It’s been a year since two-time Worst Company In America winner Comcast confirmed it would spend $45 billion to acquire another much-loathed pay-TV provider, Time Warner Cable. And while we all wait for the FCC and Justice Dept. to finish kicking the tires and looking under the hood of this deal, what better time to review some of the promises Comcast has made about the post-merger pro-consumer wonderland we’ll all enjoy.
Our colleagues at Consumers Union, who have been outspoken critics of the merger, have broken down and debunked several of the claims made by Comcast about what it will do with the millions of new TWC customers (and billions of their dollars).
As we recently pointed out, Comcast and Time Warner Cable are at or near the bottom of all the major customer service and satisfaction surveys. And on the American Customer Satisfaction Index, which allows consumers to compare scores for companies across all industries, Comcast and TWC were the absolute worst of every single business scored in the survey, leading the Director of ACSI to state about the merger that “it’s a concern whenever two poor-performing service providers combine operations…. It’s hard to see how combining two negatives will be a positive for consumers.”
And these providers have made this hollow promise before, promising better service to grease the wheels for an acquisition only to crash and burn when it came time to deliver.
In 2006, Comcast and Time Warner cable carved up a bankrupt Adelphia Communications. You wouldn’t think that customer service could only improve when being switched over from a bankrupt operation to a profitable one, but CU points out that the switch over to Comcast and TWC caused Adelphia customers in several areas to complain about lost Internet service, deleted e-mails, cancelled cable channels, non-functioning modems and call centers that couldn’t handle the volume of complaints.
That was just the result of breaking up the fifth-largest pay-TV provider in an era when people were not as dependent on Internet service. Why should anyone believe that things will be any smoother when Comcast acquires another 10 million customers in one fell swoop — not to mention the millions of TWC customers who are being handed off to a completely new company, GreatLand Connections?
The fact is that the lack of competition in the cable/ISP market means that companies like Comcast and TWC have minimal reason to provide decent customer service. The overwhelming majority of their customers can’t switch to other providers, so all these companies have to do is provide a base level of service that will prevent customers from getting so disgusted they cut the cord entirely.
2. “We’ll help poor and rural communities if the merger is allowed.”Image courtesy of Karen Chappell
While residents in many cities and suburbs have access to decent broadband speeds, consumers in rural America often only have access to slower service or expensive satellite. And even in urban areas with existing service, the poorest consumers can’t afford broadband.
Even though Comcast could spend this $45 billion on improving access for these Americans, the company believes that money is better used acquiring TWC, a deal that it says will help it “bridge the digital divide.”
If that sounds familiar, it’s the same promise Comcast made in order to shove the acquisition of NBC Universal down regulators’ throats in 2011. The result of that deal was a program called “Internet Essentials” that is intended to provide low-income families with affordable broadband accesss.
While Comcast might sing the praises of Essentials to lawmakers, it’s been heavily criticized as window dressing to appease legislators.
There are numerous roadblocks to enrolling in Essentials, like having a school-age child living at home who qualifies under the federal reduced-cost school lunch program. This means that senior citizens are generally disqualified, as are many low-income households that need broadband access to look for work or for their education. Current Comcast customers are generally not eligible, meaning those families that have been scraping together money to make sure their kids have broadband access can not enroll just because they’ve been able to budget for service.
And even if you are able to enroll in the service, the speeds of Essentials are far slower than what you’d get elsewhere. At 5Mbps downstream, Essentials barely qualified as broadband under the FCC’s old, outdated definition. Now that the Commission has voted to revise that definition to a more realistic number that won’t be antiquated in year, Essentials isn’t even close to providing broadband service.
“It’s all too easy for a company to promise to do good works when seeking approval for a merger, and then go back to business as usual,” writes Consumers Union. “If Comcast really wants to help bridge the digital divide, there is certainly more it – and Time Warner Cable – can do. But they don’t need another merger to do it.”
3. “We won’t restrict access to choice programs we control if the merger is allowed.”Image courtesy of Dan Century
As part of the deal to acquire NBC, Comcast promised it would make its exclusive programming available to those few services that it actually competes with. But as several examples show, this has not been the case.
For instance, here in Philadelphia, satellite customers still don’t have access — even on a premium sports tier — to Comcast Sports Philadelphia, which airs the overwhelming majority of Phillies, 76ers, and Flyers games. The station is available on other terrestrial cable services in the region, but those generally don’t compete with Comcast. Meanwhile, DirecTV and Dish — the only non-Comcast pay-TV options for many Philadelphians — still don’t carry the channel.
