Comcast’s blockbuster acquisition of Time Warner Cable for a cool $45 billion hit front pages again this week in anticipation of the Wednesday’s Senate Judiciary Committee hearing, which will review antitrust laws regarding services provided by telecommunications companies. Comcast will also soon have to lay its defense before the Federal Communications Commission, which will closely scrutinize the merger’s impact on public consumption.
According to the New York Times, the most crucial concerns should be raised over high-speed Internet service, not cable television. Comcast’s share of the high-speed Internet market is larger than its cable TV market share, as it holds between 40 and 50 percent of the market for high-speed Internet service. Comcast’s rising market dominance has upended net neutrality, a principle that prevents Internet service providers from blocking or privileging content. It has also strong-armed major companies like Netflix to the negotiating table. Netflix struck a deal with Comcast in order to preserve its ability to provide streaming services to its customers, but according to Netflix CEO Reed Hastings, it sets a dangerous precedent. He says in Slate, “If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future.”
“Crony capitalism” is a politicized term for institutionally supported greed. Comcast has leveraged its considerable financial assets to acquire its biggest competitor, and its political opposition. To make sure that the merger prevails, Comcast has already invested heavily in the Democratic Party, with generous contributions to the Democratic National Committee followed up by extensive lobbying. Executives from Comcast were present at the state dinner welcoming French president Hollande and his wife. Comcast will come out of this merger one of the most powerful telecommunications providers in the country, with the weight to make even otherwise big content providers like Netflix bend their knee. They have the money to play the Washington game and turn the tables in their favor.
Republican Sen. Mike Lee of Utah has already voiced his opinions on the principles involved in a strongly worded op-ed in National Review Online late last week. Without mentioning the merger, Senator Lee more broadly condemned the Obama administration’s participation in “crony capitalism,” claiming it was destroying market competition, harming the poor, and destroying the middle class. The op-ed went on to detail the benefits of true market competition and allowing small businesses to flourish to create job growth. Reaping political benefits from the line of argument will require more than words, however. Lee continued, “a still-distrusted GOP first must end cronyism in our own ranks. The GOP has to close its branch of the Beltway Favor Bank and truly embrace a free-enterprise economy of, by, and for the people.”
For years, corporate greed has been associated with Republicans, but this merger shows that political influence, Democratic or Republican, is for sale to the highest bidder. If the GOP leadership is smart, they’ll at least make the appearance of breaking away from allowing corporations to stack the deck in their favor, and towards championing local businesses that promote sustainable economic growth. The Senate hearing on Wednesday provides an opportunity to send a signal to the private sector that mergers are not insurable through fundraisers, and to take a first step towards winning back the public trust.