Local governments should be concerned about the proposed Time Warner-Comcast merger – and ought to be planning now to address those concerns at the local, state and federal level.
Media reporting, such as this Huffington Post article, has emphasized that the deal could dramatically and negatively affect consumers. Comcast and Time Warner were ranked by The Motley Fool as among the “worst values” from a consumer perspective. Perhaps more importantly, the consolidation may give a merged company significantly more power to control the way information can flow and what information can flow over the Internet, particularly in the wake of the D.C. Circuit decision gutting the most significant parts of the FCC’s net neutrality rules. (We’ve written about that decision here.)
To give a sense of the risk: John Malone, who owns a 27% interest in Charter, is pushing for more industry consolidation and is seeking to develop “tiered pricing models” – that is, “data cap” models which will charge customers for the number of bits they consume every month. One can imagine a world where favored providers who pay the pipe owner will have their content delivered without it counting against the data cap. Companies like Netflix, who do not pay a toll to the pipe owner, will find that consumers must pay extra to access anything but a base level of content. But as Susan Crawford points out in this WIRED.com article, the real losers may be small businesses and others who depend on robust Internet access to buy and sell goods and services – because faced with data caps, consumers will begin to avoid these innovators. And local governments, which are increasingly relying on electronic communications to provide services, distribute information and streamline development, may find that the only true high speed network in their community is now a toll highway.
So how to respond?
Comcast and Time Warner communities that have local franchising authority should look at their franchises to determine whether they have the right to independently review and approve the transaction. (Many communities will have that authority.) Under many franchises, localities have broad rights to condition or deny approval of a transfer – and at the very least subject the proposed merger to public scrutiny and comment.
In addition, the proposed merger will trigger significant reviews at the federal level (Department of Justice and FCC) and may trigger requirements for transfer review and approval at state and local levels. The merger may be denied, or if not denied, approved subject to significant conditions. These could include net neutrality conditions similar to those imposed when Comcast acquired NBC-Universal.
Local governments may wish to begin discussing the importance of an open Internet to economic development with elected officials in Washington and at state legislatures. And, they should begin preparing to participate in any merger proceeding in Washington to ensure that, if a merger is approved, it protects vital community interests.