Should We Fret Over Another Cable Marriage?

  • Share
  • Read Later
Forget the Jurassic period: If you want to see giants roaming the earth, just check out your paper's business section. We're talking mergers, of course, and the latest loomed large on Thursday with Justice Department trustbusters' approval of AT&T's acquisition of cable giant MediaOne, a corporate marriage that will create America's largest cable provider. If the other regulatory body involved, the Federal Communications Commission, gives AT&T the nod, the corporation will have successfully transformed itself from an old-school telephone giant into a high-tech force to be reckoned with — and will have done so remarkably quickly. Only Time Warner (the parent company of would rival the AT&T-MediaOne mega-company.

So what, you might say, does the current mad rush to consolidate mean for those of us who are faced with a single cable provider anyway? Does it really matter whether the monopoly covers just our city or extends across the country? If you were talking 10 years ago, when cable just meant the provision of TV signals, the answer probably would be no. But cable isn't just about getting a clear picture of your favorite baseball team anymore. It's about broadband — high-speed Internet access, television programming and telephone all coming down the same tube. And with that spicy mixture, you might not want it all to be controlled by one entity, a situation highlighted a few weeks back when Time Warner Cable blacked out programming from the rival Disney Company in a dispute over fees. It's a point taken seriously by the DOJ, which made both AT&T and MediaOne divest themselves of their shares in RoadRunner, the cable-based Internet service (also owned by Time Warner).

Not everyone is worried. Some analysts have theorized that the AT&T-MediaOne merger might actually be good for competition, because tentacles of the resultant giant would work their way into communities previously dependent on one cable or Internet provider, challenging the status quo and presumably forcing prices down. There is also the growing realization that cable lines will not be the only broadband entryway to people's homes forever: Advances in satellite technology and improvements in phone lines will no doubt mean increased competition at this crucial part of the information-delivery chain.

Meanwhile, though, we have to look to Washington for assurances, and that's a little fuzzy. According to TIME financial correspondent Bernard Baumohl, although there are certain immutable red flags that signal monopoly power, the Justice Department and FCC each have their own way of doing things, which can be trying for companies who need the go-ahead from both agencies to continue a merger or acquisition. "While the DOJ maintains long-standing, black-and-white parameters to seek out monopolies, the FCC tends to undertake a far more subjective and changeable analysis," says Baumohl. AT&T, take note: While it's extremely rare for the FCC to challenge DOJ findings, the possibility is out there.