Thursday, February 13, 2014

Comcast Rationale for Buying Time Warner Cable Mirrors Sprint Argument for Buying T-Mobile US

source: comscore
In some ways, Comcast’s justification for buying Time Warner Cable echoes arguments made by Sprint about its potential acquisition of T-Mobile US:  economies of scale.

“In today’s market, with national telephone and satellite competitors growing substantially, with Google having launched its 1 GB Google Fiber offering in a number of markets across the country, and consumers having more choice of pay TV providers than ever before, Comcast believes that there can be no justification for denying the company the additional scale that will help it compete more effectively,” Comcast said.
That, in essence, is how Sprint frames any consolidation between Sprint and T-Mobile US. Long term competition with the larger Verizon Wireless and AT&T Mobility will require more scale.

At the moment, by some measures, Verizon Wireless and AT&T Mobility are about four  times bigger than T-Mobile US and three times  bigger than Sprint. In most markets, that might be considered an insurmountable lead.

In a market that is virtually a zero-sum game, few might believe it is possible for the smaller providers to wrest market share away from competitors so much larger.

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