If You Like the Airlines’ Consolidation, You Might Love an Even More Concentrated Broadband and Cable Marketplace

[Commentary] With several cable television operations in play, perhaps we should consider what’s behind the urge to consolidate? Bear in mind that the broadband and cable television business already is quite profitable and concentrated, a key difference with the US airline industry that lacked profits and high concentration before its flurry of mergers. The answer: more concentration makes it easier for the survivors to avoid sleepless afternoons innovating, competing and enhancing the value proposition for consumers. It is that simple: with fewer major players, the odds decline substantially that a maverick will buck the incentive to match the terms and conditions set by the major operators.

I don’t see much upside to consumers in having a stronger number two cable and broadband provider. Recall that Comcast executives emphasized how their company does not compete with Time Warner Cable. Comcast’s logic was that if it didn’t compete with Time Warner, then there shouldn’t be any problems in acquiring their market share. So how would a larger number two cable and broadband operator become a more aggressive competitor of Comcast?