05 Jun The all New Super Duper Mega Charter
According to the FCC the earlier proposed merger between the two largest Internet providers, Comcast and Time Warner Cable (TWC), was unfair to competition and was denied.
Now its Charters’ turn… wait who?
For those who haven’t heard that name before, Charter is a telecommunications company just like the giants listed above. Known mostly as the 4th place network in terms of total subscribers, Charter is more common in the mid-west and north-east areas of the country. While they may not have the reach or popularity of Comcast, they sure have the money.
Last year, Charter had ending revenue of $2.36 billion. This week, after about a year and a half of deliberation, a deal worth $78 billion in cash and stock has been reached. That’s roughly twice the offer that Comcast had conjured for TWC earlier this year.
The question becomes what this does to the market. The Comcast deal fell through because it had the possibility of creating an unfair monopoly through the merger of the two largest telecom companies. Charter thinks it can be different. In their opinion it is better to have a shared duopoly in the industry rather than a Comcast controlled monopoly.
The acquisition of TWC would put New Charter (the official new name) closer to the magnitude of Comcast. Nearly quadrupling their cable subscribers, New Charter would provide faster Internet for existing TWC customers, as well as have an impact on rising content costs. This way, according to them, they have the power to monitor Comcast and compete on a more reasonable level. The merger would also allow the new company to have combined purchasing power, overhead costs, product development, engineering, and IT.
In addition New Charter vows to uphold net neutrality. They want to be able to provide more for their customers without annoying data caps or limits. Comcast has had its full share of customer service and industry problems with multiple incidents over the past year that hurt their reputation. The fact that they own a TV programing company, NBC Universal, also puts them at a disadvantage in terms of industry fairness. Charter on the other hand does not have a stake and has the potential to be more open.
It is very possible that this merger could change the stakes, converting unhappy customers and shifting the scales.
Only time will tell if New Charter will actually stick to their claims. If this deal is approved by the FCC, their business will nearly quadruple, and they may take Comcast’s superiority down a notch.