The consolidation of communications companies that provide cable television, Internet connections and telephone services appears to be the trend for 2014, based on the several significant mergers announced thus far. The companies claim the consumer will benefit from the deals, while consumer activist organizations counter with accusations that the mergers reduce competition and ultimately limit customer choices. Both sides can agree that these communications mergers affect customers, but the degree of the effects are debatable.
Earlier in 2014 came the announcement that two of the biggest names in the communications industry had struck a deal to combine into one company. Comcast seeks to acquire Time Warner Cable in a $45 billion deal that is pending approval from the Justice Department and the Federal Communications Commission. If allowed to merge, the combination of these two already-giant corporations will create the largest cable company in the United States.
In May, AT&T announced its proposed purchase of DirecTV. The telecommunications giant claims that the communications merger would result in one company that provides customers with the convenience of being able to offer paid-TV, broadband Internet and wireless services as a bundle. AT&T claims customers will benefit from the megadeal from the convenience of a single bill for services, as well as from AT&T's ability to cut costs and increase efficiency.
Opponents, however, criticize such megadeals. Critics point out that communications mergers of companies with such large market shares reduces competition, forcing customers to choose from limited options. Consumer advocacy groups fear the mergers will increase costs for customers if they are forced to purchase services in bundled deals. In the past, similar large-scale communications mergers negatively impacted customer service as well as price structures. When competition is reduced, companies often put less effort in pleasing customers and offering high-quality customer care. After all, if there is no other choice available, then it matters little whether the customer is happy or not.
These recently announced communications mergers are far from finalized. Each must clear several hurdles, including hearings by Congress and questions posed by the Federal Communications Commission. Approval of the AT&T deal to purchase DirecTV for $45.8 billion is not expected for at least a year and will likely take even longer, especially given the fact that regulators already are busy assessing the Comcast acquisition of Time Warner Cable.
U.S. regulators have their hands full in the near future as they weigh the pros and cons of the proposed communications mergers. As the Justice Department and Federal Communications Commission assess the impact on the industry and on competition, consumer groups continue to keep the impact on customer service in mind and watch that when giants combine, they do not crush customers in the process.
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