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The basic ingredients of a healthy market are in place, and sooner or later competition will set in. Yes, the big programmers' anticompetitive distribution policy was a setback for consumers, but only in the short run. Other programmers-perhaps including movie studios without corporate ties to cable-will enter, and as they do, excessively "cable-friendly" attitudes will become too expensive to maintain. If the existing rates are really unreasonable, then all the mechanisms to bring them down are present. HBO's Levi sounds believable enough when he says, "If our cash register isn't ringing, if our phones aren't ringing, then we're going to take a hard look at what we're charging." In fact, HBO has already responded once by cutting its dish subscription rate by 17 percent.
It is easy to lose sight of the fact that the whole direct-satellite pay-TV business is only a few months old. Only about 10 programmers are fully scrambled. It's absurd for scrambling critics to say that the market is "uncompetitive" or "failing" when it has hardly begun to operate. The true shape of that market will only be known once the majority of pay services scramble, consumer confidence returns, and the programmers begin to compete with each other.
It's a safe bet that cable's attempt to subordinate the dish won't succeed for long. Consider an interesting historical precedent: In 1878, Western Union, the largest and most powerful corporation in the United States, entered the telephone business to preempt the upstart Bell telephone company. The telegraph giant's executives had what now appears to be a peculiar attitude toward the telephone: they thought it was a great way to send in orders for telegraphs. In fact, the telephone and the telegraph did enjoy a synergistic relationship for many years, but eventually the telephone business swallowed up its technological forefather.
Like Western Union in 1878, the established cable interests want to incorporate the dish into their business without letting it disrupt the status quo. We'll see.
Milton Mueller received his M.A. in communications from the University of Pennsylvania in 1985 and is currently working on a Ph.D. dissertation on the history of AT&T. He is coauthor, with Edwin Diamond, of Telecommunications in Crisis (Cato Institute, 1983).