State swears it can improve New York’s cable and Internet service

 

Cable TV and Internet operator Comcast is raising its profile in New York. For one thing, it wants to pull the GE sign from atop 30 Rockefeller Plaza, and put its name up in its place.

Comcast-LogoBut the biggie is Comcast’s wish to take over Time Warner Cable, the state’s dominant cable and Internet operator. Time Warner operates in nearly all of New York’s 62 counties. It’s in four of the five New York City boroughs — it serves all of Manhattan, Queens and Staten Island, as well as the northwest corner of Brooklyn.

The merger faces a gantlet of reviews by Washington bureaucrats and politicians. It also faces scrutiny in New York, thanks to a state law passed in April that gives the Public Service Commission the power to veto cable franchise agreements if they are not in the public interest.

What does that mean? Public Service Commission chairperson Audrey Zibelman explains: “To determine whether the proposed transaction is in the public interest, the Commission will examine the proposal to ensure services the merged company would provide will be better than the service customers currently receive.”

Another clue about the state’s intentions for the merger, from a press release by Gov. Cuomo’s office last month:The PSC will critically review the protections being offered to low-income customers as well as how the proposed merger might impact consumer pricing and telecommunication competition overall.”

Almost everybody hates the cable company.  A study last year found that consumers are more likely to curse when they call the cable company than almost any other business. The only companies that hear more cursing from clients are home contractors and — get this — satellite TV companies.

Who can blame us customers for hating the cable people? If you’ve ever looked at your cable bill, you might wonder what all the fine print means. A few months ago, I couldn’t get a Time Warner phone rep to explain why I was paying $10 per month for something called a “variety pack,” one of several unexplainable items on my bill.

This 2013 report by the American Customer Satisfaction Survey found only one company in America more hated than Time Warner Cable or Comcast — it is the Long Island Power Authority. In the ACSI’s 2014 report, the companies performed even worse. From the report:

Time Warner Cable lags behind the entire industry following its second consecutive yearly  decline, down 7% to an all-time low of 56. The combination of low and downward-trending customer satisfaction for both Comcast and Time Warner Cable is cause for concern amid merger talks between the two companies. The issue at stake is not that the proposed merger will limit competition as the service territories of the two companies do not overlap. Instead, it is the question of whether a combination of two pay-TV providers with such poor records could possibly create a better customer experience, especially given the volume of evidence from ACSI data suggesting that mergers in service industries tend to damage satisfaction—at least in the short term.

Time Warner and Comcast offer several justifications for the merger in this May 15 PSC filing. One is: “The transaction will have no negative effect on competition.” That’s because there’s no competition now between Time Warner and Comcast, the petition says. The corollary, of course, is that the merger won’t have a positive effect on competition either.

The companies’ PSC filing offers some upsides for Time Warner customers, such as better phone service. Comcast is also promising to improve Time Warner’s transition to all digital service, which it says will give customers more Internet bandwidth and faster data speeds.

Comcast offered me this comment on the state’s role in the merger: “We’re cooperating with local and state groups on related inquiries and look forward to these opportunities to further share the consumer benefits of the transaction.”

The state is giving you a chance to gripe about the merger in person. It plans a public statement hearing on the merger on Thursday, June 19, at the Public Service Commission’s Manhattan office, at 90 Church St. The event includes an informational forum at 6 p.m., followed by the hearing at 7:30 p.m.

For a take on another aspect of this issue, check out this Huffington Post story by Bruce Kushnick of the New Networks Institute.

Comcast and Time Warner aren’t the only data and Internet game in town. Check out my Wall Street Journal story on how Verizon has gone all digital in part of the Rockaways in Queens.

Update, July 19: Check out the presentation by New York’s Utility Project at the PSC’s hearing on the merger held July 18 in Albany.

Update, October 2: The PSC has put off a decision on this case to November 13.

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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