The proposed Comcast-Time Warner Cable merger has at least one high-profile backer here in Silicon Valley.
Carl Guardino, president of the Silicon Valley Leadership Group and an ever-present present figure in regional public policy discussions, wrote in a Forbes piece on Tuesday that he supports the deal. It would be good for consumers and would encourage competition rather than thwarting it, he said.
“There seems to be nothing but upside in this deal,” Guardino wrote.
While somewhat surprising, given the seemingly wary relationship between many folks in Silicon Valley and the big telecommunications companies, Guardino’s sentiments aren’t new. In fact, his Forbes piece is merely an extended version of a letter to the editor he sent to the Mercury News in February soon after the announcement of the deal.
What’s new in the Forbes piece is that Guardino purports to be speaking for Silicon Valley’s CEOs. While he can certainly claim to speak on behalf of the local tech business community on matters such as transportation and housing, one would think that there’s a diversity of opinion within the SVLG’s membership on this deal. Maybe that’s why Guardino doesn’t quote or even mention by name — a single Silicon Valley CEO in his piece — despite the claim of the headline that area CEO’s support the merger. (And, no, Mark Cuban, who’s based in Dallas, doesn’t count.)
Guardino’s prominence comes from being the head of an organization that represents Silicon Valley’s business interests in area discussions of public policy issues, including transportation, development and housing. But Steven Wright, SVLG’s Senior Vice President, said that despite the headline on the Forbes piece — “Silicon Valley CEOs support the Comcast-Time Warner Cable merger” — the views Guardino expressed are his own personal one’s and not those of the SVLG or its members.
Indeed, Joris Evers, a spokesman for Netflix, which is a a member of SVLG, said that while his company hadn’t taken a position on the merger, Guardino was not speaking on behalf of the streaming media company or its CEO Reed Hastings.
Guardino’s arguments read like they were taken directly from Comcast and Time Warner Cable’s own talking points in support of the deal. As those companies stress in their materials, he notes that the merger wouldn’t reduce competition in local cable markets, because Comcast and Time Warner Cable have different territories. And as they do, Guardino talks about all the competition in the delivery of video services, from satellite providers to Internet video providers including Netflix, Apple and Google.
He also touts the potentially favorable effect the deal would have on net neutrality, just like the cable companies do. Guardino notes that the deal would extent the protections of those principles, which basically seek to guarantee that consumers have equal access to all legal content on the Internet, regardless of who provides it, to millions of new Time Warner Cable customers. Although a federal court recently blocked the enforcement of net neutrality rules that would apply to all U.S. Internet service providers, Comcast is still governed by them, thanks to an agreement it made with federal regulators as part of its acquisition of NBC Universal in 2011.
That Guardino is echoing Comcast’s talking points may be less surprising when you consider that the Silicon Valley Leadership group counts among its members not just Google and Netflix, but also the cable giant and two other big telecom companies, AT&T and Verizon.
While it’s true that Comcast and Time Warner aren’t direct competitors, that doesn’t mean that their combination won’t affect competition. Together, they would provide 40 percent of the high-speed broadband connections in the country. That would put them in a prime place to block or thwart services that could pose a threat to their business, very much including the video service providers such as Netflix that Guardino touts. Block Netflix from reaching 40 percent of its potential customer base, and you deal it a staggering blow. Threaten to block a startup from reaching that audience, and it may never get off the ground.
That’s not just a theoretical concern. Netflix recently paid to upgrade its network interconnections with Comcast — going against long-standing industry practice — after seeing the quality of video delivered over Comcast’s network deteriorate when the broadband provider refused to upgrade those connections on its own.
For all of Guardino’s — and the cable companies’ — talk of competition, that competition is more imagined than real. While Comcast and other cable providers are seeing some competition in the provision of video services, they face little competition in the provision of high-speed Internet access or in triple-play services that combine video, phone and Internet access. And even their video competitors are fundamentally flawed.
Satellite companies may have gained some subscribers from cable companies such as Comcast, but they can’t provide a true triple play offering including video, phone and Internet service. Similarly, while consumers may be spending more time watching Netflix or other online video services, those services are dependent on companies like Comcast to deliver their video . Should Comcast choose to block or degrade their services — or simply refuse to upgrade its connections to them — those services could find themselves at a big competitive disadvantage.
And while it sounds great that more people would be subject to net neutrality rules, the fact is that the rules governing Comcast are set to expire in 2018 and they did nothing to prevent the company from degrading consumers’ access to Netflix.
Guardino, meanwhile, fails to note that the merger will evaluated through another prism than just competition — whether it is in the public interest. As I noted in a recent column, the answer to that question is clearly no, because it won’t address consumers’ chief concerns about their broadband service — its high price and the lousy customer service they typically receive.
So, yes, Comcast and Time-Warner Cable have a high-profile local backer. But that doesn’t make their deal any better for area consumers or companies.
Update: In an email, SVLG Senior Vice President Steven Wright said that the headline on Guardino’s Forbes piece was inaccurate. Guardino wasn’t speaking on behalf of Silicon Valley CEOs; instead the piece was his “personal view,” Wright said. The story has been updated to reflect Wright’s comments.
Comcast logo courtesy of the company.