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
    Nick, 3 Dec 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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