Is Comcast The 21st Century Version Of Standard Oil?

Before being dissolved by the Supreme Court in 1911, Standard Oil was the world's largest oil refiner and made founder John D. Rockefeller the wealthiest man in America.

Before being dissolved by the Supreme Court in 1911, Standard Oil was the world’s largest oil refiner and made founder John D. Rockefeller the wealthiest man in America.

More than 100 years ago, the Supreme Court ruled that Standard Oil had become an “unreasonable” monopoly and broke the mega-company up into dozens of smaller ones. With America’s growing reliance on the Internet and high-speed data transmission, is it time to put companies like Comcast and AT&T under the antitrust microscope?

In an op-ed piece for Bloomberg, author and visiting professor at Harvard Susan Crawford writes about how Comcast skated through the antitrust review when it merged with NBC Universal — and how she believes the American consumer and the already highly consolidated cable industry has been hurt by this venture.

“Comcast is the communications equivalent of Standard Oil,” she writes, pointing out that Comcast is the dominant cable and Internet provide in 11 of the country’s 25 largest cities. “Even before its merger with NBC Universal, it was the country’s largest cable operator, its largest residential high-speed Internet access company, its third- largest phone company, the owner of many cable content properties — including 11 regional sports networks — and the manager of a robust video-on-demand platform.”

Crawford writes about how, while AT&T and Verizon compete — at least superficially — with Comcast for cable and Internet subscribers, Verizon had already slowed down the expansion of its FiOS network. And, as we wrote last August, the recent purchase of cable company-owned wireless spectrum by Verizon Wireless — and the accompanying marketing partnership that has Comcast and others selling Verizon phone service — has effectively taken away any incentive for Verizon to continue its expansion of the FiOS network, even though it’s a service that has been shown to provide faster download speeds than any of its competition.

“Rather than try to ensure that the U.S. will lead the world in the information age, American politicians have removed all regulation of high-speed Internet access and have allowed steep market consolidation,” writes Crawford. “The cable industry has done its best to foil municipal efforts to provide publicly overseen fiber Internet access. Now, the U.S. has neither a competitive marketplace nor government oversight.”

She points to South Korea as a country where regulators work to insure that consumers have affordable access to high-speed fiber networks. Only about 7% of U.S. households have access to fiber, says Crawford, while she claims that more than half the households in South Korea are connected to a fiber network.

Of course, South Korea’s population is only about 1/6 of that in the U.S. Additionally, South Korea has a much higher population density than the U.S., so it might not be a fair statistical comparison.

Regardless, Crawford writes that the consolidation of the cable and Internet industry and the lack of regulatory oversight has resulted in a situation where American consumers are paying higher prices every year without receiving better service.

She concludes, “Perhaps they will start to care when they see that the U.S. is unable to compete with nations whose industrial policy has been more forward-thinking.”