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.

Filed Under: cable, fcc, growth, monopolies


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  1. identicon
    Rick, 3 Dec 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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