Could Time Warner Outage Doom Comcast Merger?

Well, that wasn’t helpful.

With the proposed merger between Comcast and Time Warner Cable headed back into the spotlight this week, millions of Time Warner customers on Wednesday found themselves without service.

Funny thing: “Outage” is just one letter away from “outrage.”

The Christian Science Monitor explains why that’s a problem for the merger:

Detractors of the proposed deal have said that cable consolidation would be bad for users in an age when access to reliable Internet is essential for everyday life. For this reason, Time Warner’s recent outage has added fuel to an already-simmering fire surrounding a merger between the two companies.

Specifically, critics note that consolidation between these two cable giants would mean even more people could fall victim to problems that arise when something goes wrong – such as a cable outage. With fewer options on the table, subscribers would have little choice should they decide they want a more reliable service.

Time Magazine adds:

Comcast’s network engineers are undoubtedly already thinking about this, but as the debate over the Comcast-TWC merger continues to heat up, expect this map to show up again — and sure enough, New York Governor Andrew Cuomo said Wednesday afternoon he’sordered an investigation of the Time Warner Cable outage as part of a merger review.

“Dependable Internet service is a vital link in our daily lives and telecommunications companies have a responsibility to deliver reliable service to their customers,” Cuomo said.

The New York Daily News goes deeper with Cuomo:

Gov. Cuomo, in a statement released late Wednesday morning, directed the Public Service Department to investigate the outage as part of its ongoing review of the company’s proposed merger with fellow cable giant Comcast.

“Today’s widespread internet outage that has apparently impacted more than 11 million customers at Time Warner – which is based in New York – is a stark reminder that our economy is increasingly dependent on a reliable broadband network, “ Cuomo said in the statement. “That is one of the reasons why I pushed for a stronger standard of review for cable company mergers earlier this year.

“I have directed the New York State Department of Public Service to investigate this outage as part of its review of Comcast’s proposed merger with Time Warner. The Department will also review whether the outage affected Time Warner’s provision of telephone service in any way. In addition, the Department will include its analysis of this event in its ongoing study of the telecom industry, which is exploring potential changes to the regulatory landscape pertaining to telephone, internet and cable.

And of course, Comcast already faced an uphill battle in New York. The Department of Public Service there concluded a few weeks ago that there was no net positive benefit to New York consumers from the merger. “The report, which was quietly posted on the PSC’s website around 6 p.m. Friday, does not go so far as to recommend that the deal be rejected but makes it clear that more needs to be done to safeguard consumers.”

The L.A. Times concludes:

“This is just another challenge that Time Warner and Comcast face in overcoming a customer environment that is fraught with frustration and misery,” Steve Beck, founder of the management consulting firm CG42, said in an interview with the Los Angeles Times.

A customer survey earlier this summer by Beck’s firm found that Comcast and Time Warner Cable had the highest levels of “brand vulnerability,” due to customer service complaints.  The group found higher levels of frustration for cable companies than even customers of banks and financial institutions reported in 2011 in the aftermath of the financial crisis, Beck said.

“Service interruptions happen — the world is an imperfect place,” Beck said. “But it really comes down to how these companies handle the problem and resolve their customer’s complaints.”

Emphasis added. You don’t want to bet against Comcast, ever, but the challenges loom pretty large right now.

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