- The Washington Times - Wednesday, July 11, 2001

Comcast Corp.'s unsolicited $44.5 billion bid for AT&T;'s cable operations has turned up the volume on a continuing debate between the cable industry and consumer advocates over competition in the industry.

Those on the consumer side argue that such a move would create too much consolidation and less competition, thus giving Comcast unusual power to control programming and pricing. But industry representatives say cable competition is stiffer than ever, and that consolidation has historically been a positive thing.

The potential combination between Comcast and AT&T; would create the largest broadband communications provider in the world, with more than 22 million subscribers, and a leading share in eight of the country's 10 largest markets.

Most cable companies, including Comcast and Cox Communications in this region, have raised prices to subscribers this year, and over the past decade, rates have increased significantly more than the rate of inflation. Industry representatives say they are only trying to keep up with programming costs, while consumer advocates say cable companies are gouging customers simply because a lack of competition has placed them in a position to do so.

"Given that we're seeing rates go up and up, [a merger] certainly isn't going to do anything to make it better," said Chris Murray, spokesman for the Consumers Union. "Moving toward further consolidation is not the way to go."

"We hate it," said Mark Cooper, spokesman for the Consumer Federation of America. "These mergers are bad for people. They create an excessively concentrated market."

Not so, says Comcast President Stephen Burke.

"The evidence so far is that consolidation has actually helped the consumer," he said. Mr. Burke said consumers should be in favor of the merger, because they'll get expanded and improved service, particularly in the area of high-speed Internet.

"The first question subscribers always have is who's going to offer more new products," he said. "You'll have a company with the wherewithal to offer more services."

Other industry representatives said that the merger might have a minimal effect in areas where Comcast and AT&T; aren't dominant players. In Virginia, for instance, Comcast is only the third-largest cable provider and AT&T; is the fourth-largest. A merger would still make Comcast just the third-largest in the state, behind Cox Communications and Adelphia Communications.

"I think it would be a seamless move for the consumer," said Kathryn Falk, president of the Virginia Cable and Telecommunications Association.

But Mr. Murray said the greatest fear is that Comcast could potentially wield a heavy hand in controlling programming options.

"That's always the most significant thing," he said. "The most dangerous thing is operators with the ability to make or break programming."

Industry representatives say that consumer advocates either haven't noticed or totally ignored the current cable marketplace, which they view as extremely competitive now that satellite television is gaining market share. Satellite claims four out of every five new television subscribers, according to the Federal Communications Commission. But, consumer advocates say, there is little evidence that satellite competition has any real effect on pricing or subscriber rates.

"It would be incorrect to say satellite has any real effect," Mr. Cooper said.

Industry representatives disagreed, and said consumer advocates are out of touch.

"It's a little frustrating when [consumer advocates] have a knee-jerk reaction every time something like this is discussed," said Marc Smith, senior director of the National Cable and Telecommunications Association. "They have some consistent concerns. On the other hand, the world has changed a great deal and you'd think the opinions would change."

Mr. Smith added: "When you look at EchoStar and DirecTV, virtually everyone has two or three choices. Cable companies are reacting with a competitive mindset. It's one of the best things that's ever happened to cable companies."

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