Why Dish Network Thinks the Comcast-Time Warner Merger Is Terrible for Consumers

By Markets Fool.com

Dish Network is among the most vocal critics of Comcast's proposed takeover of Time Warner Cable .

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Part of the reason is Sling TV, Dish Network's new service aimed at cord-cutters -- particularly urban-dwelling, Millennial cord-cutters.

In a recent phone interview, Roger Lynch, Sling TV's CEO, explained why the merger could be so threatening -- both to his company and to others like it.

19 of the top 20
Sling TV is a new, Internet-based cable TV alternative from Dish Network. It is neither a la carte programming, nor is it meant to fully replace a robust cable package. But for a low monthly fee -- just $20 -- Dish offers a collection of 15 channels streamed to subscribers' PCs, mobile devices, and set-top boxes. Sling TV depends on the Internet for its distribution, and on the willingness of broadband providers to not block, throttle, or charge it for its product. Right now, Sling TV isn't facing existential problems, but that could change if Comcast and Time Warner combine.

"It's bad for consumers," Lynch told me. "If the merger goes through, Comcast/Time Warner will control 19 of the top 20 broadband markets."

Lynch is not particularly concerned with the exact percentage of the broadband market the combined entity would control, but rather, the geographical breakdown. Cord-cutters -- at least the ones Sling TV is hoping to court -- are overwhelmingly young adults, often living in or around major metropolitan areas: the sort of areas Comcast/Time Warner would dominate. If the combined company chose to block or impede Sling TV, it would dramatically reduce the market for Dish's new service -- and reduce the options for consumers.

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During the company's last earnings call, Dish Chairman Charlie Ergen labeled Comcast and Time Warner's rationale for the merger inaccurate "propaganda." Stan Dodge, Dish's General Counsel, argued that the Sling TV business would become impossible if Comcast/Time Warner used their combined network to block the service.

Netflix has complained about paid peering agreements in the past, arguing that it's been unfairly forced to pay Internet service providers to connect to their networks. Lynch agreed, stating that paid peering agreements are simply "unacceptable."

Regulation could render it a moot point
Of course, the recent vote from the FCC could render much of the debate irrelevant. Merged or not, with the Internet now under Title II, Comcast/Time Warner would not be able to block or impede Dish's new service.

Yet, when I asked him, Lynch had no specific comment on Title II.

That may be because of Dish Network's other ambitions -- its growing cache of wireless spectrum and its interest in acquiring wireless carriers suggests it's likely to move more aggressively into the business of providing Internet itself at some point in the future. As a provider of wireless Internet service, Dish would be subject to the same sort of heavy-handed regulations as Comcast/Time Warner -- a prospect that may be less than appealing.

Although the FCC's vote is likely to face several legal challenges, if it stands, it should be great for Sling TV. Without Title II, the combination of Comcast and Time Warner might have meant the end of Dish Network's upstart service.

The article Why Dish Network Thinks the Comcast-Time Warner Merger Is Terrible for Consumers originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.