Early Thursday morning, executives at Comcast and Time Warner Cable made it official: the two companies are merging, creating the nation’s largest cable provider by far and a giant headache for federal regulators. But what does it mean for the average person’s all-important TV and internet access? Here’s a primer to the basics of the deal, which won’t have much of an immediate impact on either party’s customer base, but promises big shifts down the road.
It (theoretically) won’t make the market any less competitive.
Comcast and TWC currently don’t overlap in many markets; in most parts of the country, they compete against smaller local providers, not each other. Since most customers weren’t given a choice between the two companies to begin with, it’s not like customers across the country will suddenly be faced with one less option when it comes to cable. That certainly makes Comcast’s lawyers’ jobs easier when it comes to making their case to the feds, and takes away at least a bit of the proposed merger’s shock value by limiting its immediate, on-the-ground impact.
But it would give the new company enormous leverage.
Comcast has promised to sell off three million of TWC’s 11 million subscribers. That would still put the new cable giant at about 30 percent of the country’s existing customer base, the absolute maximum market share allowed to a single player for an industry to still be considered competitive. The issue with a provider that massive isn’t reduced competition for customers; it’s the negotiating power it brings to the table with network broadcasters, who now must cater to a single company or lose risking almost a third of their customers. Translation: lower profits for them, passed along to provider patrons in the form of lower rates. Remember the CBS throwdown with TWC this fall? TWC just re-upped its bargaining power to make sure that doesn’t happen again.
Service might improve.
Not customer service, of course; the two parties are the lowest ranked in the country in that department, way behind FiOS, DirecTV, or Dish Network. But while you won’t be spending any less time on hold cursing out your representative, Comcast has some upgrades in store for its existing customer base. TWC’s dowry includes services that allow viewers to restart programs they tune into midway through from the beginning and watch new shows within 72 hours after air, even without a DVR. It’s not exactly TiVo, but consider it a reason to look forward to a deal that otherwise makes a bunch of dudes you’ve never met several million dollars richer.
Internet might be more affected than cable.
As Uproxx pointed out in its off-the-cuff analysis of the deal, Comcast, the acquiring company, caps its customers’ bandwidth, whereas TWC does not. And that means it’s very likely TWC customers will soon find themselves forking over more for their internet access, either in upgraded plans or overage fees for exceeding the limits of even the most expensive data plan. Make all the binge-watching jokes you want, but more expensive access to the world’s biggest exchange of ideas and information means more limited access. And that’s not good news for anyone, unless “anyone” includes Comcast.
It’s not in the bag yet.
The merger first has to pass muster with both the FCC and the Justice Department’s antitrust people. Most estimates put a ballpark figure of about a year on this onerous legal process, so it’ll be a while before any major changes go into effect, if any (remember T-Mobile and AT&T?). Few analysts seem to think there will be any major hiccups given the two companies’ aforementioned lack of market overlap as well as Comcast’s willingness to do things like shed three million TWC customers and, most likely, offer net neutrality provisions preventing it from privileging its own content over those of other providers. But there’s still a lot of paperwork between now and millions of dollars in jacked-up broadband rates.