Friday, February 14, 2014

The Comcast $45 b Merger: Will Rampant Neoliberalism Prevail Again?

According to Wikipedia:

"The Sherman Antitrust Act (Sherman Act,[1] July 2, 1890, ch. 647, 26 Stat. 209, 15 U.S.C. §§ 17) is a landmark federal statute on United States competition law passed by Congress in 1890. It prohibits certain business activities that federal government regulators deem to be anticompetitive, and requires the federal government to investigate and pursue trusts.  It has since, more broadly, been used to oppose the combination of entities that could potentially harm competition, such as monopolies or cartels. According to its authors, it was not intended to impact market gains obtained by honest means, by benefiting the consumer more than the competitors"

This is relevant now as the news that the largest cable provider in the U.S. plans to buy the second largest cable company, Time Warner Cable, for $45 billion is an obvious antitrust violation.  It will create a gigantic media-telecommunications monstrosity that will not only be able to control consumer access but content.  It will also drive up the costs of cable TV - perhaps as much as 14%.
We all expected this when the 1996 Telecommunications Act was passed under Clinton's watch, and while it was touted as a pathway to greater competition and lower costs, that wasn't how it panned out. Indeed, within a year Comcast had driven out all competition in Maryland, as cable prices soared.  But none of us familiar with the Neoliberal idiom thought anything different would happen. We understand that the dictates of  Neoliberalism actually require a coercive market, meaning choices collapse and citizens are left with few options. (Given Neoliberalism demands a retraction of citizen security on all fronts.)
One of the classic examples has been book publishing What had been a vigorous industry of competition with 30 or more publishers at the end of the 1960s has now mutated into one controlled by 2-3 mega-players like Bertelsmann AG. Why does it matter? Because firstly, reading options can be severely foreclosed. Hard hitting atheist books, for example, will be much less likely to be published, certainly by a major company. This means far less exposure. Ditto for books that reject the Warren Commission conclusion to do with the Kennedy assassination. In many cases then, authors may be forced to take the route of self-publishing.

 Secondly, this accounts for why midlist or lower authors who could find a niche and make a living some 45 years ago can no longer do so.  The multinational publishers barely look at an unknown, they're not certifiably profitable enough. While small independent publishers in the 60s would tolerate even a 5-6% profit margin and often less, the big players today demand 15% or more. Thus, they won't take an author on unless s/he's a J.K. Rowling or Tom Clancy.
In the case of telecommunications the issues are more critical for many more citizens, because what's at stake is not only content and cost, but access.  Jodie Griffin, senior staff attorney at the consumer rights group, Public Knowledge, made it clear:
"This is a deal that needs to be blocked"
. She said Comcast would use the leverage to "drive up costs and reduce choices for consumers."
She also added it would be a 'gatekeeper' - throttling competition.

How big a deal is this merger? After it occurs, if it does,  Comcast would boast 33 million broadband Internet subscribers and control half the market for so-called triple play (broadband, TV, telephone) access in the U.S. As GigaOm immediately pointed out, this is best understood as a broadband Internet play, not a traditional cable-TV access move.  Also noted by GigaOm:

"If it is allowed to gobble up its number two rival, Time Warner Cable. Philadelphia-based Comcast will become the largest broadband provider in the United States, and perhaps the largest outside China.”
Those are numbers that should give pause to every Netflix-watcher, as well as YouTube users, Spotify streamers, or any other consumer of high-bandwidth Internet services.The sheer physical reality of our nation’s telecommunication infrastructure means that whoever controls the cable network has the biggest leg up in the Internet access sweepstakes. Verizon and Google are attempting to roll out fiber-optic “last mile” networks that can compete effectively with cable speeds, but right now, the cable companies already own a considerable advantage over all their competitors in terms of being able to offer the fastest download and upload speeds.

