4 ms·

It would be insane to let this go through. They're both effectively monopolists in most markets they serve; allowing them to combine just allows them to exert

It would be insane to let this go through. They're both effectively monopolists in most markets they serve; allowing them to combine just allows them to exert more political influence to make sure they keep their monopoly and high profit margins. Their core business is very much a low-value-added, rent-seeking concern, which doesn't benefit from economies of scale except for in as much as they can increase their market power by reducing competition - a fundamentally zero-sum game. Political influence is a major and underexplored negative externality of monopolies.

rayiner 13y ago
Building the expensive infrastructure that Silicon Valley depends on to get its cat videos and advertisements to users is a low value add, rent seeking concern that doesn't benefit from economies of scale? Its exactly the opposite.
- wmf 13y ago
  Does economy of scale start to level out above, say, 11 million customers?
  - rayiner 13y ago
    There's no practical reason why there needs to be say more than one team of cable network architects in the whole country. If an architecture works okay in Philadelphia, it should port pretty easily to Chicago. The stuff that needs boots on the ground, laying cable, doing installations, and servicing them, is already outsourced to local companies.
  - gojomo 13y ago
    Probably not in 'lobbying power'.
- fiatmoney 13y ago
  The most valuable infrastructure that Comcast and Time Warner run is ye olde copper coax lines in the "last mile", often built a long time ago and at a large public subsidy (either explicit or implicit via a grant of monopoly). What little infrastructure investment they do make (eg, laying fiber) is a result of actual competition, which would be lessened by the merger. By way of analogy, having clean water is important, but water infrastructure is not high-value-added ("buy Water Premium Max Plus! only 79.99/month!"); it's a basic utility. The alternative to Comcast isn't "no internet", it's a public utility wire-owner. Which would provide roughly the same level of service that Comcast actually provides, in the vast majority of areas. And exploiting a monopoly on infrastructure is almost the Platonic ideal of rent-seeking.
  - rayiner 13y ago
    Cable companies spend $17 billion a year on CapEx, and telecom services, excluding wireless, spend another $46 billion more. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/capex.html http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/.... That's a lot of money for companies that are just resting on the publicly subsidized networks they built in the 1980s... Snark aside, most of the modern hybrid fiber-coax network that cable companies actually use today were built after deregulation in the 1990's. And it continues to be upgraded, which is where that massive CapEx comes in.
    - fiatmoney 13y ago
      Utility (general), which I believe ~ electric co's, spends $31 billion. Absolute numbers don't tell you anything; maintaining even a completely static infrastructure costs something.
      - rayiner 13y ago
        You said "what little infrastructure investment they do make" which is directly contradicted by the enormous infrastructure investments they make. Also, electric companies are in the middle of a huge push to replace aging coal plants with gas and renewables. There is a ton of value being added in that sector right now.
    - pbhjpbhj 13y ago
      Net Cap Ex / Sales = 0.05% ? I was going to ask what revenue they were bringing in with that CapEx. Am I right in thinking this means they're bringin in $34,000 million from sales and spending only $17 million on infrastructure. That doesn't look like "a lot of money" in relative terms - I must be misreading those figures?
      - rayiner 13y ago
        I'm not sure what that column means, but the capex column is in thousands. So $17 billion.
- dba7dba 13y ago
  I'm not going to look around for balance sheets of these cable companies but they are doing FINE, even after building the expensive infra. Why? Because they charge BUCKS for it.

rayiner 13y ago

Building the expensive infrastructure that Silicon Valley depends on to get its cat videos and advertisements to users is a low value add, rent seeking concern that doesn't benefit from economies of scale? Its exactly the opposite.

wmf 13y ago
Does economy of scale start to level out above, say, 11 million customers?
- rayiner 13y ago
  There's no practical reason why there needs to be say more than one team of cable network architects in the whole country. If an architecture works okay in Philadelphia, it should port pretty easily to Chicago. The stuff that needs boots on the ground, laying cable, doing installations, and servicing them, is already outsourced to local companies.
- gojomo 13y ago
  Probably not in 'lobbying power'.
fiatmoney 13y ago
The most valuable infrastructure that Comcast and Time Warner run is ye olde copper coax lines in the "last mile", often built a long time ago and at a large public subsidy (either explicit or implicit via a grant of monopoly). What little infrastructure investment they do make (eg, laying fiber) is a result of actual competition, which would be lessened by the merger. By way of analogy, having clean water is important, but water infrastructure is not high-value-added ("buy Water Premium Max Plus! only 79.99/month!"); it's a basic utility. The alternative to Comcast isn't "no internet", it's a public utility wire-owner. Which would provide roughly the same level of service that Comcast actually provides, in the vast majority of areas. And exploiting a monopoly on infrastructure is almost the Platonic ideal of rent-seeking.
- rayiner 13y ago
  Cable companies spend $17 billion a year on CapEx, and telecom services, excluding wireless, spend another $46 billion more. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/capex.html http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/.... That's a lot of money for companies that are just resting on the publicly subsidized networks they built in the 1980s... Snark aside, most of the modern hybrid fiber-coax network that cable companies actually use today were built after deregulation in the 1990's. And it continues to be upgraded, which is where that massive CapEx comes in.
  - fiatmoney 13y ago
    Utility (general), which I believe ~ electric co's, spends $31 billion. Absolute numbers don't tell you anything; maintaining even a completely static infrastructure costs something.
    - rayiner 13y ago
      You said "what little infrastructure investment they do make" which is directly contradicted by the enormous infrastructure investments they make. Also, electric companies are in the middle of a huge push to replace aging coal plants with gas and renewables. There is a ton of value being added in that sector right now.
  - pbhjpbhj 13y ago
    Net Cap Ex / Sales = 0.05% ? I was going to ask what revenue they were bringing in with that CapEx. Am I right in thinking this means they're bringin in $34,000 million from sales and spending only $17 million on infrastructure. That doesn't look like "a lot of money" in relative terms - I must be misreading those figures?
    - rayiner 13y ago
      I'm not sure what that column means, but the capex column is in thousands. So $17 billion.
dba7dba 13y ago
I'm not going to look around for balance sheets of these cable companies but they are doing FINE, even after building the expensive infra. Why? Because they charge BUCKS for it.