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FCC Planning Rules to Open Cable Market
quanticle writes "According to the New York Times, the FCC is planning to unveil new regulations for the cable market that will lower barriers to entry for independent programmers. The rules would be aimed at stopping the growth of existing cable giants like Comcast and Time Warner, while seeking to encourage more small companies to get into the field. Also, earlier this month, the FCC struck down the practice of having exclusive contracts between cable providers and apartment owners. All in all, this looks like a welcome infusion of competition into an otherwise stagnant market. The impact that this will have on the network neutrality debate is unclear."
..exclusive contracts between cable providers and municipalities?
If they really want to make it a level playing field, prohibit the ownership of both physical infrastructure and programming by the same entity. You can have one or the other, but not both. Once you own both, or a significant proportion of both (say, more than 3-5%), there is an inherent conflict of interest when the infrastructure side sets carrying rates for the programming side. If you own both, you can set the rates high enough that the programming side always loses money, and the infrastructure side makes enough money to keep the system afloat. That way, you can sell your programming costs below wholesale, knowing that at the end of the year the combined operation will make money. Outside players offering programming and paying the same infrastructure rate cannot compete, and you're back to a monopoly status.
Is it just my observation, or are there way too many stupid people in the world?
Looks like someone forgot to pay their bribes this election season!
Software patents delenda est.
I don't know. Opening up the cable markets would certainly be a good thing. It would be nice to be able to pay for the services I use instead of having to pay for 150 channels when I only watch 15.
However, part of me is a little wary about this. I would rather it be the FTC that steps in and implements these kinds of change. The FCC has said in the past that they wish to bring their brand of censorship and anti-obscenity rules to the world of cable service, an area which is legally outside of their jurisdiction. However, if they can claim successfully that cable falls under their rule enough to implement business changes, what stops them from carrying out these other tasks?
Would it be worth it to have the monopolies of cable television broken up only to replace it with the mediocrity that is broadcast television?
First off, I'm a little puzzled by the statement that they would make it cheaper for cable competitors (satellite and telcos), to purchase programming. So, Satellite pays $1.00, telco's pay $.50, and a cable company pays $2.00, just to throw out numbers? I'm not entirely clear I understand the rationale of the government price fixing on behalf of large industry.
Secondly, this is a little disturbing because of some of the other subisidies in these industries, and the fact that the FCC really appears to want to treat them equally, when, in fact, they are all on very different playing fields and games.
Telco's get massive subisidies and monies to maintain "universal access" and also provide government services, such as 911. As such, it puts them ahead of the game when it comes to maintaining the physical infrastructure.
The satellite providers have a much lower cost of maintenance (short of a bird frying), because they do not have a physical plant to maintain. The local cable company had over 7,000 miles of plant in my metro area alone.
And as far as programming goes, the truth is that 98% of the cost of programming to cable companies is charged by a few providers. Disney will force several channels down the throat of a cable company by telling them they have to carry those channels if they want ESPN. And then they'll ask for an extra $.05 or $.10 per subcriber per month just to carry ESPN. When you see programming of those channels you don't watch, the reason is that generally those are incredibly cheap to carry, and don't add much cost.
So the amount a consumer ends up paying, as a percentage, for all those channels they don't care about, is pretty much irrelevant in the larger scheme of things compared to the organized system of bribery that a few media providers are using, such as Disney, HBO, TW, and GE, and the like.
Which brings us back to this attempt by the FCC. Seems to me that treating all TV signal providers, regardless of the radically different issues each faces in providing a signal is shortsighted and counterproductive. As someone else commented, this smacks of letting the Telco's provide more service more cheaply at the expense of other types of providers is just another way of abusing the system.
For full disclosure, I worked for my local Cable company for several years.
Bill
So what're the chances of the FCC forcing cable companies to adopt an a la carte-type system? That's all I really want, to only have to pay for the channels I watch.
This would be more interesting, if a single word of it were true. But it isn't. It's the PR machine of AT&T at work.
The reality is more obvious, and certainly clear to anyone in the business of working with the FCC. This is about the triple play.
First, know this. Municipalities, by Federal and State law, cannot grant an exclusive franchise agreement (which is just a license to use local rights of way, in return for compensation to the municipality) to any telecommunications or cable provider, under any circumstances, and this has been the law for more than 20 years. To decry Cities for granting monopolies to cable companies (or phone companies) is simply ignorance of the truth. In fact, the converse is true - Cities have been trying in vain for many years to lure in other television and telco providers to no effect. The cost of entry is just too high (it takes a ton of money to build and maintain any kind of hard wire plant), and the entrenched industries have been too successful in getting doublespeak bills (like the referenced FCC action) passed.
What cities do do, is to collect useage fees (called franchise fees) from companies who use public property to make money. After all, the public has invested trillions of dollars buying rights-of-way over the years, and does deserve to be compensated when someone else wants to make (big) money using it. But of course, none of these companies likes to pay - so they work hard to get this cost eliminated, in an amazing variety of ways.
What this article ignores, is that this is the second FCC action on this matter. In the first action, the FCC acted to overrule Cities in the management of their rights-of-way, and they did so at the behest of AT&T and Verizon, who want very badly to sell Cable Television service over their own systems - including the new fiber plant they are busy laying in. And oh, by the way, the conned the FCC into screwing the cable companies blue - by relieving themselves (the telcos) of the obligations cable companies have had to pay, and still have to pay, in order to use all that valuable land to sell TV channels. So, Time Warner is placed at a massive economic disadvantage versus the Telcos. The FCC calls this "lowering the barriers to entry". I think it might more accurately be termed "lets give the Telcos their monopoly back, by killing the cable companies".
Of course, the Cable companies, being much aggrieved by the first action, immediately (along with Cities all across America who don't want to be forced to raise property taxes) filed suit. And to even the most casual observer, it is clear that the FCC violated the law and greatly exceeded their statuatory authority in passing the first measure. So, the second measure was hastily adopted, in hopes of giving the Cable companies enough of a bone, to get them out of court - after all, the cable companies enjoy screwing taxpayers too.
It's one of those deals where you have to know how things really work, in order to understand the play being done here. Not many do. That's why the FCC might get away with it. Or, the courts could side with the Cities, in which case the Telcos would have to play fair on their way in. But no one spends money like they do. That's why we have state legislatures passing bills written by Ma Bell attorneys all over the country now, and why the FCC is so eager to pass their pet rules.
One thing is certain - it isn't going to encourage competition. Neither will it encourage lower rates (monopolies just don't play that way).
It sure is interesting how easily these big companies can control the media though isn't it. It's also interesting how readily most people buy into these big lies. Makes you wonder about the rest of the "news", doesn't it?