By studying the Cable Communications Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996, the federal arm of our telecommunications regulatory system can learn valuable lessons about how to create a well oiled infrastructure with plenty of competition.
The Cable Act of 1984 helped to create the linear programming we have come to enjoy and, at the same time, hate to pay for. In essence, the Act created content... and the crux of an issue today: how to share it with everyone at a reasonable price.
The Consumer Protection and Competition Act held that companies could not hold customers hostage for programming. Further, it paved the way for programming tiers that allow a choice on what consumers must pay to receive, and that any competitor could challenge an incumbent operator. While some of those tiers can be somewhat expensive, they do represent what consumers must pay to obtain for their favorite programs, while also accepting many others they do not want.
Competition in wireline overbuilds never really materialized to any significant degree, due to the high cost of infrastructure buildouts, programming, and overhead. Direct broadcast satellite (DBS) came along with the answer to that problem, consequently filling the gap of the underserved while creating significant video competition for cable MSOs.
The Telecommunications Act of 1996 enabled, more than anything else, the sharing of networks by incumbent phone companies. They had to sell their network connections to competitors, thereby creating competition in the local and long-distance markets.
Now that landline communications are starting to be replaced by a mobile industry, operators such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) are finally upgrading their networks to enter the broadband and content arenas. However, this is proliferating at a woefully slow pace without a significant dent in the overall market.
Fast forward to today, and, due to years of deregulation, you have a closed infrastructure consisting of a few large operators. But you can’t blame cable companies for taking steps to eliminate competition and protect their territories, because Wall Street demands it.
To solve the problem, the FCC will have to look closely at network sharing, possibly viewing broadband like our interstate highway system and enabling a pipeline to share with all competitors. But the question remains as to who would build it out and at what cost. A competitive infrastructure is the right solution.
— Leonard Grace, a cable industry vet, is a telecom strategist and blogger. He can be reached at [email protected]. Special to