Paying through the nose
There are no comments for this page [ Add Comment ]Saturday, March 24, 2007
"There was a time, a time before cable. ... When people believed everything they heard on TV."
-- "Anchorman: The Legend of Ron Burgundy" (2004)
Americans' reaction to cable television's incessant subscription rate-hikes is like their attitude toward bad government: They complain and complain, but rarely do they try to change the way things are done.
That may change sometime soon. Though it slid by under the radar during this year's legislative session, there was a move afoot to reform the way Utah's cable television operators are allowed to conduct business. Provo Sen. Curt Bramble had a bill that was ultimately withdrawn for more study, but it would have essentially aimed to accomplish what federal telecommunications reform legislation did in 1996: That measure forced local phone monopolies to open up their infrastructure to competitors. Bramble's aim is to force the cable television market to do the same.
Remember a decade ago how much local phone service cost? It was expensive, but competition eventually produced lower prices, and increased the choice of providers and a wide array of service options.
Bramble and his supporters on this issue would like to do the same for Utah's cable subscribers. The Federal Communications Commission has been moving in that direction, as have numerous other states. As reported earlier this month by the Standard-Examiner's Jeff DeMoss, the FCC says U.S. cable rates soared by 93 percent between 1995 and 2005 in markets where one cable provider had an exclusive franchise to do business. That's the typical situation in Utah, where cities have generally granted exclusive, long-term rights for single providers to build and operate their businesses.
As Bramble told DeMoss, "Cities will say they have an incumbent provider, and the only way they will let someone else come in is if they do a full build-out citywide. What you have is the very real effect of local governments creating a protected market for the incumbent (cable TV) provider."
He's right. The city-wide build-out requirement makes the cost prohibitive for competing interests. A relaxation of such protectionist rules would help foster competition, as would a requirement for existing companies to lease excess bandwidth under certain conditions, similar to what phone companies were compelled to do in the 1990s.
Then again, the FCC may take action that supersedes anything state lawmakers decide to do.
The battle over the high cost of cable TV is due to rapidly increasing prices. Customers call it greed. Cable companies call it free enterprise. Cities sit back and collect the tax revenue.
There's another issue besides cable operators having too much freedom to raise prices, too: Cable companies lump all sorts of useless channels in take-it-or-leave-it programming packages. Their reluctance to budge on that issue will likely prompt the FCC to take action on that front, too, giving consumers the ability to assemble and pay for their own a la carte menu of channels.
A tough-minded review of the cable-TV business is long overdue, and we look forward to the coming debate with great anticipation.
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