Market Power Issues Lie in High Speed Access, Not Linear Video

Beyond looking at traditional market share and competitive impacts of the AT&T acquisition of DirecTV, and the Comcast acquisition of Time Warner Cable, regulators and antitrust officials also might consider the relative fortunes of the video and high speed access markets as well.

Simply, the high speed access market is growing, while the linear video market has begun declining. It might not be part of the formal mathematical screening, but it arguably makes good sense not to regulate declining markets in the same way as growing markets are regulated.

Virtually all observers believe linear video is a product that already has entered the declining part of its lifecycle, while high speed access arguably remains short of a peak.

Also, few might disagree that the most-important consumer service now is Internet access. That is why U.S. universal service funding now centers on Internet access, not voice.

The 17 largest U.S. cable and telephone providers in the United States acquired three million net additional high-speed high speed access subscribers in 2014.

By way of contrast, the 13 largest linear video providers in the United States lost about 125,000 net video subscribers in 2014. That is about a two orders of magnitude difference in growth rates.

At the same time, cable companies had  51.9 million broadband subscribers while telephone companies had 35.4 million subscribers. In other words, the leading cable companies had 59 percent high speed access market share.

The top cable companies gained 89 percent of the net additions in 2014, and 82 percent of the broadband additions in 2013.

In other words, in addition to commanding market share position, the cable industry seems to be accelerating its market share gains.

At the same time, cable companies continued to lead in video market share.

The top 13 linear video providers had 95.2 million subscribers. The two satellite TV companies had 34.3 million subscribers, while the two top telephone companies had 11.6 million subscribers.

Both AT&T and Verizon had fewer than six million video subscribers each.

The point is that the market concentration problems are in the high speed access area, not video.
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