ITIF Argues Comcast, Time Warner Merger Will Not Negatively Impact Consumers

February 13, 2014

WASHINGTON (February 13, 2014) - Following the announcement that Comcast and Time Warner have agreed to a merger, Doug Brake, Telecom Policy Analyst for the Information Technology and Information Foundation, releases the following statement:

"Given the size of Comcast and Time Warner and the sheer volume of consumers that will be affected by this merger it is perfectly reasonable for the deal to be analyzed thoroughly by the government with requisite due diligence. However, knee-jerk, negative reactions to the merger by some 'advocates,' who often reflexively oppose any consolidation as bad for consumers, are misguided and distracting from the legitimate policy dialogue.

The key fact of this merger is that these two companies do not have overlapping service areas and do not compete against each other in any market. Given this, there will be no change at all to consumer-facing competition in the pay television or broadband space. In fact, the combined company may well enhance intermodal competition, putting it on an equal footing with DBS providers. The merger could also strengthen Comcast's development of its Hotspot 2.0 technology, potentially boosting competition between cable and wireless providers in broadband access.

In addition, the economic benefits of the combined efficiencies and economies of scale will flow to consumers in the form of lower prices and/or higher quality service. Comcast expects to save about $1.5 billion in annual operating efficiencies through the deal. The combined company, which will have 30% of the pay TV market, will also be able to drive harder bargains with upstream content providers, resulting in savings that will be passed on to cable subscribers.

ITIF urges regulators to examine all facets of this merger and make decisions based on what is best for the overall U.S. economy, including consumer welfare and U.S. telecommunications innovation, as opposed to focusing on hyperbolic over-reactions not based in fact."

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The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.