Attitude Problem


I hate my cable company. The remote control they gave me stopped working several months ago. I went to their nearest office, a few blocks from my apartment. They told me I lived on the wrong side of an imaginary line, so I would have to make a trip to Marina del Rey, several miles away, to get a new remote control. I called the Marina del Rey office to ask about their hours; the phone rang 35 times without an answer. I ended up buying a remote control from an electronics store.

I could go on—a hefty $22 a month for basic service; a channel tuner that makes it impossible to tape one program while watching another or to tape programs on more than one channel when I'm not home; mysterious signal interruptions, lasting anywhere from a few minutes to all day; a bizarre, take-it-or-leave-it selection of channels—but you get the idea.

So do members of Congress. Sort of. They know that many people are disgusted with their cable companies, but they don't quite understand the source of the problem. "Heeding consumers' ire," as The New York Times put it, the Senate voted overwhelmingly in January to re-regulate cable-TV rates, and the House was expected to follow suit.

The General Accounting Office says the average cost for basic cable service has risen about 60 percent since December 1986, when the Federal Communications Commission effectively abolished price controls in most markets. Supporters of rate regulation note that cable monopolies can get away with big price increases even as service remains spotty.

But these self-styled consumer advocates are remarkably incurious about how cable companies achieved their monopoly power. You will search newspaper articles about cable reregulation in vain for this interesting tidbit: Out of some 9,000 local cable systems in the United States, all but a few dozen are protected from competition by government franchises.

The Washington Post notes that municipalities award licenses to cable companies and that "99 percent of the nation's cable systems…have no direct competitor," but fails to draw any connection between these two facts. Instead, the Post asserts that "head-to-head competition is rare because the cost of building a second system in a community is considered prohibitive." Hence cable companies are "de facto monopolies."

The paradox here is familiar: If cable TV will always end up as a monopoly, why must local governments prevent entry into the market by competitors? In any case, head-to-head cable competition does occur where it is allowed—for example, in Phoenix, Arizona, and Mobile, Alabama. Even one competitor makes it hard for a cable company to profit despite high rates and lackadaisical service.

Moreover, the argument that cable TV is a natural monopoly rests on a narrow conception of the relevant market: A cable company's direct competitors include not only other cable companies but also broadcast television, satellite TV, "wireless cable" (via microwaves), and (if the law allowed it) telephone companies—anyone who can bring audiovisual information into your home.

Years of government protection have given cable companies a double advantage. They don't have to worry about competition from other cable companies. And because of the dominant position this gives them, they can try to deter competition from satellite TV and wireless cable, relative newcomers, through their influence as major buyers of programming and part owners of many cable channels.

But the answer is not new regulation to compensate for the effects of past regulation. Congress can promote competition, first, by abolishing monopoly franchises. Without the franchises, both established cable companies and new entrants will be free to compete for the same customers.

Second, Congress should approve pending legislation to let phone companies into the TV market. (Cable operators are already beginning to get into the telephone business.) Phone companies have the necessary lines in place and so are well positioned to start competing soon.

As viewers begin to choose from an expanded range of TV options, the cable companies may find that protection has its disadvantages. Shielded from competition, they have developed a bad attitude. To paraphrase Lily Tomlin: They don't care. They don't have to. They're the cable company.