Breakout

Why mega-mergers may not be all bad

Breakout

At its developers conference today, Google (GOOG) will reportedly introduce its version of a set-top box - that power-hogging genie’s lamp that offers almost any program the American viewer wishes to see.

There’s no saying exactly what might set Google’s box apart from standard cable-and-satellite units or whether it can outmaneuver the related Apple TV (AAPL) and Amazon Fire TV (AMZN) efforts.

But it’s fitting that we’re seeing all this urgency among the most powerful tech giants to secure a place in the home between viewers and their shows at the same time executives of AT&T (T) and DirecTV (DTV) are trying to persuade congress and regulators that its planned $48 billion merger won’t harm consumers. Time Warner Cable (TWC) and Comcast (CMCSA) will try to make a similar case in their effort to pull off their union, as will T-Mobile (TMUS) and Sprint (S) as they try to become a stronger number three in mobile phone service.

The case in favor of allowing these mergers rests on the idea that the competitive field is wide open, that no cable, satellite or broadband provider has a secure hold on customers’ eyeballs, and they should be allowed to get together to better pay for better broadband service and ever-more-expensive programming. Netflix (NFLX), Amazon Prime and other “over-the-top” services are capturing a new generation of consumers who can’t imagine paying for an expensive “bundle.”

Legislators and regulators resist this idea to one degree or another, falling back on the old idea that cable-tv players are conniving monopolists looking to gouge consumers. And, if they could continue playing that role, they would, of course. But the attempts by heavy-spending players such as Google, Apple and Amazon to give folks another way around the programming pay wall show the industry is a less secure place for the incumbents.

This doesn’t mean these huge deals should sail through regulatory review unchallenged. But there’s a chance any opposition will look in retrospect like it’s ignorant of the way technology was unsettling things. In the late ‘90s, some opposed the merger of MCI and Worldcom, on the idea that it could create a dominant player in long-distance service. Consumer long distance would soon no longer be a business, let along one in which consumers were gouged.

In this case, allowing mergers to happen could be a way to preserve more long-term competition rather than snuff it out.

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