Charter Cable to Buy TimeWarner

When Comcast shelved its attempted merger with TimeWarner Cable, it would have been reckless to assume it was over. These companies swap namesakes so often it's difficult to remember who owns who.  

It didn't take long for one of the internet's earliest powerhouses, and a familiar badge in the TimeWarner lexicon, to make similar headlines. A couple weeks after Comcast's announcement, Verizon announced it would be purchasing AOL for more than $4B.

AOL, once "so easy to use" it was #1, failed to recognize the importance of its broadband internet provision and continued to invest in its interface, unique hardware, and proprietary access. They were the Rolls Royce of internet access right up to the time that were shopping for a Prius. When everyone went to cable, AOL fell on its face.

But over the last few years, AOL has been reinventing itself. Focusing on the advertisement industry and live mobile streaming, AOL has proven itself a unique entity once again. Couple that with Verizon's own mobile division, and the inevitable leap to competitive mobile data, the pairing makes sense. 

What doesn't make sense is Big Cable's continued commitment to solely delivering content via hardwire. Just as AOL ignored the impending leap to cable, fiber, and broadband, Big Cable is ignoring the next great leap to mobile wifi. It's shortsighted to look at the big screen in the family living room and assume there will always be a market for paid cable. There are kids in the basement watching CollegeHumor and YouTube on their T-Mobile data plans, kids that will continue to get their content from tablets when they go to college in lieu of purchasing their own cable bundles through the dorm.

AOL fixated on the large PC in the family study, ignoring the rapid growth of cable internet provisions and the then-emerging smartphones, and they learned their lesson the hard way. 

Big Cable seems bent on learning the same hard lessons. Today it was announced that Charter Cable will be purchasing TimeWarner Cable for $55B, an excess of more than $10B what Comcast was prepared to spend on a merger. Given Verizon's move to buy uniquely mobile content with AOL; Comcast, TimeWarner, and Charter seem committed to a Goliath complex, finding their fight through consolidation rather than innovation or unique and timely acquisitions.

For Philadelphia, Comcast still reigns supreme as the nation's largest cable provider. But as AOL once proved, telecommunications is not a stable and finite utility like electricity and water. Technologies evolve, and a telecom company's commitment to customers and current technology needs to be consistently paired with the inevitable emergence of new technologies, as well as customers' thirst for more and their ability to find it with or without a cable box.

Comcast, AOL, and the Future

A month ago, the Comcast-TimeWarner merger dominated the news. People screamed, "Monopoloy!" without really knowing what that meant. They jeered "Conflict of interest!" while ignoring Comcast's prior merger with NBC Universal, and the merger between NBC and Universal that preceded it. 

After walking away from the merger, Comcast quickly refocused. Responding to customer service complaints that have become a national spectacle, Comcast responded by telling the city they know how much we hate them.

That's a smart move, albeit reactionary and not immediately profitable. 

Comcast's Innovation and Technology Center

But one question remains, why did Comcast want TimeWarner in the first place? Why would a company that claims to want to get into new technology want more cable? Were they banking on the assumption that more customers meant more money? Did they want TimeWarner's content?

As moot as the point may be now, the potentially disastrous outcome of such a massive merger may have been the reason the FCC decided to sidestep the decision and send it to a hearing. Perhaps the FCC didn't want another economic collapse heaped on its shoulders, and that's exactly what would have happened if Big Cable fell. 

Comcast and TimeWarner were beasts, both with their own bureaucratic burdens and customer service nightmares. Seamless integration would have been a Herculean feat, one that would have taken years. Even the prospect of a moderately successful integration seemed questionable.

AOL learned about TimeWarner's dated telecom mentality the hard way, and look what happened to them. Once 2000's answer to what Google is still trying to accomplish today, AOL spent $160B on TimeWarner in 2001. That's four times what Comcast was prepared to spend on the same company fourteen years later. 

While you may be temped to say it was AOL's brazen disregard for money that led to their fall, don't underestimate the power of digital media. AOL had the money, but they lost it by diving headfirst into an industry they knew nothing about. In their blind ambition to grow, they lost focus, cockily assuming they could figure it out along the way.

But today something peculiar happened. Although it may not sound as exciting as the Comcast-TimeWarner merger, it asks a lot of the questions those in the industry have been wondering for a while now. Namely: What's next?

Today, Verizon announced that it will be purchasing AOL for $4.4B. While many consumers may have written off AOL, even wondering if they still exist, never suspend your disbelief in the world of technology. Technology companies are like comic book heroes and villains. Just when you think they're dead, they're resurrected, and in a few short pages they're ruling the world. Just ask Apple. 

