Comcast Corp, which started four decades ago with 1,200 cable subscribers in Mississippi, completed the acquisition of AT&T’s cable division Monday for $29.2 billion in stock to become the nation’s largest cable operator.
Comcast had been the country’s third-largest cable company, with 8.5 million customers. By acquiring AT&T Broadband, the largest cable operator, Comcast now has 22 million subscribers, nearly twice as many as second-place AOL/Time Warner.
The merger, which leaves Comcast $30 billion in debt, may eliminate the United States as contender in broadband penetration due to the “closed access” of their broadband pipe.
More than 40 percent of U.S. cable households will soon only have one choice; Comcast’s “walled prison” or phone-based DSL. DSL itself may soon be “freed” from “equal access” provisions.
The issue of “open access” on cable appears to be closed. The FCC has approved the merger of Comcast and AT&T. Portland Oregon had earlier required AT&T cable to open its cable lines to rivals, but the 9th U.S. Circuit Court of Appeals said Portland had overstepped its authority.
High tech companies lobbied U.S. regulators to ensure that consumers can roam freely on the Internet without barriers by high-speed service providers. The FCC required some “open access” provisions in their earlier AOL/Time Warner merger approval, but did not require the same from Comcast/AT&T. Blame the Republicans.
Cable and phone companies have argued that government regulation should be limited to encourage fast deployment. Consumer groups and content providers say the FCC should ensure choice of providers and content with “equal access” provisions.
The Consumer’s Union, the Media Access Project, OpenNet Coalition (an organization of ISPs), the Mount Hood Cable Regulatory Office the city of Portland and others lobbied for “open access”.
Gene Kimmelman of the Consumers Union, had this reaction over the FCC decision:
“This is a dangerous merger that allows one company to control video programming and high-speed Internet services for more than 40 percent of cable households in America. It is mind-boggling how federal officials have let the largest cable companies consolidate and thereby dictate the choices of cable channels and high-speed Internet services for consumers nationwide.
“The merger creates a cable giant with complete or partial ownership of cable systems serving more than 30 million subscribers, which is more than 40 percent of the nation’s cable subscribers. This merger will dramatically increase concentration in video distribution markets in violation of antitrust merger guidelines, and it is inconsistent with a meaningful cable ownership limit that Congress called for in the 1992 Cable Act.
“Cable rates have shot up 45 percent in the six years since Congress approved the Telecommunications Act, which initiated deregulation. The approval of this merger means that many consumers are likely to see more price hikes, and it’s going to be harder than ever for competitors to break into the cable and high-speed Internet markets served by AT&T and Comcast.
When the FCC approved the merger of the nation’s first- and third-largest cable companies last week, it ruled that open access was not an issue.
Business Week Gets Behind the High-Speed Slowdown – it’s the cost. Broadband growth is slowing in the US — to perhaps 4 million new customers in 2002, vs. 5 million each in 2001 and 2000. According to Business Week,
“In this year’s second quarter, the cost of high-speed links finally leveled off after 15 months of nonstop increases. As of June, the average price for cable-modem service was $45.31 per month, up 15% from $39.40 a year ago. DSL service from local phone companies rang in at $51.36 a month, up 7% from $47.84 a year ago…cable companies are happier with higher operating margins — 35% to 45% on their modem services.”
Cox cable modem service costs as low as $26-a-month in markets where they have cable competition. The United States will NOT be competitive with the rest of the world which is moving to ubiquitous broadband. In the narrow-band USA, the cost of doing business is going to increase. A trillion dollars from broadband entertainment, education and business transactions, will head overseas in an instant – pursuing the market – NOT in the United States.
- While other countries like Korea currently have more than 60% of households on broadband, the U.S. currently has just 12%.
-
In Europe, Germany has 39 percent broadband penetration while Sweden has 33 percent. Secretary General, Philip Virgo of the European Information Society Group said, “Korea, unlike Britain, understands the importance of broadband is not just about economics but “national and cultural survival.”
- Broadband will reach 80 per cent of the UK, in the next few years.
- South Korea will hook up EVERY household to broadband.
In the mid-1990s, the Korean government forced the country’s phone monopoly, Korea Telecom, to open its network to competition. Now broadband costs as little as $25 a month — about the same as a dial-up line.
Will government subsidies and grants help? Take a look at what’s happening in Portland.
Innovation Partnership is working with AT&T Broadband and One Economy Corporation to provide “inexpensive” cable modem access to low-income communities in Portland and Gresham.
The pilot project includes one neighborhood in each city, and focuses on community policing, city budgets, and economic development. The effort “will set a national standard for Digital Democracy.” One-Economy collaborates with a portal called BeeHive which wants users to bank with them and use their portal services.
| eVolvement put together a sweetheart package combining a $265,000 Meyer Memorial Trust grant with monies from Mt. Hood Cable Regulatory Commission ($148,000), Portland Police Bureau ($60,000), AT&T ($100,000) and others that total nearly $600,000. Their deal:
eVolvement got $600,000 in grants for this. The 6 month discount on cable modem service is AT&T’s standard promotion. Nothing special there. A friend of mine got his AT&T cable modem service for 6 months at $10/month. A community policing tie-in and a promised bulletin board is the value added. Comcast broadband is normally $39/mo. AT&T may be charging more in Portland because nobody can legally stop them.
Cheaper alternatives are available everywhere:
You could throw the entire $600,000 on a bonfire with nearly the same outcome. Because you could buy a new computer and monitor for about $400, the effective discount is about $150 per person or $60,000 for all 450 participants in the program. Let’s face it, at least half a million bucks appears to be going to “administration fees” – and to AT&T broadband. About 150 people in Gresham and 150 people in Beaverton will also participate.
eVolvement could spend $600,000 on users rather than themselves:
I’d spend $600,000 differently. I’d dump the expensive cable modem and deliver broadband, wirelessly. The first year would be FREE. After that broadband would be $14.95/mo. A $350 computer with $100 monitor would be equipped with a $150 wireless bridge using a WET-54 ($99) and +19dB panel ($35). It might cost $99 up front. A $350 Moxi box could be an option. It would rule the home.
Total cost would be the same; 450 computers x $500/each = $225,000. If someone wants cable modem service, great. AT&T provides $19.95/month broadband promotions to ANYONE. I’d provide access to COMPETITIVE ISPs. Computer labs with dozens of computers share DSL or T-1 lines. So can we. Local educational videos could be downloaded (via the city’s I-Net) at 10 times the speed of cable modems. Within our 1 mile range we could deliver an effective 10 Mbps.
Free is a very good price for one year. Do the math. A $100 DSL line divided by 10 homes equals $10/month.
|
A representative from AT&T cable told me they wrote a CHECK for $100,000 for this project. I’m not convinced. Maybe 20 percent tax breaks will help somebody, but it doesn’t lower costs.
It looks like a honey pot. It smells like a promotion.
