struck a $10 billion deal to buy cable and Internet-provider Bright House Networks LLC, which mostly offers service in central Florida, parts of Alabama and around Indianapolis. But it is possible Charter could end up buying both Time Warner Cable and Bright House.
Cox Communications Inc. also may look to purchase other cable companies.
Consumer groups say future mergers will give customers even fewer choices of Internet providers in a market that already offers scant options. Even with four large cable companies — Comcast, Time Warner Cable, Charter and Cox — and four large telecommunications providers — AT&T Inc., Verizon Communications Inc., CenturyLink Inc. and Frontier Communications Corp. — Americans still have few choices because the providers avoid competing with each other, as a Center for Public Integrity analysis showed.
For example, five companies offer Internet service in Roanoke, Virginia. But almost all residents in and around Roanoke have a choice of only two providers, one cable company and one telecommunications company offering DSL service.
Only 23 percent of Americans have a choice of two Internet providers under the FCC’s newest definition of broadband, 25 megabits per second download and 3 megabits per second upload, according to the FCC. Even at 10 mbps download, half of Americans have a choice of two providers, and 30 percent have only one choice.
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