Fostering Competition in the Cable Television Industry

Cable television is available to more than 90 percent of U.S. households, and more than 60 percent of all such households subscribe to cable service. Services historically provided include improved reception for television programs broadcast over the air on advertiser-supported networks such as CBS, NBC, ABC, and the FOX network, and specialized programming from cable networks such as CNN, MTV, and the Disney Channel. In coming years, much of the growth in cable TV revenues will come from the provision of new shopping and data communication services. The problem is that consumers in most communities receive these services from a single monopoly provider. Regulators must decide how to encourage continued innovation in programming and in the development of new cable services, while at the same time restraining industry prices.

One possible competitor for existing cable companies is the local telephone company, although they have to install new fiber-optic cable to provide competitive services. Standing in the way, however, are regulations that prohibit competition from telephone companies. Rules that would allow telephone companies to carry television programming and other video services would clearly enhance competition in the industry. Similarly, requiring local cable companies to transmit programming provided by others would free up access to local markets. Rules would have to be put in place to guarantee open access to local cable markets and reasonable fees to the local cable companies for program transmission.

Another potential competitor for existing cable companies is provided by "sky cable" and new emerging technologies for over-the-air transmission of specialized programming and data. Such technologies are an effective competitor for local cable companies, especially in large cities and residential areas with dense population. If such forms of competition are allowed to meet their potential, the local cable monopoly problem may soon become moot.

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