NEW YORK ( TheStreet) - If AT&T's (T) failed $39 billion acquisition of T-Mobile USA (TMUS) raised consumer fears of a telecom duopoly, a similar rumbling is emerging as cable and broadband players like John Malone's Liberty Media (LMCA), Time Warner Cable (TWC - Get Report), Charter Communications (CHTR - Get Report), Cablevision (CVC - Get Report) and Cox Communications become the subject of merger rumors.
Mergers among cable and broadband providers could allow firms to finally institute usage based broadband pricing, some speculate, in a move that would hit the pocketbook of the ordinary American. It could also pose a threat to streaming video players such as Netflix (NFLX - Get Report), Amazon (AMZN), Google's (GOOG) YouTube and Hulu.
Such a scenario, while possible, would turn major Obama administration consumer protections from a victory to defeat. It would also be a laughable setback for the nation's communications infrastructure and is increasingly unlikely, according to some industry watchers who, for years, called usage based broadband pricing the "single most important" issue in the cable industry.
Given consumers' rising reliance on their internet service providers for streaming video such as Netflix and the threat it poses to pay-tv earnings, usage based broadband pricing could help cable companies both boost their profit margins and fend off competitors. Hence the rationale for consolidation among regional service providers, according to some analysis.Apple (AAPL - Get Report), Intel (INTC) and a handful of other tech behemoths are rumored to be on the verge of increasing their presence in the market. Were internet service providers (ISP's) to eventually charge for usage, it could destroy the business models of streaming players like Netflix and leave ordinary Americans in a refugee status, constrained from accessing 21st century media. Consider that the recent rise of streaming video services comes as consumers shift their consumption away from stretched and expensive wireless networks, onto faster and unlimited services offered by ISP's. Still, it is exactly what some expect. Amid reports John Malone may look to acquire Time Warner Cable or Cablevision in a merger, GigaOm founder Om Malik said on Monday those prospective deals had little to do with classic M&A issues such as synergy, growth through consolidation or the calculus of all-stock acquisitions. Instead, Malik argued consolidation would simply give cable providers the vehicle to finally implement usage based broadband pricing. "
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