I’ve been investigating this issue for years, and while Comcast insists it “makes the stations available” to the satellite companies, sources have repeatedly told me that Comcast is demanding a rate for the local sports channel that is significantly higher than Dish or DirecTV would pay in other markets.
Then there was the case of streaming video startup Project Concord, which attempted to get paid access to NBC programming but was refused, and continued to fight even after an arbitrator sided with Concord.
“The merger would just make this problem worse, because Comcast would control even more of the ‘pipes’ through which its own popular movies, television programs, and sports programs get to homes throughout the country, including in most of the largest metropolitan areas,” writes Consumers Union. “More cable and broadband coverage in more cities equals more opportunities for Comcast to restrict access by competing distributors to the programs Comcast controls.”
4. “We’ll provide plenty of sports programming for local fans if the merger is allowed.”
Comcast’s Philadelphia monopoly was made quite evident in 2014 when the Flyers were in the NHL playoffs. Several games were slated to air on the national NBC Sports cable network, but Comcast — which also owns a slice of the hockey team — decided to simultaneously run the games on CSN Philly, meaning the national broadcast was blacked out for Dish and DirecTV customers. There is no other reason for the company to do that other than to hopefully convince satellite subscribers to give in and switch to cable.
In addition to the ongoing satellite blackout of local sports programming in Philadelphia, Comcast and Time Warner Cable have a history of restricting access to sports programming in numerous major markets, like Los Angeles, where 70% of the market can’t watch the Dodgers play because TWC won’t make SportsNet L.A. available to other carriers on a reasonable basis. It’s gotten so bad that the city’s mayor has asked the FCC to intervene.
Then there’s the mess in Houston, where CSN Houston was only available to about 40% of residents. After being pushed into an involuntary bankruptcy, the station is now being handed over to AT&T and DirecTV, so maybe Rockets and Astros fans will finally get to see their games.
“This merger would do nothing to reduce this sort of gamesmanship,” contends Consumers Union. “It would only increase it – and that would be strike three for many sports fans.”
5. “The merger wouldn’t harm competition – in fact, it couldn’t.”
Finally, the biggest piece of truthiness that Comcast has been pushing since day one of the merger — that the loss of TWC won’t result in a harm to competition in the pay-TV and broadband markets because there isn’t any competition.
But that’s just looking at lines on a map and saying, “Oh, they don’t overlap so there’s no competition.” It glosses over the fact that Comcast will now have unprecedented negotiating power and leverage to drive content providers’ prices down, which means they can only go up for other pay-TV and broadband companies.
It also means that Comcast could unilaterally make rate changes to some 30 million households’ service, most of whom would have no other option but to pay more or cut the cord.
Additionally, Comcast will now control the majority of high-speed broadband lines that carry the services that actually do compete with pay-TV — like Netflix, Amazon Prime, Hulu, Sling TV, and HBO’s upcoming streaming service.
Comcast has already shown that it will leverage its current user base to force Netflix and others to pay more so that subscribers can actually stream videos at the rate Comcast promises in its ads. If it decides that Sling TV is a similar threat, what’s to stop Comcast from allowing that data to bottleneck? And when millions of online users are trying to access NBC’s Olympic feeds, is the network paying its parent company a toll so that its data doesn’t hit speed bumps?
And the one thing Comcast won’t promise…Image courtesy of Kevin Burkett
Meanwhile, there’s one promise that Comcast just won’t make, that the TWC merger will result in more affordable cable bills — or even that it will slow down the rate
“We’re certainly not promising that customer bills are going to go down or even increase less rapidly.”
Those are the words of Comcast Exec. VP David “The Merger Whisperer” Cohen, who has talked up all the ways in which the deal will save the company money but refuses to say whether those savings will be passed on to customers.
That’s because there is only one direction your bill is headed — up.
Between 1995 and 2013, during which Comcast and TWC were no strangers to acquiring smaller cable providers, bills increased at around 2.5 times the level of inflation during those same years.
Because of the very lack of competition that Comcast claims as a reason for approving the merger, the company will be free to continue increasing prices while cutting corners on customer service.
“For a company with such a terrible track record with consumers, there’s little reason to believe all the promises Comcast is making about this merger,” said Delara Derakhshani, policy counsel for Consumers Union. “When you take a hard look at some of Comcast’s biggest promises, they just don’t hold up. What you can count on is continued price hikes, fewer choices, and more of the same lousy service that Comcast has become so notorious for delivering to its customers.”