AOL has shrunk substantially, yes, but they've managed to survive by investing smartly under the radar. They're probably one of the most undervalued technology companies solely because of their botched merger more than a decade ago. They own quite a bit of notable content like the Huffington Post, advertising technology, and a collection of profitable companies like MapQuest. 

AOL's CC2

They have a unique history, and perhaps more like IBM than Pets.com, they learned lessons taught from the Digital Revolution, the dot.com bubble, and surviving the Great Recession. 

In the early 2000s, AOL was developing new technology that would integrate its online content with content from its newly acquired network and cable providers. But they had it backwards. Assuming that users wanted TV first, and internet second, their conceptual products like AOL-TV brought the internet into your living room, not TV to your internet. Without smartphones in everyone's pockets, they focused on desktops and the big screen. And in a 1-2-3 punch: cable internet, Apple's iPhone, and streaming content rendered the world's greatest digital media provider a struggling legacy company.

Successful companies, like people, struggle through a period of perceived indestructibility, a corporate adolescence. Much more brutal than humanity, only a few survive with lessons learned in tact. And AOL is a survivor. 

What's interesting about Verizon's acquisition of AOL isn't just the content it will acquire, but Verizon and AOL's plan for that content. While Comcast and TimeWarner continue to plug away on cable and the living room TV screen, Verizon owns access to the small screen in your pocket, and AOL is jumping at the opportunity to be a part of that. 

AOL's content already has a reputation for working well on mobile devices, despite the fact that you might not know it comes from AOL. As more and more people continue to access their devices - smart phones, tablets, even laptops - from mobile connections, Verizon's AOL acquisition stands to be more than just a savvy business move, but the first step in the next way we access digital media.

While Comcast continues to claim it will fill its new Innovation and Technology Center with the kinds of minds that built Google, Microsoft, and even AOL, we have yet to know what they intend to innovate. Replicating successful industry innovations isn't what built the Silicon Valley, delivering innovations that consumers didn't yet know they wanted did. 

For the sake of Comcast, and Philadelphia's local economy, the telecom giant needs to recognize cable's numbered days. TimeWarner wasn't the answer, and the failed merger is the region's veiled blessing. Change is coming in how we access digital content, and if Comcast intends to compete in the future, it doesn't need to be looking at what's available, what Google and Apple are doing. If they want to be innovators, they need to be looking at what's next, and inventing it.

Another Comcast Rant

So, what is up with the Comcast Innovation & Technology Center?

The question sounds absurd. I mean, this is Philadelphia. What Comcast says, happens, right? But it's Philadelphia, where three floors aren't erected without neighborhood meetings, protests, and a flyer in Philadelphia Magazine.

So yeah, what's up with that?

The American Commerce Center was proposed without a tenant or a plan, and despite the fact that it was obvious it would never happen, the naysayers came out like an army. How did Comcast push 1121 feet through City Council, NIMBYs, and red tape as old as Ben Franklin with no objection?

Was Comcast working behind the scenes with City Council? It seems unlikely that someone wouldn't have blabbed. With at least ten various renderings of Comcast Center circulating before a final one was approved, a 2014 groundbreaking seems unlikely for an even taller building.

Did Comcast just assume it owns the skyline, that this design would go forward with no resistance? Where are the shadow nuts?

Was Comcast working with Foster for the past year on this specific design? After all, if they expect to break ground in 2014, more than just a few renderings must be complete. That would have been a pricy risk to assume those final plans would be approved. And if they aren't finalized, we have to wonder about the quality of a 1000 foot skyscraper that takes the next six months to engineer.

Maybe this was one of Foster's shelved designs, or a cleaned up version of something that never happened. Did Foster recycle something?

Questions to ponder. However the answers to all are likely "Comcast."

The truth is Comcast virtually owns Philadelphia, City Council, and our skyline. Perhaps neighbors know a fight would be futile. Still, it's disheartening to watch residents come out against casinos and shadows with such furor, rally against local developers like Carl Dranoff and Toll Brothers, even protest corner bars and three story row homes a few feet too high, but when it comes to Comcast, concerned citizens bow to our overlord.

Meanwhile Comcast is preparing to bundle electricity with its cable and telephone packages and is attempting to purchase TimeWarner Cable, which aside from Verizon is its last paralleled competitor.

New jobs are great, but at what cost? How many industries does Comcast plan to acquire before the corporation is synonymous with the United States government?

