Economist Joel Maxcy: Comcast/Time Warner Merger Will Lead To Higher Rates And Fewer Choices
By Chris Stigall
PHILADELPHIA (CBS) -- Chris Stigall spoke with economist and Temple professor Joel Maxcy this morning on Talk Radio 1210 WPHT about Comcast's attempt to purchase Time Warner Cable.
"My concern is the merger and the consolidation of the cable and internet delivery system for consumers and what will happen to internet and cable rates and choices," Maxcy said, voicing his hesitancy about a deal that merges the nation's two largest cable providers.
"As that industry has gotten more consolidated over time, we have seen rates go up. The answer from them is that we've got more choices. Are we better off or not better off? I don't know, but certainly rates have gone up at a much faster rate than the inflation rate," Maxcy said. "The result of more monopoly power is always higher prices and less choices and it seems that this merger moves in that direction."
Stigall asked Maxcy to consider the current environment for the cable industry with competition from Netflix, Hulu, Apple TV, and others. Maxcy replied, "The threat from non-network content providers is a concern for the cable industry. We're moving to a situation where we don't need cable, but we still need the internet and the cable companies are the ones that have control of that."
Maxcy said the merger, for Comcast in this case, will give the cable providers more leverage against both online-based services and the consumer.
"Consolidating them together makes them more competitive against the outside forces, but the other argument makes the whole thing less competitive so they'll have more ability to control the access to Netflix, YouTube and the like. People that may develop other similar sorts of services will have a hard time getting the access they would like to purchase those," Maxcy said.
Comcast agreed to purchase Time Warner Cable earlier this month for $45 Billion. The deal must now wait for FCC approval.