Friday, April 17, 2015

Antitrust Lawyers Lean Towards Blocking Comcast Acquisition of Time Warner Cable

Staff attorneys at the Justice Department’s antitrust division are nearing a recommendation to block Comcast Corp.’s bid to buy Time Warner Cable Inc., according to Bloomberg. At least initially, many observers believed the deal would be approved, in large part because the relevant market was deemed to be “linear video.”

Comcast said it would divest enough video customers to keep the company’s share of the national market at or below the 30-percent threshold historically applied by antitrust authorities.

The problem, others pointed out, is that video increasingly is not the relevant market. That would be market share in the high speed access market, where a combined Comcast and Time Warner Cable would have about 40 percent share of the high speed access market, and an incomparably high share of faster speed connections, even before Comcast upgrades all U.S. locations to a gigabit.

If the Comcast acquisition were allowed, Comcast would have more than 57 percent market share of all U.S. high speed access connections operating at 25 Mbps or faster.

Looking only at homes able to buy gigabit high speed access, Comcast would, at more than 21 million locations, vastly outstrip all other gigabit providers put together. If one assumes that networks capable of a gigabit, supplied by all other competitors, could soon pass half a million U.S. homes, Comcast would represent 98 percent of all connections.

That is likely to be too great a degree of concentration for antitrust lawyers.

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