Comcast's new building, the Innovation & Technology Center is a new symbol of Comcast's innovation. But Comcast's never been known as a company that innovates. Comcast's creative abilities are (broadly speaking) limited to acquisitions and creatively evading anti-trust suits. What will be innovated at the CITC? Will they be leasing 20% of the skyscraper to potential future acquisitions?

All of this returns to what Comcast and Verizon will do to the internet. Net Neutrality was originally one of those rare ideals above partisan politics. It was embraced by the Republican party, supported by President Bush, and preserved laissez faire capitalism in perhaps the one and only place it worked: online.

Today's internet is a barely recognizable descendant of its clunky, dial up ancestors. Eons of generations evolved within a matter of twenty five years, aided by the fact that any virtual company was equally accessible to the world.

Dot coms had to be great to survive, and countless thriving companies came and went. Remember CompuServe, Pets.com, and Friendster? It was the Gilded Age of technology, a true revolution. The 1990s and early 2000s saw our generation's Vanderbilts rise and fall. New companies would emerge, crash, or get purchased by more successful competitors.

It was risky and challenging, but what kept technology evolving, moving forward, was a level playing field available to anyone with a laptop and an internet connection.

Until now ISPs were never really part of that game. They competed with each other offering faster speeds and connections, but Comcast and Verizon never competed with the content they provided until they started buying up that content.

Despite the insane conflict of interest in companies like Comcast owning NBCUniversal, politics allowed it. Comcast is playing Risk, running some of the nations most powerful television networks, offering access to that content, and spending just as much time in Washington making sure they can continue to get away with it.

Comcast

When Comcast's pledge to support Net Neutrality expires at the end of the decade, we're going to see a very different internet. One that squashes anyone who dares to register a URL. Lawmakers have allowed the internet to be socialized, turning it over to a few very powerful individuals. What was once a free world of 1s and 0s, tomorrow's internet will be a Soviet wasteland of rationed memory and oppressed ideas.

Queue the theme from Tron.

Comcast Celebrates the Death of the Internet with a Billion Dollar Skyscraper

If you live in Philadelphia, or even know someone here, your Facebook newsfeed is already full of posts from BizJournals to Philly.com to Philadelphia Magazine about Comcast's $1.2B expansion by renowned architect, Norman Robert Foster.

It's exciting. At over 1100 feet it won't just be the tallest building in Philadelphia, it will be the tallest building in the United States outside New York and Chicago. It will bring more than 6000 construction jobs and even more permanent jobs to the region.

Norman Robert Foster

Philly.com's Bob Fernandez echoed local concerns that Comcast's acquisition of NBCUniversal might pull jobs to New York and Los Angeles. Obviously this expansion is hopeful, right?

Well, buried beneath the glossy renderings and excited tweets is another story. Unfortunately it's not covered in glitter and cats, or whatever gets the internet excited. Miley Cyrus? It's saddled with beltwayease, politico mumbo-jumbo, and lengthy dialogue that most don't bother to read.

I'm talking about the death of Net Neutrality and the conveniently timed $1.2B announcement by a company that stands to exponentially profit from the demise of an open internet.

Sadly, most people don't know what Net Neutrality is, yet its existence ensures that we are free to explore what has become our greatest communicative resource: the internet. And without it, the World Wide Web is about to get narrow.

Just yesterday a court struck down an appeal against a Verizon lawsuit that would change the rules, and throw out Net Neutrality. As a result, Netflix stock plummeted.

Why? Because this is the internet without Net Neutrality:

For decades we've been forced to purchase cable bundles full of nonsense channels like HSN and Oxygen just to get CNN and ESPN. That's the internet without Net Neutrality. While the most notable restrictions would be on sites that require higher bandwidth like Hulu and Netflix, Comcast and Verizon would be free to exclude websites with which they have no vested interest, or charge more for them.

To make it simple, think of it this way:

You purchase Comcast's Basic Internet Package, which includes basic search engines, email, and news sites that don't contain streaming videos. You go to CNN and click on a video. A pop up displays on your screen that reads, "You must subscribe to Xfinity Permium to view this story, please call..."

Worse, companies would be free to restrict access to sites like YouTube and Flickr simply because they're owned by your service provider's competition.

Cable companies do it all the time. The demise of Net Neutrality means internet service providers can profit more by providing less, which is why it's so fitting, convenient, and not so surprising that Comcast decided to celebrate the defeat of a free internet with a $1.2B skyscraper.