In 2002, Comcast and AT&T, the two largest telecommunications companies in the USA finalised a deal which merged their broadband divisions, making them the largest provider of broadband in the country and utterly destroying a large amount of competition. C. Michael Armstrong, then CEO of AT&T said of the deal that “Our shareowners and our employees will both benefit from the industry-leading growth we will achieve.” What Armstrong failed to acknowledge was that the merger allowed the companies to farm high sums of money from the consumer because, well, where else were they to go?
Today we’re seeing something just as dangerous, and the most terrifying part? It’s the same two monolithic companies expanding. Comcast and AT&T are currently pursuing mergers with other large scale telecommunications companies such as, Time Warner Cable and DirecTV.
The argument from both providers seems justifiable: with the advent of internet television, traditional cable companies need to be bigger and therefore have a better capacity to keep up with the competition. That seems understandable, but there’s a problem. AT&T Comcast is the largest provider of broadband in the USA, with the Time Warner merger they’ll provide two thirds of the country’s broadband, and in the last year AT&T’s U-Verse high speed broadband service saw a 29% increase in profit due largely to the advent of streamed television. The competition that AT&T and Comcast claim they have to fight against doesn’t exist, because they’re massively profiting from online streaming, not making losses at all.
So if the merger isn’t necessary for keeping up with competition, because there is no significant competition to keep up with, what is it for? To destroy competition altogether, and move towards a monopoly. With both Comcast and AT&T growing exponentially, the consumer is having less and less choice over where to get their telecommunications from, leading the companies to exploit their consumers, both financially and in their services, because it leaves them with nowhere else to go. It’s an example of barefaced corruption by two media giants that sets a very scary precedent about the role of the provider and the consumer.
“But,” you may think “why should what’s happening in regards to American companies be in any way significant to me? It’s not happening in the UK and I’m not being exploited, so why should I care?” The thing is, the American business model is the one the Western world follows, and if US telecommunications providers send the message that we should be aiming to monopolise, UK companies might very well follow suit – that is something to be very wary of.
The UK Parliament has drawn up some anti-monopoly laws in the past, notably the Competition Act 1998 and the Enterprise Act 2002. These allow the government to supervise the mergers and acquisitions of large corporations through the two non-departmental bodies, the Competition and Markets Authority and the Office of fair trading. Yet the effectiveness of these bodies are sometimes questionable.
If you end up having to pay even more extortionate prices for mobile phone contracts, if the one or two sole providers of broadband in the country decide your area is not profitable enough, if you’re forced to lose net neutrality, to pay package deals to visit certain sites – it will be because of what’s going on now, and it has to be stopped.