🚀 go-pugleaf

hougen@uirvlh.csl.uiuc.edu (Darrell Roy Hougen) writes:

>It would be much better if the cable companies were deregulated.  As
>it is now, most cable companies have an exclusive franchise (even
>though it is sometimes called a nonexclusive franchise) to serve a
>particular area and the only thing that is keeping them from raising
>their rates sky high is the fear of rate regulation.  This is supposed
>to be a free country; why not open up the cable markets to free market
>competition?  Then we could have low rates and the cable companies
>could make their profits.  But, of course, they are trying to protect
>their unreasonably cushy position and all most people can think of is
>more government interference to cut the rates.  As far as I am
>concerned, cable is not a necessity of life and therefore, there is
>absolutely no reason to regulate that industry at all.  Period.

As a Libertarian at heart, I would probably agree with you, EXCEPT for
a major problem with this:

In a free market there should be equal opportunity to compete.  If Cablevision
(as an example) overcharges, I should be able to move in and start my own
cable company and compete.

Unfortunately it doesn't work that way.

1.  The existing cable companies had the advantage of being able to install
    their plant under situations where they and their investors believed
    that an exclusive right existed.  This constituted to a significant
    degree a specific sanction by the appropiate government authority.
    That's NOT a free enterprise or a level playing field.

2.  Many cable companies are cross owned with programming providers.
    While this is technically not wrong in a truly free enterprise system,
    it does get abused an awful lot.  Cablevision, Inc., has a lot of stock
    held by a couple of program providers.  Would those providers be willing
    to offer their programs to the competing cable system?

3.  There is only a limited level of resource available for installing the
    cable lines on the poles and into larger buildings.  Would the second
    cable company get an equal oppotunity to install lines at an equal cost?
    What about a third, or a fear of a third and fourth by the owners of the
    poles?

4.  Cable lines leak radio frequency interference.  A second cable company
    stringing lines is going to double this interference.  The second
    company is going to be even less likely to afford the added equipment
    to make leakage any less.  The only existing incentive to keep the
    leakage low is FCC regulations.

5.  Costs go up for BOTH because the existing plant base of one company is
    now supported by fewer subscribers.  The plant base is a constant.
    Another way to look at it is that the whole subscriber base now has to
    support TWO plant bases, TWO head end sites, TWO bureaucracies (and
    Cablevision has a pretty sad one... their computers won't even let
    their people calculate prorated bills based on cutoff days).