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The recent announcement of Comcast proposing to buyout Time Warner has sparked some serious debate in the industry, why? Price increase on the consumer is the reason that is so obvious that even the FCC is thinking very hard to make sure the merger is not going to hurt customers wallet. The untold story is that the average consumer already pays hefty bills right now. The average amount Comcast collected per household today is $156/month. The average amount collected per person is about $86. This is the scenario when Comcast has 37% of the market share and Time Warner is 20 % of the market share. After merger Comcast can leverage 57% of the market share and needless to say they price will go up. When the last time the price went up and Comcast conveniently blamed it on the infrastructure improvements that it had invested $300 billion dollars and to keep up with its cost increase it had to raise the price. Brian Roberts the head guy at Comcast himself cant give a plausible explanation as to why this deal can good for consumers.
Experts predict that this means slower speeds on Neftlix, Hulu, AmazonTV, GoogleTV and similar content providers. Why? because these providers are in direct competition with Comcast and its easier to flip a switch and clog the pipeline on which these content providers stream their media. Compact will have complete control over who thrives and who dies in the media market. In the past when asked why the prices were ludicrously high and it was easy to shift the blame on the content makers in Hollywood. The fact is that the cost of cable in United States is among the highest in the entire planet, where stuff gets created and we all assume that creativity thrives and its easy for everyone to access it.
The strategy that has worked in the past for Comcast is to go into a new market place in United States and take complete control over NFL and NBA streaming rights. They know that those are the most watched and once you have control over who streams ESPN, FOX, NBC sports network they control the cable dominance. It has worked in the past and it will work even better in the future with this level of market dominance.
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