Cross-posted from Hightower Lowdown
Imagine my surprise when Robert Marcus, COO of Time Warner Cable, reached out to me in March. I don't get a lot of personal communiques from Fortune 500 chieftains, so I perked up when Bob indicated he had a piece of hot, inside-the-corporation news that he felt I should know about. "Dear Valued Customer," his letter began, reflecting that corporate warmth and camaraderie I feel when I phone TWC's service center and am told -- again and again... and again--to please hold, for "Your call is important to us."
Bob's big news was this: "[Time Warner] plans to merge with Comcast, forming an industry-leading technology and media company dedicated to delivering great customer experiences." And, of course, I was totally stoked when he added this punch line: "Above all, this merger will benefit you, our customers."
Only then did I notice that my monthly bill was attached to Bob's joyous missive. It showed, with no explanation, that he had chosen that very month to hike my cable payment by $4.92! How great is that for a customer experience?
Marcus concluded with a line meant to be reassuring, but it struck me as ominous: "We are very excited about the promise of this combination for you, our customers." Sure they're excited, for they know that this deal promises to put us high-speed internet and cable TV customers at their mercy. They're erecting a colossal telecom combo that will have overbearing power to gouge us on prices and short us on services.
Even without this merger, the consumer marketplace for these digital hookups has hardly been a model of competitiveness. In most communities, one or at most two internet service providers (ISPs) have locked down the market -- especially for bringing high-speed internet wires (known as broadband) into our homes and businesses.
Increasingly, these digital conduits are essential parts of America's utility infrastructure, nearly as basic as electricity and water pipes. They connect us (and our children) to worldwide knowledge, news, diverse viewpoints, and other fundamental tools of citizenship. And, of course, we can buy and sell through them, be entertained, do business deals, connect with friends, get up-to-the-minute scores, follow the weather, and -- yes indeedy -- pay our bills online.
We're told by politicos, pundits, and providers themselves that access to the net is crucial to our educational achievement, future prosperity, and ability to be self-governing. Yet, while this digital highway is deemed vital to our nation's well-being, access to it is not offered as a public service -- i.e., an investment in the common good. Instead, it is treated as just another profit center for a few corporations -- so few that selling broadband access to the world wide web has become a very lucrative source of what economists call "monopoly rents," the ability of corporations in a non-competitive market to extract excess profits from customers.
Already, only five profiteering ISPs -- Comcast, Time Warner, AT&T, Verizon, and Sprint (now a Korean corporation) -- control practically all of the US broadband market, and are charging among the highest prices in the world, while delivering one of the slowest internet services. Consumer Reports notes that both Comcast and TWC rank toward the bottom of its surveys on customer satisfaction, adding that "a merger would leave little incentive to improve."
The biggest ISP is Comcast, which runs its proprietary lines into 22 million of our abodes, and Time Warner is second-largest with 12 million connections. Now, the Big Two will become the Big One if their consolidation is rubber-stamped by federal anti-monopoly "regulators" (a group that's been thoroughly cleansed of any Teddy-Rooseveltian, trust-busting grit). The Comcast/Time Warner Cable combine would be a coast-to-coast beast, controlling nearly a third of the US market for cable TV and 40 percent of high-speed internet wires. This one corporation then would have the sheer market might to sock it to us "valued customers" at will.
The real power playAmassing market power to gouge customers is bad enough, but -- shhhhh -- the merging ISP giants hope you don't notice that they have a secret, even more sinister reason for muscling up: They intend to eviscerate the pure egalitarian ethic of the internet.
A BIT OF BACKGROUND. Like an uncensored global bulletin board, the great virtue of the internet is that no one controls its content. This digital communication technology has been so spectacularly successful and so socially valuable because it is a wide-open, democratic forum, accessible on equal terms to all who want to put information, images, opinions, etc. on it or to download any of the same from it. Since its invention, the guiding principle behind the use of this liberating technology has been that no corporation, government, religion, or other controlling power should be its gatekeeper, impeding the free and equal flow of communication to and from those who use it (yes, there is some censorship around the world, as well as here at home, but clever users commonly find their way around it).
This open-access tenet is dubbed "net neutrality," meaning the system doesn't care if you're royalty or a commoner, an establishmentarian or a rebel, a brand-name corporation or an unknown start-up, a general or a grunt, a billionaire or a poverty-wage laborer -- you are entitled to equal treatment in sending or getting information in the worldwide webosphere. That's an important democratic virtue. As we've learned in other spheres, however, corporate executives are not ones to let virtue stand in the way of profit, and today's telecom tycoons are no different. For some time, they've been scheming to dump the idea of net neutrality, viewing its public benefit as an unwarranted obstacle to their desire to grab greater profits.
Thus the real motivation behind the current bid to swallow Time Warner Cable, but also AT&T's recently announced $48.5 billion takeover of Direct of ISP mega-mergers (not only Comcast's $45 billion TV, is that their added market control will set them up to be the very gatekeepers that the internet community doesn't need and adamantly opposes. By owning practically all of the wires that link US internet users to the global web, these few corporations are in a position to dictate to the millions of content providers what can go through the wires and on what terms. Here's their scheme:
- Rather than having one big broadband "freeway" open for transporting everyone's internet content, the ISP giants intend to create a special system of lanes for high-speed traffic.
- This express lane will be made available to those who want to rush their information/view points/programs/etc., to the public and to get greater visibility for their content by having it separated from the mass clutter of the freeway.
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