WASHINGTON D.C. — Yesterday, the Federal Commission Communications (FCC) released an Order limiting the ability of state and local franchise authorities to regulate basic cable television rates. Previously, cable operators had to prove to regulators that they faced “effective competition” from other video providers in order to avoid rate regulation. Now, in light of the growing competition from both satellite (33.9% of the market in 2013) and telco (11.2%) video providers, that burden has been flipped.
“Finally, the FCC has come to terms with reality,” said Tom Struble, Legal Fellow at TechFreedom. “Competition between cable and other video providers is vibrant, and state and local authorities have no business regulating prices in a dynamic market. It’s encouraging to see Chairman Wheeler standing with his Republican colleagues, in sharp contrast to the party-line votes that have been so common during his tenure. For common sense and hard data to triumph over politics is a refreshing change of pace for a city all-too-often crippled by partisan deadlock.”
“The Chairman’s embrace of competition over price controls is welcome news, but it’s hard to square with his decision to impose Title II on the Internet,” said Berin Szoka, President of TechFreedom. “Despite his claims that the FCC is forbearing from price regulation, the Open Internet Order imposed a price of zero for prioritizing sensitive Internet traffic, and the Sections of Title II the FCC isn’t forbearing from will allow the FCC to impose other forms of price regulation in the future. I fear that Wheeler may simply be paying lip-service to competition in an effort to moderate his image — after implementing the greatest regulatory power grab in history just to further the President’s political agenda. But whatever his motives, if Wheeler’s finally learning how to build bridges across the aisle, that’s good news for everyone.”
“Whatever the case for regulating cable television as a monopoly back in the 1990s, that rationale long ago disappeared,” concluded Struble. “Back then, satellite was a novelty and telephone providers weren’t even allowed to provide video service. Today, satellite and telcos serve almost half of the video market, and have at least a 15% share of each and every market in the country. The FCC should always chose competition over rate regulation, because price controls hurt consumers by reducing investment and distorting innovation. If the 1992 Cable Act hadn’t restored cable price controls, cable modem service would probably have been deployed years earlier — and the Internet would have blossomed far faster.”