Verizon and cable: bad for the country

Verizon’s push to acquire additional portions of the nation’s airwaves, along with cross-marketing with cable companies, has the potential to stop expansion of high-speed broadband, stifle competition, and drive down wages. Some national media have noticed the threat and have sounded an alarm.

In a Christmas eve editorial, The New York Times noted:

“When Congress deregulated telecommunications 15 years ago, it was counting on a burst of competition among phone companies, cable carriers and other high-tech newcomers. Instead, we have seen a relentless push for consolidation within and across technological platforms, carving the market into national and regional oligopolies.”
The problem isn’t new, however. Almost since the development of consumer cable, the companies have refused to compete in each other’s geographies, buying up smaller companies and creating regional monopolies with national market power.

Verizon's FiOS build (along with AT&T's U-Verse) promised to challenge the cable companies' dominance of the video and high-speed broadband market. But as the San Jose Mercury News said, the Verizon/cable deal will put an end to that potential as Verizon pulls back on its FiOS expansion. “With these announcements, the companies have doubled down on their market-division schemes. This is a type of anti-competitive cooperation that would make even an old railroad monopolist blush.”

These stinging editorial positions ignore another negative consequence of the Verizon/cable joint marketing agreement -- the downward effect on wages – unlike the now-scuttled AT&T/T-Mobile merger which would have preserved union rights and kept decent wages. Cable has been built on a low-wage, low benefit, outsourced labor policy, and Verizon, by joining forces to market the non-union cable companies' video rather than growing its FiOS deployment will be pulling the rug out from under its unionized wireline workers.

In all, the Verizon/cable deal raises serious questions, and the media are right to raise them.

Verizon’s Worrisome Cable Deals (Dec. 24, 2011)

The Verizon-cable deal would end competition and incentives to innovate (Dec. 21, 2011)