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BrightHouse

Comcast and Time Warner: What Could It Mean?

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In the world of pay television, news doesn't much bigger than the headlines that splashed over newspapers and internet-based media organizations in the heart of February announcing Comcast's $45 billion dollar takeover bid of Time Warner Cable, Inc. - Xfinity

The merger, should it be allowed to go through, would dramatically customize the cable TV business landscape by essentially making Comcast, a mega company as it currently exists, the largest cable television provider in the nation.

While it's easy to receive the fainting vapors, once more, about another potential wire merger squelching competition and limiting consumer cable television viewing and payment options, there is a far more ominous specter lurking in the obvious but somewhat ignored details of the deal.

Simply stated, wire business models don't possess much left with respect to shelf life. Cable television being a business is probably financially viable for one more 10 or 15 years, however the real future of television lies with internet broadband.

As broadband Internet television is constantly spawn streaming video options like Hulu, Netflix among others, in conjunction with the expanding world of handheld WiFi-enabled devices, it's not hard to imagine a straight cable television completely disappearing as it melds into the exploding whole world of broadband.

And therein lies the ominous specter lurking within the potential Comcast and Time Warner merger. A great, standard quality streaming video typically uses a broadband connection greater than 2Mb/s, while a high definition stream can require 4Mb/s or higher. Once you start factoring in high quality audio, plus any concurrent downloads or uploads, you can observe a considerable jump in your broadband requirements.

For Time Warner Cable, such considerable broadband requirements haven't been much of an issue. As a Time Warner Cable subscriber, you may pretty much binge on as much broadband each month while you wanted. In fact, most Time Warner Cable customers probably weren't even aware there was clearly such a thing as placing a strain on broadband.

For the Comcast side of the coin, however, broadband is a relatively tightly held commodity where clients are regularly capped at the amount broadband they can devour during a month. Granted, Comcast's broadband caps are fairly generous because they apply to casual or perhaps moderate broadband users, nevertheless the broadband gluttons (gamers) can and do hit their broadband ceilings. Generally, Comcast doesn't radically enforce its caps, however that can always change.

So, returning to the Comcast and Time Warner merger. If the merger get the nod of approval from your government, you'll have the greater company, Comcast, with its broadband caps, buying out Time Warner, featuring its casual approach to broadband. Therefore, everything you potentially have on the horizon can be a multitude of Time Warner customers that are used to unlimited broadband suddenly being informed that broadband caps now exist. Further, you'll have a company that just shelled out $45 billion in acquisition costs seeking to fill its coffers.

The issue just begging a remedy is this - will the merged Comcast and Time Warner venture opt to start clamping down on customers who regularly exceed their monthly broadband allocations? Could there be financial penalties incurred?

The answer then is... probably.

Again, we will need to go back to the emerging realities of streaming video. Because streaming video technologies keeps growing, evolve and improve, so that as more streaming video providers type in the marketplace, the need for more broadband to support ever growing video streams means current broadband caps is going to be surpassed more regularly. The financial impetus to penalize essentially the most egregious broadband cap violators will, without doubt become too tantalizing to pass up.

Of course, it is also entirely possible that advances in broadband technology could push broadband capability to heights previously considered unattainable. Broadband capacity could outstrip demand, keeping prices stable and pushing broadband caps really at high level only a select few could continue to surpass caps. Like all technologies, only time will tell, and in all probability not all that much time during this. - Xfinity

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