Share this article

print logo

Consumer advocates applaud end of Comcast/Time Warner deal

The failure of Comcast’s bid to buy Time Warner Cable is good news for consumers, but it may not have any immediate effect on Time Warner’s many cable TV and broadband Internet customers in Western New York, according to public-interest groups and industry experts.

Opponents of the planned $45 billion takeover cheered Friday’s announcement that the deal was dead. They had warned that further consolidation in the telecommunications industry would lead to fewer options for consumers, higher rates and less-responsive customer service.

Many customers already are unhappy with their service from the two companies. The most recent Consumer Reports customer satisfaction survey, from March 2014, ranked Time Warner Cable 16th out of 17 companies for TV service, while Comcast was 15th. The two companies ranked in the bottom third of the survey for satisfaction with Internet service.

“We had real concerns that this merger, if it were to go through, would make matters worse,” said Delara Derakhshani, policy counsel for Consumers Union, the advocacy arm of Consumer Reports.

The unraveling of the deal came after Attorney General Eric Holder told Justice Department lawyers at a meeting two weeks ago that they had his support in deciding to challenge the transaction, according to a person with knowledge of the discussions who spoke on the condition of anonymity because of the sensitivity of the issue.

The Justice Department confirmed that it had significant concerns that the proposed merger “would make Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers.”

“This is a victory not only for the Department of Justice,” Holder said in a statement, “but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world.”

Tom Wheeler, chairman of the Federal Communications Commission, said Friday that the decision to abandon the deal was in the best interest of consumers.

Broadband will only grow in importance as more cable customers, particularly millennials, cut the TV cord or don’t bother signing up in the first place.

The combined companies would have controlled around 30 percent of the country’s pay TV market, but between 40 percent and 57 percent of its broadband market, according to various estimates.

“In this case, the more vendors trying to win the customer’s business, the better off the customer is,” said Robert Rosenberg, president of Insight Research Corp., in Durango, Colo.

Time Warner Cable is a dominant cable and Internet provider in Western New York, where residents also are served by Verizon FiOS — though not in every community — and by satellite companies. Time Warner Cable said it has 1.5 million customers in upstate New York but it does not provide customer numbers for just Western New York.

What happens to those customers now that Comcast has pulled the plug on its purchase of Time Warner Cable?

They’ve already gone through rate increases that took effect at the start of this year and in March 2014 that included a higher charge for leasing an Internet modem, a “broadcast TV fee” and a sports programming monthly surcharge.

The average U.S. household pays $154 per month, or $1,848 per year, for cable, Internet and phone service — more than they pay for electricity or clothing, according to a recent report from the Mintel Group.

Time Warner Cable spokesman Scott Pryzwansky declined comment Friday on the company’s future plans in the region. Derakhshani said she believes the heightened scrutiny paid to the proposed merger, and its failure, could have ripple effects in the industry.

“I hope it spurs companies to take more steps to address the needs of consumers,” she said.

Larry Sanders, a professor of management science and systems at the University at Buffalo, said he thought a combined Comcast-Time Warner Cable may have lowered prices out of the gate to try to grab market share in this area.

Now, he said, “I think it’s going to be business as usual.”

This report contains material from the New York Times.