Cable industry should push back against FCC regs
Published: Saturday, November 17th, 2007
Perhaps it’s not all that surprising. Any government agency set up with a mission to regulate some aspect of commercial life develops an institutional imperative to regulate ever more aspects. So the Federal Communications Commission, which was barred by law in 1984 from regulating cable television — to give the industry a chance to grow and develop — now wants to start regulating the industry with a vengeance. It would be difficult to imagine a better way to stifle the growing array of choices consumers have available for viewing television programming. What might let the FCC get its nose under cable’s tent is a portion of the 1984 Cable Act, which said that if cable television becomes available to 70 percent of U.S. households, and 70 percent of those who can subscribe to cable do so, the industry then can be regulated. There is controversy as to whether that threshold has been reached. The FCC’s report in 2005 put the number of cable subscribers at 54 percent, while a cable industry-sponsored study this year puts it at 58 percent. But a recent court decision defined TV service offered by a phone company over fiber optic cable as being cable. If subscribers to Verizon and other phone company TV services are included, that could push the number of cable subscribers to more than 70 percent. That highlights the fact that the marketplace now offers more competition than regulation could facilitate. The phone companies are getting into providing television transmission, in addition to the satellite providers. More and more people are getting TV shows over the Internet. Heavy-handed federal regulation is more likely to stifle this kind of innovation than to encourage it. Even though the “70/70” provision was written into law in 1984, it lacks the kind of justification whereby the FCC, back during the New Deal enthusiasm for creating new regulatory agencies, was given authority over broadcasting. The airwaves over which signals are sent, the rationale went, “belong to the public,” which means the government can decide who can use them and how. This was a stretch — the airwaves are part of nature, which doesn’t necessarily imply that somebody in a government office has more right than anybody else to decide how they shall be used — and it involved government in regulatory micromanagement that would never have been tolerated in the print media. But at least there was a rationale. Cables, however, are privately funded and privately owned, which gives the government no legitimate authority to regulate how they are used, except possibly in the unlikely event legitimate health or safety issues arise. The fact that Congress passed a law in 1984 asserting a regulatory “right” if certain arbitrary numbers are reached doesn’t change these facts, and if the FCC does start asserting regulatory authority we expect a court challenge. The other problem is the kinds of regulations the FCC is thinking about imposing — in the apparent belief that people in offices in Washington, D.C., know what consumers want better than consumers, through their choices in a highly competitive marketplace, reveal about their preferences — would almost certainly make the industry less competitive rather than more so. For example, the FCC is said to want to force programming providers to stop “bundling” their programming — offering cable companies popular channels like MTV only if they also take less-watched channels like Spike. There’s also talk of forcing cable companies to offer subscribers an “a la carte” system, letting them pick just the individual channels they want rather than the packages the cable company assembled. But you can see how this might lead to less diversity rather than more. The present system makes for a variety of channels that serve relatively small niches but “piggyback” on more popular channels. If each channel had to rely on individual subscriptions at both the consumer and local cable company end, some might well not survive. The impulse to extend one’s empire seems virtually universal, especially in government. If the FCC is unable to resist this impulse and pushes into cable television, the industry should push back.
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