clock menu more-arrow no yes

This summer will change the internet and media forever

One way or another, we're all getting in Comcast's van.
One way or another, we're all getting in Comcast's van.
The Verge

Watching today's House Judiciary Committee hearing on Comcast's proposed merger with Time Warner Cable — a masterful exercise in lawyerly misdirection as Comcast trots out everything from iPhones to Netflix to Google Fiber as existential threats to its business — it's hard not be struck by the enormous tidal waves of change sweeping over the media business this summer. It is entirely possible that 2014 will end with the traditional cable bundle broken, a fundamental change to the free and open internet, and the emergence of Comcast as a telecom behemoth more powerful than the old AT&T even dared to dream.

It is also possible the complete opposite of those things will happen.

The direction and scale of these titanic shifts are entirely in the hands of our government, various departments of which are wrestling with three major decisions: the Supreme Court is deciding whether or not a company called Aereo can stream broadcast channels like NBC and Fox to customers over the internet, the FCC and DOJ will decide if Comcast will be allowed to buy Time Warner Cable, and the FCC is about to vote on a controversial new set of Open Internet rules that will create "fast lanes" for companies that pay extra. Each decision has individually occupied hundreds of lawyers and lobbyists, but all three together makes for a formidable wrecking ball that hasn't yet begun to swing.

May 15th: The FCC's Open Internet rules

At this point it's fair to call the furor over the FCC's Open Internet rulemaking process a full-on crisis. The short version is that the FCC's old net neutrality rules preventing ISPs like Comcast from throttling services like Netflix were thrown out by a federal court in February, and new FCC Chairman Tom Wheeler responded with a new set of rules that basically everyone hates... except ISPs like Comcast. (This is where a cynical person points out that Wheeler used to be a prominent cable industry lobbyist.)

Wheeler's new rules would allow ISPs to create "fast lanes" on their services that a company like Apple could pay to use, so (for example) iTunes movies would stream better than Google Play movies. That would fundamentally change the entire way American businesses and consumers have experienced so far, and as more and more media moves to the internet (see the Aereo decision below) it could change the fundamental costs of publishing.

Consumer groups have been fighting these new rules for weeks, and last night, a huge coalition of companies including Amazon, Microsoft, Facebook, Twitter, and Dropbox all published a letter demanding tougher rules prohibiting fast lanes. Wheeler's due to release his draft rules on May 15th — and that's when this fight will really begin.

Late May or June: Aereo

Aereo has a simple, and simply ridiculous, business plan: for $8 a month, you rent a tiny antenna in their data center that can pick up the free broadcasts of networks like ABC, NBC, CBS, and Fox, and then you record and stream those channels to your phone, tablet, or PC over the internet. (It's basically a giant virtual Slingbox.) The broadcast networks, which collect huge fees from cable companies like Comcast and Cablevision for the rights to transmit their signals, hate this — and they hate Aereo. So they've sued, and now the decision over whether Aereo is legal rests with the Supreme Court.

Here's why this matters: if Aereo is legal, there's nothing stopping Comcast or RCN from dropping its billion-dollar retransmission agreements with ABC or Fox and setting up a similar technology, which would essentially give them the same programming for free. The danger to that business is so great that some broadcast networks have threatened to go completely off the air if Aereo wins and become regular cable channels like AMC or MTV.

But for consumers, Aereo winning is terrific news: not only will it be easier and simpler to stream broadcast channels, it'll be easier to cut the cable cord, since you'll still be able to watch live events like NFL games and awards shows. And having cable companies and broadcasters fundamentally rethink their agreements is a good thing: that's what's preventing us from moving beyond all those clunky cable boxes and too-expensive bundles in the first place. Aereo's a little company with a goofy business model designed to jump through the goofy hoops of copyright law, but this case is the one that could force TV and the internet to finally start talking to each other.

All summer long, forever: Comcast buying Time Warner Cable

It's impossible to overstate how massive Comcast will become if it's allowed to buy Time Warner Cable. The combined company will have 31 million TV customers and 32 million broadband subscribers, dwarfing every other company in the United States. It will be the only major service provider in 19 of 20 major American cities. And it will also own NBC Universal, which means it will control a massive number of cable channels, film studios, production companies, MSNBC, and NBC itself. (My favorite NCBU channel is the low-budget mystery network Cloo, which, well, just look at the logo.)

Comcast is so big and powerful that its lawyers have had to conjure up the ghosts and goblins of meaningful competition out the shadows of other companies in order to make it seem like the merger isn't flatly anticompetitive. Apple and Google and Netflix all stream video, so they're cast as competitors to Comcast's TV business... even though you need Comcast's broadband service to get them. Verizon Wireless and AT&T sell mobile broadband, so they're being cast as competitors to Comcast's internet business... even though no sane human would pay Verizon's prices for the same amount of data in the average Comcast plan.

But Comcast's silly protestations are but a sideshow to the main event, which is what happens when all the lobbyists lobby, all the grease is greased, and the merger finally, inevitably goes through. What happens when a single company owns a massive chunk of information production and controls the twin massive distribution systems of television and the internet? What does meaningful competition to such a behemoth even look like? And is it even possible for Time Warner Cable's service in New York City to get worse?

Make no mistake: each of these three decisions alone will have lasting effects on the economics of the internet and media. But add them all up, and you've got the recipe for a single summer that will radically change the entire industry one way or another.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.