How New York Could Stop the Comcast-TWC Merger

This week, the world was reminded of just how awful Comcast can be, thanks to the recording of one appalling customer service call. But that flare-up was also a reminder of how many people could find themselves trapped in similar situations, with fewer ways out, if Comcast's merger with Time Warner Cable goes through. Fortunately, all it takes is one state to stop it.

The merger could happen, and that's a scary truth. However, there's also a chance that the state of New York could throw a wrench in the gears, a wrench big enough to bring the merger to a grinding halt for good. The better news? That process has already started. Back in May, Governor Andrew Cuomo announced that the New York Public Service Commission would "use its new regulatory power to conduct a thorough and detailed investigation" into the merger. The so-called "new regulatory power" refers to a change in the state's law regarding telecom mergers, one which switches the burden of proof. Now, instead of the PSC having to demonstrate that the merger isn't in the public interest, Comcast has to prove that it is.

This is terrific news if you're a fan of freedom and justice. While Comcast swears the merger will benefit consumers, proving as much to a state commission that exists solely to ensure citizens get good service without getting ripped off is going to be tough. As such, the PSC has held hearings across the state over the past couple of months and heard from concerned citizens and telecom experts alike in Albany, Buffalo, and New York City. In an email to Gizmodo, the commission reiterated that the purpose of the investigation "is to determine whether the proposed transaction is in the best interest of Time Warner [Cable]'s New York customers and the State as a whole." The process could conclude as early as August, or it could stretch into the fall.

Investigations are great and all, but the real question is whether one state's investigation could actually derail a nationwide merger. And the answer is an encouraging "maybe."

Phil Dampier, founder of broadband industry watchdog group Stop the Cap!, explained the possible outcomes to us. "If the PSC decides this is a bad deal for New York, it can reject it out of hand by refusing the transfer the franchises currently held by Time Warner Cable to Comcast or the holding company it is proposing," he said. Because TWC is the dominant broadband provider in the state, this would pretty much screw Comcast out of about 2.6 million potential post-merger customers. "Without NYC and the huge media market that offers Comcast, investment bankers that help finance these deals may feel it is no longer worth the price and investors may also push to kill the deal." Other experts have said as much in the past.

Other outcomes are certainly possible. Lieutenant governor candidate Tim Wu has said many times that he would block the merger if elected. Wu, who also happens to be the guy that coined the term "net neutrality," has stopped short of saying exactly how he would do that. Meanwhile, other states could could come to similar conclusions, but none of them wields the population leverage of New York. That in mind, it seems less likely that other states where TWC is the predominant provider—namely Ohio and North Carolina—would ever have such a dramatic effect on the larger process.

Again, we'll have to wait a few more weeks to see how things play out in New York state. So far, things don't look good for Comcast, though. Dampier pointed us to the public input on the merger, where about 2,300 people have stepped up to voice opposing or neutral opinions about the merger. Zero say they support it.