FCC Cable Ruling: Big Change For Consumers Or Not?


Tomorrow's going to be a big day for the telecom and cable industries. The FCC is expected to strike down exclusive contracts between cable TV providers and apartment building owners. This will end the practice that kept competitors from offering their services to residents.

And it's not just competition between Time Warner Cable and Comcast --the competitive landscape has changed dramatically now that AT&T and Verizon also offer TV services. The telecom companies have been (no surprise) pushing for the FCC to make this move, trying to expand their TV services.

Competition is good for consumers, right? And the FCC says it's trying to help with a dire situation--a 93% increase in cable rates over the past ten years. The telecoms and some consumer groups say it's good because the ruling would provide more competition (which generally lowers prices).

But the cable companies and some apartment owners say it's bad because they wouldn't have the bargaining chip of exclusivity and it means that the apartments would have to pay higher rates than if the building owner had negotiated a single lower price.

Consumers aside, what does this mean for business? It could give the telecom's a new entree, and it could also push the question of whether AT&T should buy Dish. But I wouldn't expect it to change anything right away. There are still some questions about whether the new rules will affect current deals or only new ones.

Bottom line: this says a huge amount about how content delivery is changing--the FCC found that satellite providers didn't provide enough competition to off-set the exclusive cable deals. This is similar to satellite radio's challenge: what kind of distribution does it compete with? What counts as competition is changing-- it's not just within an industry, it's intra-industry -- which means that all the rules should be reconsidered in light of this new landscape.

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