The FCC Plays 'Monopoly'; Cable Numbers Disputed

THE FCC PLAYS 'MONOPOLY'
[SOURCE: Wall Street Journal, AUTHOR: Editorial staff]
Federal Communications Commission Chairman Kevin Martin wants to force cable companies to reduce, by as much as 75%, the already regulated rates they charge to lease channels to programmers. He also wants to require cable operators to settle carriage disputes, like the current one involving the NFL Network, through an arbitration system set up by the FCC. Apparently Mr. Martin, a Republican appointee to the agency no less, has lost faith in the free market's ability to handle commercial disputes. Either that, or he has some personal animus against cable. Chairman Martin likes to point out that cable rates have increased over the past decade, which is true. But it's also true that consumers are getting much more for their money. Ten years ago, the average cable customer received 45 channels. Today that customer receives 75. On a per-channel basis, cable rates have fallen. More people also subscribe to "bundles" that allow them to receive cable, phone and Internet service from a single provider. As a result, consumers today are paying 30% less than it cost to buy those services separately 10 years ago. To justify his meddling, Chairman Martin describes a marketplace that doesn't exist. He pretends there's no DirecTV and EchoStar option. He pretends that Verizon and AT&T's video offerings pose no threat to Comcast and Time Warner. But if the FCC Chairman is most concerned about costs, the goal should be more competition via different platforms. In other words, he should want current trends to continue. His odd and untimely proposals are more likely to retard them.
http://online.wsj.com/article/SB119603665588003451.html?mod=todays_us_op...
(requires subscription)

* FCC Chief Seeks Votes to Tighten Cable Rules
[SOURCE: New York Times, AUTHOR: Stephen Labaton]
Chairman Martin is struggling to find enough support from a majority of the agency’s commissioners to regulate cable television companies more tightly. Commissioner Jonathan Adelstein recently tried, unsuccessfully, to postpone the vote on the video competition report. Commissioner Adelstein complained that Chairman Martin has been unfairly rushing other commissioners to complete the finding. Mr. Adelstein has told people involved in the proceeding that he was unsure whether there was an adequate basis for concluding that the cable companies had become too dominant. Without Adelstein’s support, Martin’s proposal could fail. A defeat would be a major blow to consumer groups and a setback for Chairman Martin.
http://www.nytimes.com/2007/11/26/business/media/26cable.html?ref=todays...
(requires registration)

WALL STREET ANALYST REFUTES FCC CHAIRMAN'S CABLE MATH
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
Wall Street cable analyst Craig Moffett told a Federal Communications Commission official last week that it was not “mathematically possible” that cable penetration of U.S. households is 70% or higher. Moffett, a cable analyst at Sanford C. Bernstein & Co., provided his analysis in a Nov. 21 letter to FCC Democrat Jonathan Adelstein. Adelstein became the third FCC member to seek an outside data after FCC chairman Kevin Martin infuriated the cable establishment by declaring that cable TV operators had breached the 70% barrier, triggering a legal provision that gives the FCC expansive new powers to regulate cable. Moffett, based on a review of Securities and Exchange Commission filings and other publicly available data, concluded there are 63.5 million U.S. cable subscribers, which means the total number of homes passed would have to be 90.7 million or fewer to achieve 70% penetration. But, Moffett said, such a result could not be possible because “the eight publicly trade cable companies” alone have reported passing 94.2 million homes. The eight MSOs have 48.4 million subscribers. After looking at the total number of cable subscribers and the total number of homes passed by all cable companies, and after adjusting to exclude vacant households, Moffett determined that cable penetration was no higher than 60.5%.
http://www.multichannel.com/article/CA6504793.html?rssid=196