Can Someone Explain The Rationale For Capping Cable Growth?

from the capping-cable dept

FCC Chairman Kevin Martin is looking to reinstate a national cap on cable ownership, which would bar any one firm from serving more than 30 percent of the U.S. subscriber base. (A similar rule was thrown out by the courts back in 2001.)

The rationale for a national cap has always been a bit opaque to me. Because cable is geographically constrained, from a consumer perspective, all that matters is the market power my provider can exercise locally. If I've got three regional cable providers to choose from, it makes no difference whether two of them each hold a 40 percent national share. If I've got only one serving my area, the fact that it only controls 3 percent of the national market is similarly irrelevant. And if I'm in the latter boat, declaring that the largest firms with the most resources are forbidden to expand their operations into my neighborhood scarcely seems calculated to increase my access to alternatives. The FCC cites regional consolidation as a motive for the cap, but if cable providers are gunning for such regional monopolies, then won't they divest first in the regions where they do face competition, and hold on to the areas where they're the lone option?

It also seems a little perverse to introduce such limits just as consumers are finally starting to experience more robust choice in premium video. According to The Wall Street Journal, satellite now holds 30 percent of the pay-TV market. And despite some rocky first steps, phone companies are ramping up to aggressively expand IPTV over the next few years. Racing in to rescue viewers from monopoly now is, if not technically "ironic," then at least close enough to meet the Alanis Morissette definition.



Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    CB, Dec 3rd, 2007 @ 4:35pm

    FIOS= death of cable...

     

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      identicon
      ibeetle, Dec 3rd, 2007 @ 5:51pm

      Re:

      FiOS will never... never... never... never in 100,000,000,000,000,000 years have any where near the market share of satellite television much less cable. Why?... Why you ask.

      FiOS cannot be installed in Condominiums, Townhouses, Apartments, Duplexes or any thing other than a single family dwelling. Unless the entire Condo or multifamily structure goes completely FiOS.

      FiOS cannot be installed in underground wiring restricted areas. Thats about 99.999999999999% of every new housing development in the last 10 years.

      Subdivions, are siging non-competion contracts with the local Cable company.

      Cable is cheaper for cities. How much to run cable to a school? FiOS... about $5,000 and at a monthly cost of about $60. Cable's bill? $200 bucks at a monthly cost of about $20. Which do you think a School is going to choose?

      How many hotels have FiOS? Not one. Not a single hotel in the U.S. has it. How many hotels have cable 100%

      Damn shame too. FiOS has much better picture and can provide faster internet.

       

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        identicon
        DG Lewis, Dec 4th, 2007 @ 7:43am

        Re: Re:

        FiOS can be installed in multi-family dwellings. In townhouses and the like, VZ will pull fiber to the same point at which it currently terminates the copper (an NT on the outside of the unit) and use existing inside wiring (coax and twisted pair) for video, data (using MOCA) and voice. In high-rise apartments and the like, where the copper typically terminates in a basement wiring closet and the inside wiring isn't suitable for this topology, VZ can either cut a deal with the building owner to pull fiber up the riser to a wiring closet on each floor and install the ONT there, or can drop a multi-unit ONT in the basement wiring closet and use VDSL2 and coax to get to the individual units. Just because it's not being widely offered today doesn't mean it "cannot" be offered.

        In many new housing developments, VZ is pulling fiber before the houses go up. In others, it's going back and trenching. Most new housing developments have underground utilities, and once the municipality allows the utility a ROW, it can't prevent them from going back and pulling new plant.

        Private subdivisions (i.e., "gated communities") are a different story; they can limit utility access, sign exclusive deals with a particular provider, etc. And those kinds of deals typically lead to homeowner dissatisfaction (and a decline in housing values) which either leads to changes in the terms of the deal or breaks the deal. Plus, VZ will compete for those exclusive deals as much as will the cablecos and any other provider.

        Most hotels, actually, have satellite service, not cable.

        In the long run, fixed-line communications (telephone, internet, video) will basically be a duopoly, with telcos and cablecos splitting a market roughly down the middle (40%-60% each). Satellite will keep 10%-20% of video, and there will be 10%-20% "cherrypickers" who will pick and choose individual services from the various providers (including second-tier providers like Vonage); but in a given market, FiOS triple-play market share will approach 40%-50% in the long run (10 years).

        On the other hand, VZ is only planning to pass about 47% of their households with FiOS, and VZ only has about 40M households in their service territory (out of about 110M nationwide) -- so even at 50% share of FiOS HHP in-region, that's less than 10% of the national video market.

