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A breakdown of the Comcast-Time Warner Cable broadband combination

  • A compelling breakdown of the Comcast (CMCSA +0.7%) - Time Warner Cable (TWC +0.9%) merger by TechDirt concludes the combination of the two firms poses an "extraordinary danger" to consumers in the Internet service market.
  • Leaning on a tool of economists called the Herfindahl-Hischman Index, TechDirt notes that even before adding in the impact of adding TWC markets or splitting up territories between the brands - Comcast's broadband positions borders on anti-competitive. TWC adds another 13 bps of broadband market share, which under HHI is squared to add 169 points of damage.
  • HHI reading on TWC-CMCSA = 1600 + (13 x 13) = 1769 to fall in the "moderately concentrated" range before even all the other deal leverage possibilities such as sports, phone, and cable TV are added in.
Comments (5)
  • The Enterprising Value Inve...
    , contributor
    Comments (544) | Send Message
     
    For what it's worth, 13% is 1300 bps not 13. (100 bps = 1%)

     

    Second, an HHI reading of 1769 is quite benign by comparison to other industries.

     

    The US carbonated soft drink market is dominated by KO, PEP and DPS and has a HHI above 3500. The US cigarette market post the RAI and LO deal would have an HHI also above 3500. The US shaving razors market, dominated by PG and ENR, has an HHI above 7000.

     

    While the argument about regional concentration is a valid one, the article avoids discussing other competitors to cable broadband. Many markets have telco's that offer DSL, which while not as fast as cable, is still a broadband connection.
    4 Aug 2014, 01:59 PM Reply Like
  • BillBrown
    , contributor
    Comments (277) | Send Message
     
    I'll add that the analysis -- whether "right" or "wrong" -- is simply too technical. Whatever its merits, its technical nature ensures it will be NO MATCH and STEAM-ROLLED by the army of lobbyists and the industry-packed FCC commissioners who are CERTAIN to make this deal happen.
    4 Aug 2014, 02:06 PM Reply Like
  • db313706
    , contributor
    Comments (213) | Send Message
     
    A mathematical interpretation of screwing over customers, that's great.

     

    TWC is the worst company I've ever had the misfortune of dealing with. The quality of services and support rendered by them has continued to diminish for nearly a decade. I despise the fact that I've no alternative ISP to choose from. I despise even more knowing that this merger will most likely come to fruition.
    4 Aug 2014, 02:12 PM Reply Like
  • jman3136
    , contributor
    Comments (3) | Send Message
     
    I suspect the HH analysis by Techdirt erroneously does not consider wireless broadband to be competition. That's a major mistake. Wireless is increasingly competitive for many users.
    4 Aug 2014, 02:17 PM Reply Like
  • elig
    , contributor
    Comments (2) | Send Message
     
    twc & Comcast SUCK BIGTIME!! maybe a large enough volume of maiul to Congress and SEC FCC will have effect of stopping this. Don't just sit there, get on up!!!
    5 Aug 2014, 06:24 PM Reply Like
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