David Cohen, Comcast Corp.’s executive vice president and the mastermind behind its deal to buy Time Warner Cable Inc., sounded pugnacious and confident on a recent conference call with investors. Regulatory and antitrust approval of the deal, he says, will happen within the next nine to 12 months. But even Cohen had to acknowledge that the public might be worried about the power of this combination. “It may sound scary,” he said.
The reason this deal is scary is that for the vast majority of businesses in 19 of the 20 largest metropolitan areas in the country, their only choice for a high-capacity wired connection will be Comcast. Comcast, in turn, has its own built-in conflicts of interest: It will be serving the interests of its shareholders by keeping investments in its network as low as possible — in particular, making no move to provide the world- class fiber-optic connections that are now standard and cheap in other countries — and extracting as much rent as it can, in all kinds of ways.
Comcast, for purposes of today’s public, is calling itself a “cable company.” It no longer is. Comcast sells infrastructure subject to neither competition nor a cop on the beat.
For a country attempting to compete on the global stage, this is a problem. It’s time to recognize that industrial policy is called for. We can’t allow our future to be captured by the short-term cash flow desires of Comcast’s investors.
The Department of Justice has a problem: It doesn’t do industrial policy. It can’t create competition where none exists. It can’t mandate that all U.S. businesses have world-class, inexpensive fiber-optic connections. But the Federal Communications Commission and the executive branch can.
If all of this sounds technical, try this: We’re all the people of Fort Lee, N.J., trying to get on the George Washington Bridge. There’s a bully narrowing our access to the world whose interests aren’t aligned with ours. Let’s be clear: This is old-school monopolistic behavior.
Whatever happens to this particular combination, let’s keep the bigger picture in mind: High-speed wired connections are now infrastructure, just like bridges, roads and water. We can’t flourish as a country unless someone takes the long view and ensures that American businesses aren’t forced to pay whatever tribute Comcast demands in order to thrive.Susan Crawford, the John A. Reilly visiting professor in intellectual property at Harvard Law School, wrote this for Bloomberg News.