Tuesday, March 30, 2004

The Washington Post reports on Senate hearings concerning cable television rates. The paper notes: No U.S. cable or satellite company offers what are called "a la carte" plans... That may change, if some lawmakers and consumer groups get their way, as the cable industry finds itself under increasing scrutiny. Lawmakers report that their constituents are angry about cable bills that have risen at three times the rate of inflation since the industry was largely deregulated in 1996. Others want government to do something about the rising incidence of profanity and nudity found on pay-television systems. One possible solution being proposed is a la carte cable, a way to give consumers more choice over what they watch and how much they pay for it. But it's not an answer the cable industry will swallow easily, if a Senate Commerce Committee hearing yesterday on cable rates is any indication.

"When I go to the grocery store to buy a quart of milk, I don't have to buy a package of celery and a bunch of broccoli," Committee Chairman Sen. McCain said in an interview. "I don't like broccoli."

I doubt that government intervention of this sort is a good idea, but the cable company that does offer a la carte would get my business instantly... assuming it was in my city. Unfortunately, deregulation hasn’t increased competition.

Cable companies sign franchise agreements with municipalities. Infrastructure investment makes it expensive for there to be more than one cable company in all but the largest cities. As a result, there’s an understanding between cable providers that while they will compete with each other to get the franchise to individual municipalities, once a franchise has been awarded to one, others won’t bid for a second. In other words, no competition.

In my area, not a single municipality offers consumers more than one cable choice. (Satellite services only offer packages too). There’s so little to watch on TV anyway, I wouldn’t waste $45 (?) on regular cable or $60+ on digital, especially since the latter offers 200-something TV channels and who-knows how many music and home shopping channels but not a single French-language one. Still, I’d be happy to pay a higher per-channel fee and only get the few that are actually worth watching, like the soccer channels and Sundance.

People need to understand that de-regulation and competition are not synonymous. Regulation isn't always the answer. But de- or anti-regulation proponents on specific issues need to not be disingenuous by suggesting that non- or de-regulation automatically leads to more competition.

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