The Washington PostDemocracy Dies in Darkness

Step it up on telecoms, progressives

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So Comcast is seeking to buy Time Warner Cable for $45 billion in stock. As the biggest and second-biggest cable providers in the nation, the combined two would make one hulking monstrosity of a cable company.

This is a great opportunity to reiterate that anti-trust action should be part of the progressive agenda. Telecom monopolies are sucking wealth out of the country while providing awful service, and bringing them to heel would provide real benefit to average Americans.

Matt Yglesias makes the point that this probably doesn’t mean that much as far as restricting competition — but only because cable companies already don’t compete at all:

…cable television competition has proven to be largely a mirage…The merger proposed here will in effect turn two medium-size regional monopolists into a big sprawling monopolist. But in terms of consumer-facing competition, you’re going from zero to two times zero.

I’d still say that on the merits there’s probably no reason for the FCC to approve this thing, mainly because what on earth is the point? Beyond a certain point a larger corporation doesn’t provide much in the way of economies of scale. On the contrary, the hugest corporations tend to be more monopolistic, more unwieldy, more sclerotic, and more prone to seek profits through rent-seeking rather than good business (eg, lobbying Congress for special favors and tax breaks).

Personally, I suspect the major motivation for America’s merger mania is so senior managers and executives can be in charge of a larger thing, and therefore demand more money.

In any case, the bottom line is that America’s telecom industry in general is atrocious. Almost without exception, everyone hates their telecom provider. Greedy, monopolist service providers push prices as high as possible, while investing as little as possible in capacity or repairs. The result is that by international standards, from internet, to cell phones, to television, we are gouged mercilessly for crummy speeds and atrocious service.

There are two basic solutions to this problem: either run telecoms as a regulated monopoly, like how land lines used to work, or break up the telecom trusts within individual markets to force them to compete with each other. Both have upsides and downsides, but the point is that government action will be required either way. This is another reason to keep prevent pointless mergers — to level the power imbalance between regulators and colossal corporate conglomerates.

This will be a tough lift, but I think it’s still possible to do. Telecom capacity is relatively cheap, by infrastructure standards — and for Pete’s sake, Romania somehow manages to have the third-fastest internet in the world. It’s easily within reach, if we can get our act together. It should be a key goal of progressive lawmakers.