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Google to the Rescue?

Ari Goldfarb is communications director with Buffalo-based Goldfarb Financial, and published novelist whose works include Just Under the Sky. His series with Buffalo Rising comments on the intersection between finance, economics and pop culture.

Cable watchers in WNY may have noticed a repetitive commercial/message from a company called Spectrum in recent months. This is the new name for the only cable provider in our area. It is a rebranding after federal regulators approved the Charter Communications acquisition of Time Warner Cable back in April.[1]

Spectrum and Comcast have distance themselves from all competition and have almost free range in cable providing.

With this merger Spectrum and Comcast have distance themselves from all competition and have almost free range in cable providing. On Spectrum’s website it says they will be available in 41 states.[2] According to Broadband now, the next two providers (Cox and Mediacom) do not reach that many states combined.[3]

Due to the comfortable relationships between lobbyists and Washington it is understandable that one may be skeptical with the dynamics this acquisition creates; the notorious 2011 acquisition of NBC by Comcast was met with skepticism, which only worsened once Meredith Atwell Baker left the FCC to accept a lobbyist position with Comcast four months after voting the merger through.[4]

On average a family will pay over $231 per year for cable. The Wall Street Journal reports (using data from the Federal Communications Commission) that price is up 185% since 1994.[5] Why is this stunning? Because according to the same data price of the products used to enjoy cable and internet have fallen by 90% in the same period.[6]

file0001746068249To make things worse, the two largest cable providers are also leaders in internet service providers. In 2014 Comcast was the leading cable provider and third leading internet provider; they planned on merging with Time Warner to become the clear leaders in every service they provide. However, Comcast withdrew their proposal after the Department of Justice announced it planned on filing an anti-trust suit. Two years later things have not gotten much better. Rather than one clear leader, the US has two. According to the FCC over half of America’s households have access to no more than two internet providers.[7] As a result customers pay higher prices for lower quality; according to an article by Time, cable providers have been plagued by increasingly worse customer service reports over the last few years.[8]

Americans pay some of the highest costs among developed countries with some of the worst results; our internet speed ranks 28th in the world.

The proof is in the numbers; Americans pay some of the highest costs among developed countries with some of the worst results; our internet speed ranks 28th in the world.[9] For half the cost, customers in London, Seoul, and even Romania enjoy faster speed.[10] In cities like Seoul, Korea, customers enjoy internet eight times faster than ours in the states at only $30 per month.[11]

Dallas Morning News reports that Google’s fiber service will allow users to download 25 songs in one second.

With a desperate need for competition, there is one force in the states offering a very limited alternative. Google has provided high speed fiber optic cables to four US cities and announced its plan to make Dallas its fifth.[12] Just how fast is internet with these cables? Dallas Morning News reports that Google’s fiber service will allow users to download 25 songs in one second.[13] While Google is not exactly a small company, and has dealt with anti-trust suits in the past, it may take a company of their size to drive a wedge in what is currently provided. The lack of competition in cable/internet has created a complacent atmosphere and the customers are the ones who suffer.

This article is courtesy of Goldfarb Financial www.goldfarbfinancial.com, a Buffalo boutique independent financial firm.

Ari Goldfarb is not affiliated with Raymond James. Views expressed are the opinions of Ari Goldfarb and the Financial Advisors at Goldfarb Financial and not necessarily those of Raymond James. Goldfarb Financial is an independent firm. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Goldfarb Financial, 295 Main St Suite 914, Buffalo, NY 14203 716-842-0145


[1] http://www.nytimes.com/2016/04/26/technology/charter-time-warner-cable-bright-house-cable-deal.html?_r=0

[2] https://www.charter.com/browse/content/about-charter

[3] http://broadbandnow.com/Cable-Providers

[4] http://mediadecoder.blogs.nytimes.com/2011/05/11/f-c-c-commissioner-to-join-comcast/

[5] http://www.wsj.com/articles/busting-the-cable-box-monopoly-is-overdue-1462738795

[6] https://apps.fcc.gov/edocs_public/attachmatch/DOC-337449A1.pdf

[7] https://apps.fcc.gov/edocs_public/attachmatch/DOC-329161A1.pdf

[8] http://time.com/money/3901532/cable-tv-ratings-internet/

[9] Reich, Robert Saving Capitalism p 32

[10] http://www.pbs.org/newshour/updates/internet-u-s-compare-globally-hint-slower-expensive/

[11] http://www.huffingtonpost.com/2014/10/31/internet-speeds_n_6078204.html

[12] http://thenextweb.com/google/2016/06/14/google-fiber-dallas/#gref

[13] http://frontburner.dmagazine.com/2016/06/14/google-fiber-targets-dallas-for-next-possible-rollout/

Lead image: Duboix | Computer photo: o0o0xmods0o0o

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