This is a BIG deal unless you are like me, and don't fret over slower speeds. (I do something else like read a book if a DL - say of an MIT physics lecture - is taking longer).
A post-merger Comcast operating in a marketplace in which the courts have ruled against network neutrality would be immensely powerful, able to dictate bandwidth consumption fees to consumers and content providers at will.  But this is the very essence of the Neoliberal market imperative, which isn't about competition or lower costs for consumers but rather more profits for the mega-companies that contribute more in political largesse to our Neoliberal pols.
The onset of the Neoliberal meme was well articulated by Robert McChesney in his excellent book, The Problem of the Media, Monthly Review Press, 2004, p. 49:

"With the election of Ronald Reagan, the neoliberal movement had commenced. Neoliberal ideology became hegemonic not only among Republicans but also in the Democratic Party of Bill Clinton, Al Gore, and Joseph Liebermann. Differences remained on timing and specifics, but on core issues both parties agreed that business was the rightful ruler over society.

It was a return to the 1920s - if not the Gilded Age of the late nineteenth century. Few industries seized the neoliberal high ground as firmly as the media and communications industries.

A new generation of economists trumpeted the value of applying market principles to all communication policy matters, as one of them put it, 'the ancient regime was often dominated by ad hoc prescriptions premised on shaky economics applied to dubious histories'."
In other words, a coercive market via mergers is created, which exists in order to self-reinforce the Neoliberal political and media establishment that already exists. Don't believe me? Look back at November and the travesty of how the 50th anniversary of the JFK assassination was reported by ALL the media! It was uniformly portrayed as being a "settled issue" and Lee Harvey Oswald dunnit- never mind I showed the opposite in my blog posts for that month. This is one example - a critical  one- of how a uniform, undifferentiated media can manipulate thought and debate.
Given the stakes in this merger decision,  Tom Wheeler, the newly installed chairman of the FCC — will be on the hot seat. Will he disclose himself to be a Neoliberal lackey, or do the right thing and kill this deal where it stands?   The omens aren't fortuitous given Wheeler is a former cable industry lobbyist. This alone exposes the intrusion of the Neoliberal virus into our political-economic landscape. Because in a true liberal,  market competitive arena there'd be no transitions between "foxes" and the "hen house".  In this way, we'd be assured no fox is guarding the henhouse, as we too often behold with federal agencies in this country.
We also know that in the Neoliberal gestalt, tricks and gimmicks can be used to ease the corporate consolidations and monopolies.  Early analysis of this  proposed merger suggests that Comcast might evade antitrust scrutiny by shedding 3 million or so cable-TV subscribers, giving it just under one-third of the total number of such subscribers in the U.S. But don’t be fooled by this tactic.  Netflix CEO Reed Hastings has attacked Comcast, has accused the cable firm of capping data it provides to streaming companies like his own in order to favor Comcast’s own Xfinity video-on-demand. Recent studies show that Comcast users receive their Netflix media at significantly slower speeds than those using other internet service providers.

The Neoliberal puppets (as in the WaPo comments the other day) who defend the upcoming merger in "free market" terms, argue along the lines of "Well, in true competition Time -Warner lost out to Comcast so should be taken over."  Thereby, disclosing they have no clue. How to know if a market is free or coerced? Charles Reich provided the test in his 'Opposing the System’, 1995, p. 22:

"A free market produces results that favor the health of society as a whole, because an essential balance is maintained. But in a coercive market, the balance is destroyed, the earning power of work and the standard of living of workers declines, and society as a whole is devastated while those with economic power gain an ever more unbalanced share of the nation's economic wealth"

This is exactly what we have with the top 1% controlling 57% of the nation's wealth, and 400 billionaires with the same monetary resources as 150 million fellow citizens!
Keep an eye on the aftermath if this merger is approved by the FCC. If you're not convinced already, the likely approval and negative effects ought to finally convince you we are inhabiting a Neoliberal Corporatocracy, as opposed to any genuine, free market democracy!


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