Tuesday, January 17, 2006

"City, county opposing Cox deregulation"

New Tricks: Cox asking FCC to "deregulate" in North Carolina. City and county claim that such deregulation will free Cox to charge poor and rural customers more than their neigbors have to pay says the man who oversees the cable company for the county:
Under deregulation, the company could charge "one neighborhood one price and another neighborhood another price," Lynch said. Poorer neighborhoods could see higher rates because homes there don't take advantage of Internet, digital cable and other services, he said.
Right now, of course, most city's contracts with cable companies require that they serve all and that they offer the same services at the same prices to all. That's the cable model in our country. And it's a LOCAL, not federal or state, requirement.

But BellSouth and the other Baby Bells (most noticeably Verizion and ATT in addition to BS) are lobbying the FCC (and statehouses) hard to escape the "cable model" and be allowed to use city property without having to agree to serve all in a community equally. This is mostly not about (as the Bells claim) the "onerous" task of negotiating with municipalities but about getting a competitive advantage over their chief potential competition: the cable companies. If the Bells are allowed to compete only for the most profitable neighborhoods while the cable companies are stuck with providing for all, it will add up to an enormous unfair advantage for the Bells. (Hmmn, the Bells seeking an unfair advantage, why does that seem familiar?)

This story suggests that the cable companies have begun thinking strategically--they can't dump infrastructure they've already built but they could demand that the feds allow them the same discriminatory "powers" they are poised to give the phone companies by exempting the cablecos as well as the telecos from local franchise agreements. That would neatly get them out of the Hobson's choice they correctly see the telecos as trying to force them to make: of either being forced to lower their prices to the point of nonprofitability across a whole community in order to compete in the most profitable segments (like our upscale River Ranch), or abandon the most profitable segments, allow the phone companies to beat them there and wait for the teleco's inexorable expansion into every profitable neighborhood.

That's the world we find ourselves in. It's another race to the bottom with consumers in general and the least wealthy of any community in particular taking the hit first and hardest.

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