Comcast buys-off Government to Kill Competition

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Have you ever wondered why Comcast is such a terrible company? Why they have high prices, bad customer service, and you really don’t have any other options? This is because Comcast is a prime example of crony capitalism playing out. The company Comcast has bought off the right politicians in order to gain control over the cable industry, spending $19 million last year alone on lobbying, with 100 lobbyists on the payroll. A majority of Comcast’s $33 million worth of political contributions since 1989 have gone to Democrats, with President Obama number one on the receiving end. Comcast Foundation has disbursed $3 Billion to mostly left leaning political organizations since 2001. Other crony ties between government and Comcast include:

  • Comcast CEO Brian L. Roberts gives thousands in political contributions to Democrats, specifically Obama who he plays golf with
  • Comcast Executive Vice President David Cohen has visited the White House 14 times since 2010, raised $2 million for Obama, is a former aide to Democrat Governor Ed Rendell, major player in Comcast Foundation (and $3 billion distributed)
  • Comcast owns NBC, MSNBC which are well known for left bias, and blatant support for Democratic politics, President Obama, and Hillary Clinton

Comcast is buying Time Warner Cable for $45 billion, which requires approval from the Federal Communications Commission (FCC). But far from making sure the media stays absent of corruption, the FCC essentially ensures that the media and TV industry are in bed with the government. Just think of all the benefits and money politicians have gotten from Comcast, so it would only make sense that they will be rewarded. And if it costs that much for the FCC to approve one company buying another, how could any smaller companies compete with Comcast? FCC approval acts as a way for Comcast to crush their smaller competitors. In addition to Comcast having plenty of money to comply with the regulations of the FCC, the costs of which smaller companies cannot as easily absorb, the FCC could downright deny mergers of Comcast competitors, keeping companies that are not cronies of government smaller and less powerful. But why would the FCC play their game?

  • FCC Chairman Tom Wheeler is a former lobbyist for the Telecom industry, and was appointed to his position in 2013 by President Obama, raised somewhere between $700,000 and $1 million for Obama’s 2008 and 2012 campaigns, personally maxed out personal donations to DNC
  • Time Warner Cable has given $29 million to politicians since 1989, over half being Democrats
  • CEO of Time Warner Robert Marcus has given $8,500 to Dems since 2010
  • Time Warner PAC supports Democrats through “DNC Services Corporation, the DCCC, and the DSCC”
  • “Senator Chuck Schumer of New York, who has received donations from both companies, had to recuse himself from Senate business with the merger when it was revealed that his brother, Robert, was representing Time Warner.”

Knowing all this, it starts to become clear why Comcast pays so little attention to their customers: they don’t have to run a good business. Through positioning the company as friends of the government, they can get special treatment, while their competitors are disadvantaged by this relationship with government. Since 1972 cable providers have had to get a license from the FCC to provide this service. In 1992 Congress decided that prices were rising too quickly for cable, even though the number of channels was also increasing. They said that the high start-up costs of providing cable made it necessary for Congress to “solve” this problem with regulation. But more than 2 decades later, after the merger with Time Warner, Comcast will serve 33 million customers, one third of all cable and satellite TV subscribers in America.

One reason for this is that Congress does not know how to, or did not intend to actually increase competition in the cable industry. With price controls, it very well could have put Comcast competitors out of business. Those smaller companies may have charged slightly more for their service due to the higher start up costs, but provided better customer service, for instance. Since the FCC got to decide how much each company could charge, this favored large companies like Comcast whose competitors’ profits would be restricted. Another issue is that the FCC gets to force regulations on cable providers that could land small companies large fines that could bring down a business if they break one of the rules.

If violations of the rules are subsequently discovered, appropriate regulatory sanctions, including imposition of a monetary forfeiture and/or the issuance of a cease and/or desist order, may be employed.

Under a 1996 Act, small cable providers are exempt from price controls, but “A “small cable operator” is defined to include any operator that serves fewer than 1 percent of all subscribers in the United States and that is not affiliated with entities that have gross annual revenues exceeding $250 million.” But even a company that brings in $250 million in revenue each year is still only 1/250 the size of Comcast as measured by revenue. This means that a company right on the edge of earning that revenue may need to restrict expansion in order to avoid coming under price controls, which effectively limits competition from growing in opposition to Comcast.

And a further issue with legislation regulating cable providers, is that it established minimum requirements that the cable operators must provide for their customers, in order to form “a standard for improving the quality of customer service rendered by cable operators”. Again, this means that smaller companies are forced to provide a certain level of services to their customers, even if the customers were happy paying less for fewer, or different, services. Large companies like Comcast could easily comply with these standards, while the regulatory costs on small competitors are restrictive.

Right now, because of the FCC and other government actions, consumers do not have the proper choices for cable providers, that would have naturally arisen, absent regulation which has favored large, government connected companies like Comcast, due mostly to contributions to politicians made by Comcast and those affiliated with the company. The merger with Time Warner will further exacerbate this dominance, which the government has contributed to by implementing regulation which favored the two companies, to the detriment of smaller companies which would otherwise be able to compete.

This is why we have essentially no options when it comes to cable providers: cronyism. So the next time you are sitting on hold with Comcast for an hour, only to be told that they can’t help you, just remember why you have no options. The government, the FCC, Obama, and many other politicians have worked hard to restrict your access to choices when it comes to cable providers. Yet another reason to restrict government size and control.

2 thoughts on “Comcast buys-off Government to Kill Competition

  1. Pingback: Justice Department Selectively and Politically Approves Mergers | Vigilant Vote

  2. Pingback: TV Needs to Move to the Internet, Cable is Outdated | Vigilant Vote

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