Comcast-TWC Merger: Business-Services Market Prepares for Potential Shake-Up

By Kimberly Koerth Comments
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**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2014.**

Discussion has gone back and forth as to whether Comcast's potential acquisition of Time Warner Cable Inc. would give it too much power over broadband, but what about its impact in the business-services market?

The merger would give the two companies a large enough footprint to compete with telecommunications companies that, until now, have dominated business services, an industry that is driving more and more growth for cable operators as the video business matures. And as households exchange landlines for mobile phones, voice is also under pressure and broadband is nearing saturation in households.

But business services have only been modestly tapped by cable so far. A few years ago, the cable industry began selling services such as video, voice and broadband to businesses, competing for market share with local phone companies. Both Comcast and Time Warner Cable, as well as their brethren – notably Charter and Cablevision – have become increasingly active players in the indrect channel.

"Cable is taking business from both large and small telcos," SNL Kagan MRG analyst Mike Paxton noted on Monday.

Comcast and Time Warner Cable are both the nation's two largest cable operators and the cable industry's two biggest players in business services. Comcast's 2013 business-services revenue was $3.24 billion, up 66 percent from 2011, while Time Warner Cable's was $2.3 billion, up 57 percent from 2011.

The companies, whose merger is expected to close later this year if it approves regulatory muster, don't compete directly against one another in individual markets. That's one major reason they say they should get the go-ahead, unlike some proposed telecom mega-mergers in years past featuring two large companies that share the same geographic footprint.

Meantime, after blasting AT&T's proposed fiber-network expansion on Monday, over-the-top provider Netflix came out against the Comcast-TWC merger, saying it would give Comcast too much power over high-speed broadband and allow the company to charge service providers such as Netflix too much money in fees.

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