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CONTACT: Patrick Ross
July 13, 2005
(202) 289-8928
Adelphia Purchase Benefits Consumers
FCC Told of Merits of Comcast-Time Warner Acquisition

WASHINGTON D.C. - Ignore the apocalyptic rhetoric from so-called consumer groups surrounding the proposed purchase of Adelphia by Comcast and Time Warner, a senior fellow for The Progress & Freedom Foundation is telling the Federal Communications Commission in a paper filed at the agency. The bombast is particularly unfounded, writes Adam Thierer, director of PFF's Center for Digital Media Freedom, because "the deal will do little to alter the balance of power in the national multichannel video marketplace and can only benefit consumers in the regions Adelphia serves currently."

In "The Comcast-Time Warner Deal for Adelphia: Much Ado About Nothing," Thierer and economist Daniel English reach four key conclusions:

  • The Comcast-Time Warner deal for Adelphia will benefit consumers with new products, improved services and upgraded networks -- something smaller operators could not easily provide.
  • The relevant market for analysis on the deal must also include DBS, the Bells and other new services as cable competes intensely with each.
  • Comcast and Time Warner's increased market share will not increase the combined entities' incentives for anticompetitive behavior, limiting access or price gouging because the deal will not give either firm the market power to do so.
  • Fears about a "closed" Internet are unfounded as openness is in the broadband providers' best economic interest. Mandating forced access or "Net neutrality" regulations would be misguided since it would open the door to increased government meddling in the rapidly evolving market for broadband services and could discourage further network innovation and investment.

The FCC is reviewing the acquisition of Adelphia by the two cable companies. Adelphia filed for bankruptcy in June 2002 and recently settled with the government for $715 million to compensate investors for their losses, following an extensive fraud investigation.

In the paper, Thierer and English examine the multichannel video programming distributor marketplace and find it "far more dynamic and competitive than many acknowledge." "If policymakers myopically limit the scope and review to merely the video programming market," write Thierer and English, "they will have seriously underestimated the scope and nature of the new information marketplace in which Comcast and Time Warner compete." Prompt FCC approval of the acquisition is called for, they argue. "Indeed, consumers -- Adelphia subscribers in particular -- will only benefit from the transaction."

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation