Monday, December 12, 2005

Pity the Poor Cable Company? The Fruits of Competition

I ran across this LATimes article recently which dwells the idea that the phone companies are about to engage in real competiton with the cablecos and takes the position that this will be good for telecos. [For a story which doesn't view the coming competition so favorably for the telco's see "Pity the poor telephone comapny."]

But what caught my attention was a bit buried down in the story:
Verizon rolled out its initial video service over an all-fiber network in Keller, Texas, in September, charging $43.90 a month for 180 TV channels and $34.95 for a high-speed Internet connection.

Anticipating the move, cable operator Charter Communications Inc. slashed prices there to offer 240 channels plus the connection for $50. Previously, Charter charged $69 just for the TV package.
That's a lot of money for consumers to save and a very good thing for consumers.

It also gives us a sense of what can happen when fiber optic based transport (in this case from Verizon) goes head to head with the cable companies. In a word: competition. The mere anticipation of competition lowered prices in Keller. We can expect the same here.

Of course, even the telecos aren't willing to leave it at that; the story follows the above cited encouraging paragraphs with this one:
The two phone giants also have contributed a total of $150,000 to fund an advocacy group called Consumers for Cable Choice to beat the drum for more competition.
This is one of those "astroturf" organizations which, funded by the corporations, wants us to believe is pro-consumer but any advocacy of consumer values is purely coincidental. The real story behind Consumers for Cable Choice is that it is fighting against local franchising agreements. This will give the telco's a huge competitive advantage against the cablecos who have built their business around satisfying local requirements. The local requirement which telecos like BellSouth really want eliminated is the requirement to serve the whole community. We can look for such a push in the Louisiana legislature come March to take away the traditional local rights to control their own rights of way. But, at least in my judgment, the state shouldn't further interfere with local perogatives in favor of the big telecommunications giants. It certainly hasn't worked out well for Lafayette or New Orleans. The Municipal (un)Fair Competition Act has only served to stymie competition and keep local governments from helping themselves.

No comments: