BROOKE GLADSTONE: The proposed merger of Comcast and Time Warner Cable has left a lot of people worrying whether their TV and Internet bills will go up. But combining the country's two largest triple play companies, those that provide TV, phone and broadband Internet, could do more than reach deeper into our wallets; it could shape how many of us experience the flow of ideas. The deal would deliver 30 percent of the nation's pay TV subscribers and more than one- third of broadband Internet subscribers with no other choice into the hands of Comcast. Susan Crawford, author of the book,
Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, has, as you might guess, a grim assessment of the potential impact.
SUSAN CRAWFORD: This takes an already terrible situation and makes it marginally worse.
BROOKE GLADSTONE: Just a teeny bit worse. [LAUGHS]
SUSAN CRAWFORD: [LAUGHS] Well, in that this mammoth combined company is going to pass 62 percent of American homes, and it faces almost no competition.
BROOKE GLADSTONE: Hey, Time Warner and Comcast don't share a single ZIP Code right now, so they’re all monopoly powers in their specified areas.
SUSAN CRAWFORD: That’s true. And, actually, back in ’97 they called it “the summer of love.”
[BROOKE LAUGHS]
[LAUGHS] The cable organizations divided up their systems and clustered their operations. It makes total sense for them. Here's what makes the difference. Right now, Comcast pays about a third or a half of what any upstart infrastructure provider would pay for programming.
BROOKE GLADSTONE: Mm.
SUSAN CRAWFORD: Comcast, when it bulks up with Time Warner Cable's additional customers, will pay even less that it pays now, making it even less likely that a new competitor will be able to show up.
BROOKE GLADSTONE: How would this merger affect, potentially, the kind of programming we get?
SUSAN CRAWFORD: Every content provider has to deal with Comcast requests for payments, preferential treatment given to their own partners. And if you're thinking this is all just about video, forget it. This is about high data-using applications. That could be distance education, telemedicine, home security. Comcast gets to charge whatever rents it wants to for the privilege of reaching its subscribers.
BROOKE GLADSTONE: Let's say you really love House of Cards. It's a Netflix service. Whether or not you watch it on your television or on your computer, you're still streaming it. It's not being broadcast. So what can Comcast do to House of Cards?
SUSAN CRAWFORD: Comcast can really mess with Netflix. It can force Netflix's communications through a narrow gateway, so that your viewing experience on the other end, as a subscriber of Netflix, is very shabby, you know, sort of lots of jitter, lots of latency. They can also charge Netflix a lot to get a better experience through their networks. And finally, on the user side, they can impose usage caps, and you’ll bump into them if you start replacing your pay TV with over-the-top TV. And then that'll make you feel as if it's too expensive to watch Netflix in the future.
BROOKE GLADSTONE: Look, the public cares about Netflix programs. They are growing interested in Amazon programming. Can that situation really prevail for long?
SUSAN CRAWFORD: Well, we have two choices at this moment. One, we could regulate them, put a cop on the beat, or we could just build alternative networks. On Wednesday morning, the FCC announced that it's going to start work aimed at getting rid of a bunch of state laws that make it impossible for cities to make this decision for themselves - to decide whether or not they need an alternative network, so as to route around the power of the cable barons. And many, many mayors across America are thinking about this right now.
BROOKE GLADSTONE: A lot of cities have actively tried to create municipal networks, and the cable companies and the phone companies have done a really wonderful job of stifling these efforts in the crib.
SUSAN CRAWFORD: That's right. The cable companies have managed to get 19 states to go along with the idea that it isn't right for a city to have anything to do with telecommunications capacity. We saw exactly the same thing happen when electricity was coming around. The private actors who controlled the trusts that it locked down electricity in America didn't want to see cities have anything to do with it. It took FDR, it took enormous amounts of leadership, decades of political fighting, but we won. Now, we’re going through that fight when it comes to high-speed Internet access. We’re at least on the battlefield, at this point.
BROOKE GLADSTONE: Having completely jumped the gun about what's going to happen [LAUGHS] when this merger takes place –
[CRAWFORD LAUGHS]
- I may have leapt over a crucial question, which is that the merger is under review.
SUSAN CRAWFORD: Absolutely. There are many other ancillary markets that are affected by the merger that the Department of Justice will be looking at very closely - what happens to programmers, what happens to the equipment marketplace. The FCC has a broad mandate in looking at this merger. It’s supposed to protect the public interest, and it will be examining it for the next year. So we’ve got a long way to go on the regulatory review of this particular combination.
BROOKE GLADSTONE: Although it's like what you describe – and I know we’re full of metaphors here –
[CRAWFORD LAUGHS]
- but the – like three-quarters of the horses have already bolted from the barn.
SUSAN CRAWFORD: Look, I think the great thing is that the horses may have left the barn, but at least everybody's looking at the horses –
[BROOKE LAUGHS]
- at this point, that the merger has really focused attention on the broken situation for information distribution in America, the fact that we’re becoming a Third World nation when it comes to cheap and ubiquitous conductivity. We should be making an upgrade to fiber, but it's not in Comcast’s interest to do that. It has no desire to spend any more on its network. It is in harvesting mode. The problem is we're all being harvested, and our innovative and informational future is at risk.
BROOKE GLADSTONE: Susan, thank you very much.
SUSAN CRAWFORD: Thanks so much for having me.
BROOKE GLADSTONE: Susan Crawford is a visiting professor at Harvard Law School and author of, Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.
