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Comcast-Time Warner deal may impact broadband customers

The buyout might improve service for some but give a larger Comcast more control

By , IDG News Service
February 13, 2014 09:06 PM ET

IDG News Service - Comcast's proposed acquisition of Time Warner Cable is partly a grab for negotiating power in the fast-changing video content business, but it might affect broadband users, too.

The US$45.2 billion offer comes as cable TV operators face a growing number of new channels for the kinds of content they used to deliver almost exclusively. Online video providers such as Netflix, Amazon, YouTube and Hulu (part-owned by Comcast's parent company) now offer alternatives to cable that can travel over any reasonably strong Internet connection, and the makers of video content look to them as alternatives to cable operators. If Comcast boasts more customers, it may be able to get better deals.

But alongside its cable TV business, Comcast is already the biggest wireline broadband provider in the U.S., with 20.7 million customers. After the deal's done, it expects to have about 30 million. That's more than Verizon Communications, AT&T or any other cable operator, though mobile data services that can rival home broadband's speed have even more customers.

The direct effects on broadband customers of the two cable companies may be minor, analysts said, but critics of the deal warned it might give Comcast more power to shape consumers' broadband experience over time.

On the positive side, the buyout could strengthen service for former TWC customers, said IDC analyst Matt Davis. Comcast has been ahead of most major cable operators in rolling out new, fast infrastructure, he said.

"From a consumer broadband perspective, if the deal goes through, they would be inheriting a company that's really focused on broadband being a core service," Davis said. The company offers speeds up to 505Mbps (bits per second) on its home service.

Another benefit to Time Warner users might flow from Comcast's negotiations with regulators in order to get the deal approved, Davis said.

Net neutrality rules that Comcast agreed to as a condition of its buying NBC in 2011 would be extended to Time Warner, Comcast Executive Vice President David Cohen said on a conference call Thursday. The rules, which were set to last for seven years, call for all services delivered over the Internet to be treated equally.

"Those Time Warner customers are going to kind of have an umbrella of protection that they didn't have before," Davis said.

With the Time Warner deal under scrutiny, Comcast may also be forced to make other concessions that could help subscribers, he said. Those might include more privacy reporting and more transparency about data caps or network control.

Critics warned the combination would give Comcast too much power over equipment suppliers and other companies involved in broadband and cable, leading to higher prices.

One factor that could shape broadband service is Comcast's bargaining power when making peering agreements, the deals under which core network providers get access to the edges of networks, said Derek Turner, research director at the consumer rights group Free Press. In 2010, Comcast had a content delivery dispute with one such company, Level 3.

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