The FCC should Approve the Charter-Cox Merger
By Rohan Naval
A free market is the best way to provide goods and services. The best use of government is in enforcing contracts, not drafting them. As Charter Communications and Cox Communications enter an agreement for a merger, the Federal Communications Commission should approve this deal that will benefit consumers and stand for free-market principles.
The merger between the two cable companies is expected to help a combined 36.6 million subscribers across America. Cox Communications currently operates in six states, all of which are areas that Charter Communications does not currently have service in. No overlapping markets means that Charter is not absorbing a direct competitor but consolidating an industry to better compete with other technologies.
Too often, the FCC operates under outdated rules and assumptions that fail to account for technological changes. This is not always the fault of the agency itself but its authorizing statutes that are frozen in time as the market changes and technology advances. Cable was for decades regarded as a “natural monopoly” since it was not considered feasible for municipalities to host multiple, overlapping wires on its telephone poles or under its streets.
But this is 20th century thinking. As the cable industry has pivoted from television to internet service, they now compete with satellite and fixed terrestrial wireless ISPs. A merger between Charter and Cox can only be seen as anti-competitive move if you gerrymander the market definition to segregate technologies into separate industries when they compete directly with one another.
In assessing potential mergers, the FCC should exhibit humility in what it can predict about the future course of technological advancement. It should also hold the consumer harm standard, long the basis of American antitrust law. This standard holds that the government must prove that companies are not merely big or endowed with great market power, but that their actions actually harm consumers by restricting choice.
This merger will make it possible for Charter to provide connectivity to new customers, helping more Americans in different states. This also provides new customers access to their recent broadband deployment, which would align with the FCC’s vision of broadband expansion.
In addition to these benefits, this merger will deliver lower costs for consumers. The merger details announce an initial savings of $500 million over the next two years, with even more savings to come as cloud, IT, and sales operations are merged over the coming years. The wireline internet, mobile, and video marketplace has never been more competitive, and this merger helps solidify competition by providing a superior product to consumers at a lower cost. Far from raising antitrust concerns, this merger serves consumer and provider interests at the same time.
The FCC should allow this merger to go forward in the interest of consumers, providers, and the FCC’s stated objectives. This deal is a good example of fulfilling all the FCC’s priorities – allowing the merger to move forward would be another step in getting them accomplished.