         

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    identicon
    Rick, Dec 3rd, 2007 @ 5:06pm

    Huh?

    Wouldn't it be wiser to force more competition? If they want to cap it again, fine - but only count areas where they have no competition.

    If they want to expand, let them start overlapping each other more - especially in rural areas.

    We should also:

    Void all local monopoly charters. No single company deserves a monopoly on communication.
    Confiscate all 'right-of-way' wires/fibre/poles to be used by any provider. The people own the land their poles are on, it's time the people took control back.
    Count broadband penetration by the square mile - not the zip code.

     

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    identicon
    Human Observer, Dec 3rd, 2007 @ 5:06pm

    Rationale

    Yes:

    - traffic shaping
    - censorship
    - infrastructure weakness
    - monopolization
    - do you really want every other flatbed and van to have "Comcastic" written on it?

     

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    identicon
    Nick, Dec 3rd, 2007 @ 5:49pm

    The reason is...

    He wants to cap it at 30 percent after they saw what happened when Clinton allowed radio stations to own more share and Clearchannel started buying up stations and the nightmare began. Do a search on salon.com for clearchannel and read their article if you want to see how bad the cable situation can get.

    Simply put, if there isn't a rule like that in place, these corporations will take over and soon you won't have any choices, and prices will go up, not down. Look at the airline industry where it has a route and no competition, the rate is 5 times the national average for the same distance.

    The cable companies have fought tooth and nail to keep other ISP's from being able to compete and lease their wires, Bell fought it too with long distance. Capping them is the only way, Corporations this size cannot be trusted to self regulate when raises and promotions are given for growth.

     

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    identicon
    Hello_Newman, Dec 3rd, 2007 @ 6:05pm

    Why?

    Why would you want to limit a company that wants and is able to be your phone company with voice over IP, your cable TV provider, and your Internet provider from controlling more than 30 percent of the U.S. market? It's called mergers, and having one company controlling 90 percent...

     

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    identicon
    Jamie, Dec 4th, 2007 @ 8:19am

    I've spent the last three years working on a degree in electronic media so my thoughts come from the studies and reports I've come across in that time. Large media ownership is bad for consumers. Some examples: - The vast majority of radio stations in the United States are owned by very few companies. A lot of those stations are "robot stations" in that they are little more than relay stations for a central broadcast. Stations tend to play the same 40 songs over and over and over again and those artists tend to be the artists that are owned by the same parent company that owns the radio stations. Independent and local artists often only find airplay on college radio stations. - Most news outlets -- radio, newspaper, television -- are owned by media conglomerates that are more concerned with profit than journalism. Therefore news often takes a backseat to keeping advertisers and other companies within the family happy. - The problems with cable monopolies are documented all over the Internet. Censorship, poor customer service, high prices, low quality, lack of innovation, terrible customer service. How is it that other countries offer faster Internet service at lower costs than here in the U.S., the birthplace of the Internet? - Something like 80% of all music is owned by the handful of companies represented by the RIAA. Let's not even get into the abuses we've seen there. The list goes on and on. Limiting monopolies means giving smaller companies a chance to compete. Comcast can get away with its censorship because a lot of their customers don't have broadband alternatives. Likewise, Comcast can force customers to pay another $30 for 60 channels they don't want in order to subscribe to that one channel they do want.

     

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    identicon
    Julian Sanchez, Dec 4th, 2007 @ 10:38am

    (1) Radio is such a stunningly inapt analogy for cable deployment that I'm a little stunned more than one person brought it up. Maybe consolidation in radio is bad, and an interesting conversation could be had about reasons and remedies, but the economics and the issues involved are so wildly different that I'm pretty dubious about how naturally any conclusions there cross apply.

    (2) People raise a bunch of issues that go back to the monopoly power of cable providers, which just seems to ignore the central point of the post. Monopoly power in cable is local. A national cap does exactly nothing to reduce local monopoly. At best, it changes the identity of the local monopolist. Possibly it even exacerbates the problem by eliminating incentives for providers to compete through expansion.

     

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    identicon
    Anonymous Coward, Dec 4th, 2007 @ 11:53am

    if it wernt

    If it wasn't for cable. the cost of broadband would be sky high.


    Cable companies began offering very high speed internet over 10 years ago. for under $50. at that time, the best speed you could get (other than cable) was a direct line from the phone company, a T1 line basically. and how much did that cost? several Hundred...

    so... 3mb+ for Under $50...
    or...
    1.5mb for $350....


    even today. cable is competing in the best way possible. if cable gets limited in anyway. you can only guess what will happen to the other guys prices...

     

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