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Comcast merger a call to arms for Sen. McCain

Nov 18, 2002  •  Post A Comment

With the GOP set to take control of Congress in January, last week’s Federal Communications Commission approval of the behemoth Comcast-AT&T Broadband merger sounded yet another victory chime for deregulation-simultaneously, it would seem, with the death knell for any hope of reasonable cable rates.
But it could well be that one maverick Republican will ride to the rescue: Sen. John McCain, who will return as chairman of the Senate Commerce Committee, setting the stage for closer scrutiny of the skyrocketing cost of cable subscriptions.
When the merger, cleared by the FCC last Wednesday, officially closes this week, the combined AT&T Comcast will control what 21 million cable subscribers see. Its systems serve 17 of the top 20 United States cities-a whopping 40 percent of the country’s cable market.
If he’s true to form, Sen. McCain-whose history includes a rather terse April 2002 request to the General Accounting Office to investigate the causes of exorbitant cable rate inflation-should be monitoring the new company’s next moves very carefully, especially since the current FCC, which seems to be occupied solely with the implementation of digital broadcasting, has remained relatively inactive on the issue of cable costs and most every other deregulation-related cause for concern.
The $90 billion, 55,000-employee Comcast Corp., bolstered by enormous bargaining clout with Hollywood studios and its stakes in QVC, E!, Style, The Golf Channel and Outdoor Life, has already been labeled “the single most powerful media company in the United States.”
But saddled with a gargantuan $30 billion in debt, legions of nervous investors and a slew of aging AT&T systems in need of upgrading, the newly merged Comcast Corp. can’t rely on the unproven appeal of new digital and video-on-demand services alone to generate enough revenue to solve its problems. Rate increases will doubtless be a temptation, a move that likely would generate an industrywide trend and give the Arizona senator even further cause for concern.
As it now stands, the price of mere basic service is a burden to many Americans; add a premium tier and high-speed data and digital services and the expense becomes prohibitive for the average household. Plus, the advent of video-on-demand and other new services promises to further drive up the monthly bill.
In his April letters to the GAO and to FCC Chairman Michael Powell, Sen. McCain expressed concern for consumers, who “continue to endure rate increases that outstrip, by many multitudes, the price increases of many other consumer goods and services.” He further asked the GAO to identify steps policymakers might consider to address the continued increase in cable rates.
Our hope is that Comcast Corp. and the other cable operators will heed the message and act responsibly, as they often have in the past. If not, there will be Sen. McCain to answer to.