Sunday, August 07, 2005

"Fighting Big Cable (and why it matters)"

Following up on a point made in the previous post by Mike, Harold Feld over WetMachine is also up in arms about the relentless advance of telecom monopolization in recent years. But, complementing Mike's broadside blast against the Phone companies, his target is the cablecos. His particular point of departure is the continuing regional consolidation of the cablecos:
Comcast (the nation's biggest cable company) and Time Warner (the second biggest) are dividing up the bankrupt corpse of Adelphia. At the same time, they are swapping their own systems so that in cities where Time Warner and Comcast compete against each other (like New York and Los Angeles) they won't compete anymore.
It makes a difference who owns your cableco; monopoly control of cable is a threat to the democratic process; not merely theoretically but actually:
...the behavior of Comcast and Time Warner in the recent fight over state-wide franchising in TX should raise eyebrows. During the recent tussle in TX on legislation to abolish local franchising for phone companies offering video, Comcast and Time Warner refused to run SBC political ads. OTOH, they ran free advertisements opposing the legislation... So, for free speech purposes, national concentration and regional concentration matter.
Texas, for the moment, has managed to turn back further restrictions--but not because SBC was able to run inexpensive supporting ads in the most effective forum for targeting specific populations. Comcast wouldn't allow that. Just for the record: when Lafayette Coming Together (LCT) called for advertising rates on Cox Cable during the recent referendum battle we never got a call-back. On the other hand, we got plenty (trust me, plenty) of cold calls from the free media. Hmmmnnn. I know Lafayette Yes!, who bought all the TV advertising (including the time for one LCT-produced ad from its Fiber Film Fest) ran it all on local broadcast TV--a more costly, less targeted buy than cable. My guess is that they got the same response. Notice that in Lafayette's case it would not have helped at all if BellSouth had offered "competing" cable: the two corporations would have undoubtedly joined hands in the effort to keep pro-fiber advertising off the air just as the joined hands in the "academic" broadband conference and the last push poll. We need real regulation folks, "competition" demonstrably does not cover all instances of situations in which the interests of the community are at stake. Blocking the advertising of new competitors is only one instance of the abuse of power by corporations that a healthy community would not allow.

It all goes back to economic reality: Monopoly Power. And Feld gets it:
As the D.C. Circuit put it in United States v. Microsoft, if a company can raise prices above the competitive level profitably, and if barriers exist that keep consumers from easily switching, you have market power and the basis for a monopolization claim.
The DC Circuit, the most economically conservative in the land, is not just making stuff up. Price constraint is the essence of competition; and lack of it is the core economic definition of monopoly.

Feld notes that the ability to dominate regions of the country and to control access to the major markets in the region puts both suppliers of content and consumers at increasing disadvantages as regional consolidations solidifies. The more unchecked power a regional monopoly wields the less power the only effective check on the cable companies, the local franchise, is able to exert. (Readers will recall that Cox got a real shock when EATEL announced that it would move into Gonzales with a video offering: the town council, (so shockingly!) decided that Cox had to actually fulfill its contract. And they didn't back down when threatened. Cox finally had to buckle. My...)

The economic power wielded by regional monopolies means you'll pay more and get less variety in your viewing if this process continues unchecked. And your local government will have even fewer realistic choices. (If you don't live in'll bet we'll get no threats to suspend service if the council decides not to kowtow to Cox.)

All in all it's not a pretty picture. Telephone or Cable, our federal telecommunications policy is worthless. It may be easier to see from the vantage point of Lafayette, but really, it should be obvious to folks anywhere in this great land. We're being taken for a ride.

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