As Two Major Cable Providers Merge, Subscribers Wonder What is Next

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As with many other industries in the United States and around the world, consolidation has been the rule for cable companies for many years now. Increasing scale brings advantages in many kinds of business, and the provision of cable-borne television, Internet connectivity, and voice communication services is no exception. Larger cable companies tend to be able to negotiate better deals with the rights holders who bear the keys to the most popular television channels, while also being able to create faster, more extensive networks for their Internet customers to use. With levels of competition in many areas being such that making inroads by other means can be prohibitively difficult, buying out a competitor can seem like a better use of money.

When two cable providers merge, as Charter Communications and Time Warner have recently committed to doing, their customers can naturally expect some changes. While many skeptically assume that the underlying point of most such deals is to be able to squeeze more money out of each subscriber, the history of the industry suggests a different conclusion.

In fact, even large-scale mergers often result in more generous service offerings, especially in places where some degree of competition remains in force. With the recent Charter-Time Warner merger announcement, that same story seems to be playing out again, much to the surprise of many.

The company has already suggested, for example, that minimum speeds on its Charter-based business plans will be raised in many markets. While subscribers tend to focus on the larger numbers that represent the limit of what their connections will be capable of, minimum speeds often matter more in practice. With many business-class services carrying guarantees as to the lowest speed that a connection will ever offer, receiving a boost to that bottom line is something that many will be able to celebrate.

Of course, developments of this kind are not ever to be taken for granted. The reality is that companies that face too little competition in particular markets will tend to take advantage of that fact, and this can be painful for subscribers. On the other hand, the efficiency that greater scale enables will sometimes allow them to be more generous when they have an incentive to do so.