If you hadn’t noticed, Hawaii is an isolated island state dependent on connectivity. Our cable and broadband must be the best we can find. We need every megabit we can get. The faster it is, the less isolated we are.
We often have to beat a path to new technology. But when opportunity knocks, we need to open the door and let it in.
Right now, it’s knocking. Comcast is merging with Time Warner Cable. They struck a deal in February and applied to local, state and federal regulators for approval.
This is a $45 billion stock-for-equity merger in which Comcast will acquire TWC. They are the two largest U.S. cable providers. It’s a sign of the times, the technology and a consolidation in the industry.
Comcast says it will have some 30 percent of the national cable market and its customers will go from 22 million to 30 million. It would be adding Los Angeles, New York and Dallas and will be the largest in the country.
Consumer groups fear this would make Comcast too powerful. They want to block the merger. Comcast says there’s nothing to worry about because the parties are not currently competitors in any market and because other companies will still be competing with them.
Comcast says the merger will create a world-class communications and media company, better positioned than either of the parties to bring consumers the advanced services they will want now and in the future, and to put America at the forefront.
For state approval, the Department of Commerce and Consumer Affairs must find that Comcast has the legal, financial and technical qualifications for the merger. The DCCA had public hearings in July and is expected to rule on Sept. 19. The state Public Utilities Commission also has been asked to waive or approve certain aspects of the merger.
For national approval, the Federal Communications Commission must find that the merger is "in the public interest." It received more than 50,000 comments prior to the Aug. 25 deadline and awaits antitrust advice from the Department of Justice. Analysts expect that the FCC will approve the deal in January.
Most recently, the FCC has asked the merger parties for additional information about savings and benefits to consumers, competition in the affected markets, data caps and traffic management practices. The answers are due Sept. 11 but will be proprietary.
The mayors of 52 cities, including Mayor Bernard Carvalho of Kauai, support the merger. They said it will bring new investment and better service. Mayors from big TWC markets like New York and Los Angeles were not included.
Those who oppose the deal argue that the merged entity would dominate the market and consumers would have less leverage. But TWC is already a dominant player in Hawaii. What’s the difference, especially with competition by Hawaiian Telcom?
Many assurances have been made in support of the merger. Comcast presumably means what it says and is in a position to make good on these assurances, but we will want to make sure that happens.
Comcast said that it will invest billions; upgrade the network to all-digital; roll out its X1 cable platform; provide faster broadband (more than 500 megabits); abide by FCC Open Internet rules on net neutrality; provide advanced video-on-demand, TV and voice technology; and offer diversity programs. It also said the merger itself will not result in any price increases.
Although DCCA is unlikely to condition approval of the merger on such assurances, TWC franchise renewals could be conditioned on Comcast’s performance of these assurances. Likewise, a merger approval by the FCC might include conditions along those lines.
Just as DCCA and the PUC have engaged with the merger parties prior to approval, these regulators should continue that engagement after approval. Indeed, they have an ongoing role to ensure that Comcast meets its obligations and assurances.
As we move deeper into the 21st century, we will need big capital and economies of scale to keep Hawaii moving on cable and broadband. This calls for big companies, a phenomenon with which we are well acquainted. It also calls for down-line vigilance by the regulators.
Hawaii’s future is online. Everything we do, including our business, medical and financial records, even our social media, is there. We will need bigger pipes for the new Ultra HD 4K TV technology. In short, we will need much more speed and capacity in the years to come.
Like it or not, we are in a race against isolation. Many other places are ahead of us. If we want to keep up, or go to new levels, we need to open the door.
Jay Fidell, a longtime business lawyer, founded ThinkTech Hawaii, a digital media company that reports on Hawaii’s tech and energy sectors of the economy. Reach him at fidell@lava.net.
