Cable companies and competition

Summary:The FCC announced yesterday that they would ban exclusive agreements with apartment complexes that enabled cable companies to lock-out competition through long-term contracts that prevent residents from using alternatives. I do know that this often meant such complexes banned installation of satellite dishes anywhere on the property, which was the case at a former apartment in Dallas, TX (even from my back porch, which just so happened to face in the right direction).

The FCC announced yesterday that they would ban exclusive agreements with apartment complexes that enabled cable companies to lock-out competition through long-term contracts that prevent residents from using alternatives. I do know that this often meant such complexes banned installation of satellite dishes anywhere on the property, which was the case at a former apartment in Dallas, TX (even from my back porch, which just so happened to face in the right direction). I'm not sure whether this could have been used to prevent access to IPTV over DSL lines, but I'm sure cable companies would try to enforce such restrictions, particularly if the provision of IPTV service involved any kind of hardware upgrade to facilities on the premises.

I've shown myself skeptical of government regulations in the past, but that is mostly because governments quite often have been so ham-fisted in their implementation. One could argue that governments will NEVER have enough information to make sensible regulations, but then again, we trust them enough to make contract and property laws. Those are fairly essential components of economic activity, and the transition from developing to developed economy often involves the replacement of "de facto" contract and property rules with nationwide rules that apply to everyone.

That's why I'm not an "all regulation is bad" sort of guy. I tend to call it when I see it, judging whether a regulation makes sense based on the incentives it creates and the opportunities for competition it offers. Governments create the framework for economic activity, and regulations are a part of that.

Exclusive contracts with apartments do little more than hinder competition.  Restricting the use of such contracts is a useful regulation, much as rules that allow new cable providers to acquire a statewide right to broadcast boosts competition by reducing barriers to market entry.

Local franchise rules protect incumbent cable companies by forcing newcomers to run a gauntlet and negotiate broadcasting "rights" on a town by town basis. This is free money for local governments who can demand things like free local access TV stations and arbitrary licensing fees, but keeps prices high and blocks competition as a whole by forcing newcomers to roll-out service slowly over many years.   State or nationwide franchise rules replace the uncertainty that leaves room for local governments to act like "bridge trolls," the net effect of which is to make new service rollout unnecessarily expensive.

Telecommunications has a long history of cozy relationships with state governments who grant providers exclusivity in return for taxes and other freebies. As the FCC unwinds other regulations that are of questionable merit, I'm glad its putting in place some sensible replacements.

Topics: Enterprise Software, Government, Government : US, Hardware, Mobility, Networking, Software, Telcos

About

John Carroll has programmed in a wide variety of computing domains, including servers, client PCs, mobile phones and even mainframes. His current specialties are C#, .NET, Java, WIN32/COM and C++, and he has applied those skills in everything from distributed web-based systems to embedded devices. In his spare time, he enjoys the world... Full Bio

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