Cable companies and competition

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).

SHARE:

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

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

11 comments
Log in or register to join the discussion
  • True

    "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."

    What is not arguable is without regulation consumers will be disadvantaged. This is
    why I favour the EU (pro-)competition laws that actually encourage competition not
    just try to remedy market abuse after it has happened.

    Consumers will always be advantaged in competitive markets.
    Richard Flude
    • Sort of

      I am not against the PRINCIPLE of antitrust. My problem, however, is that they need to understand that a market dominance outcome is not necessarily the wrong outcome. Different markets demand different sized companies, and in some markets, it makes sense to have a large dominant player.

      That has ALWAYS been the case in computers. Why should it be any different today?

      I am perfectly fine with documentation requirements, irrespective of what executives at my company might prefer. I am also fine with rules that require microsoft to allow third parties to become default handlers (for anything but internal Micorsoft stuff...I can't see why Microsoft, when it uses an HTML renderer, must allow a third party handler to run in Explorer, as an example. That would make stability testing impossible).

      Where I draw the line is at design of Microsoft products by the EC (e.g. requiring they not ship whatever preinclusion they want). I also draw the line at market share targets. Those move far beyond what governments are capable of doing effectively.

      Take away the weaponry that dominance gives them to foreclose avenues of competition, and let markets continue to do their work.
      John Carroll
  • NOT Just Cable

    We need competition in all sectors not just cable, it?s not a good feeling when your stuck with no options on cable or phone service etc. With competition prices drop but someone is getting their pockets lined to prevent or make that competition hard to attain.

    We were stuck with one cable company and one phone company, that being the case they could pretty much charge what they please for appalling service. Now we have Dish and have dropped cable company in addition to dropping the land line phone service in favor of using a cell since we are no able to obtain stand alone DSL with out the phone service and all of the very expensive add on packages.
    aussieblnd@...
    • I agree

      The same rules should apply across the board. AT&T shouldn't have the right to demand exclusivity agreements, either...and I don't think the FCC ruling gives them that right.
      John Carroll
  • Condo Restrictions and Satellite Dishes

    Congress, in its infinite wisdom, passed a law prohibiting condo associations and apartments from banning the installation of satellite dishes.

    See: http://www.fcc.gov/mb/facts/otard.html
    pkstephens
    • what's wrong with that?

      Beside the estetic aspect of the antena I see no issue.
      Linux Geek
  • Cable companies and competition

    The problem doesn't arise from allowing more competition. The problem arises from introducing a new competitor that doesn't have to follow the same rules as the incumbent.
    Don't get all excited about the telephone companies being 'nice' to you. Remember 'Ma Bell' and all the stuff they used to stick us with.
    elmerpaul
    • No one is saying...

      ...the phone companies are "nice." Then again, neither are the cable companies. Better to let "not so nice" people beat each other up to the extent possible.

      Rules that were bad before don't justify the continuance just so incumbents can giggle while newcomers have to run the same gauntlet they did. If the laws are bad, change them, even if it means the incumbent had to spend money that, if it had waited 10 years, they wouldn't have had to.

      Rules should be optimized to maximize consumer benefit.
      John Carroll
  • Jaw drops again

    I thought for sure you were going to argue that apartment building owners have the "sovereign" right to do whatever they want to with their property and to impose whatever restrictions on their tenants they think proper (to include requiring them to wear pointy hats when walking the halls) on the theory that if owners do things that make no sense, prospective tenants will vote with their feet and their wallets.

    I think you've mellowed somewhat since 2000.
    John L. Ries
    • Age does that

      NT
      John Carroll
  • I Want My FIOSTV

    We only have Time Warner in the cable TV market here
    I have FIOS, want the FIOSTV, don't see why anyone should stop it
    if governement is making them jump through hoops that is ridiculous
    a little competition is good


    A
    andycher