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Regulation of the Cable Industry
Term Paper ID:27083
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Essay Subject:
Discusses the possibilities of regulation in the cable industry. Argues that regulation is necessary to protect against poor service & high rates.... More...
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4 Pages / 900 Words
5 sources, 5 Citations,
MLA Format
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Paper Abstract:
Discusses the possibilities of regulation in the cable industry. Argues that regulation is necessary to protect against poor service & high rates.
Paper Introduction:
Consumers have two basic complaints about the delivery of cable television to the home--poor service, and high rates. In the deregulation atmosphere of the Reagan era, many government agencies and regulations were abandoned or curtailed, and cable television was deregulated along with many other industries. As it has been determined that deregulation might not be serving the interests of the public and that some industries have been taking unfair advantage of the deregulated environment, Congress has moved to try to re-regulate a variety of industries. The cable television industry is a recent example. The issue is whether cable re-regulation has the potential to protect the interests of the consumer and precisely what effects it will have on the cable television industry and the consumer. It has been charged that re-regulation will have a damaging financial effect on both the indus
Text of the Paper:
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The deregulation effort is seen today as only a half-hearted matterbecause of the aforementioned retention of protection in the form ofmonopoly franchising. As it has been determined that deregulation mightnot be serving the interests of the public and that some industries havebeen taking unfair advantage of the deregulated environment, Congress hasmoved to try to re-regulate a variety of industries. The issue is whether cable re-regulation hasthe potential to protect the interests of the consumer and precisely whateffects it will have on the cable television industry and the consumer. Cable has succeeded against "free" broadcasttelevision because it delivers a better picture and more choices. The move toward re-regulation comes at a time when the cable industryis having to face new technological challenges along with potentialcompetition from such giants as the telephone company. In the deregulationatmosphere of the Reagan era, many government agencies and regulations wereabandoned or curtailed, and cable television was deregulated along withmany other industries. In a recent survey, people wereasked about their level of satisfaction regarding cable. Only 53communities in the nation are wired for two cable systems. "Playing the Regulation Game on Cable." USA Today (May 1991), 8 -81.Mills, Mike. The cable televisionindustry is a recent example. As peopleask, "Is this likely to happen?," the industry is doing all it can to seethat it does not. The majorcomplaint concerned poor service when a problem arose, with complaints suchas, "I can never get the cable company to come to the house at a time whichis convenient for me." Another common complaint was that there weresometimes added charges for service: "I am already paying for the service,and yet the company keeps finding new ways to add charges to my bill." At the present time there is little competition for most cablesystems, aside from broadcast television, though new direct satelliteservices are making inroads. Works CitedBenoit, Ellen. Ithas been charged that re-regulation will have a damaging financial effecton both the industry and its customers, that it may in fact increase thesubscription cost for the consumer rather than decreasing it as proponentsof re-regulation claim it would, and that it will do nothing to curtail themonopoly structure of the cable industry. It did not eliminate monopoly franchises, forinstance, and only deregulated price controls. Cable-owners are alsorestricted by the technologies they have already adopted and installed, andupgrading is very difficult and expensive ("The Great Media Exchange" 19).Arguments about the money needed to upgrade these systems tend to fall ondeaf hears as far as the consumer is concerned, for the average consumerhas noted a considerable increase in his or her rates since deregulationwas instituted, and the complaint is usually the same: "My rates have goneup, but I have not been given new channels or any improvement in service."The most recent battle pits the cable interests against the broadcastinterests, and both sides have heavy war chests and powerful lobbying arms. For the most part, though, thecommunications industry sees itself as frozen by regulation into a patternoutdated by technology and economics some years ago. Mostfranchising authorities offer exclusive contracts to just one system, thuseffectively preventing competition in the first place. This is why there have been calls for re-regulation as people havenoted, "The service was better before these companies were deregulated."The deregulation effort served the cable industry very well, but it did notdo as well for the consumer. Some newtechnologies are making an appearance in different markets, and some arebeing tested by cable companies. Jack Valenti of the Motion Picture Association ofAmerica (MPAA) says that cable is the only service in the marketplace todaythat has a governmentally conferred privilege and states further, "Theydon't pay for anything they pick up locally, which they sell for a profit,and they pay a pittance of the marketplace worth of a distant signal, whichthey sell for a profit. Yet, it is cable that has been protected bygovernment regulators and lawmakers. Their profit margins are 46 percent" (Victor1176). Existing cablesystems also often buy out the competition or wage court battles to retainexclusive franchises (Mills 798). "The C-word." Financial World (April 16, 1991), 35-37."The great media exchange." The Economist (July 16, 1992), 19.Hazlett, Thomas W. Nearly 95 percent of American homes have access to cable, and nearly57 percent actually subscribe (Benoit 37). The fundamental problem between the two is that cable has three revenuestreams--subscriptions, advertising, and pay-per-view--while broadcastershave only one--advertising. Consumers have two basic complaints about the delivery of cabletelevision to the home--poor service, and high rates. The 1984 Cable Act gave thecable industry a great victory by firming up the rights to renew municipalfranchises while eliminating any rate-setting authority by localgovernments, for it states, "Government barriers to competition wereprovided free of charge to companies that faced no effective regulation"(Hazlett 8 ). "House Panel's Re-Regulation Bill Targets Cable TV 'Renegades.'" Congressional Quarterly (March 28, 1992), 797-799.Victor, Kirk. Consumers would benefit by re-regulation or by a better form of deregulation, one involving theelimination of monopolies and the promotion of true competition. "Down to the Wire." National Journal (May 16, 1992), 1175- 118 . In fact re-regulation may be theonly way to force the industry to be responsive to the customers it serves.
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