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Back in 1992, when cable pricing enjoyed unfettered rate hikes only a health insurance company could appreciate, sufficient anger among the American people helped push passage of a cable re-regulation bill to control the cable industry’s insatiable Ca$h Quest. The legislation recognized that most consumers had little choice in pay television providers. Although approximately three million Americans, mostly residing in rural areas, owned satellite dishes at the time, the vast majority of people stayed with cable. The 1992 Cable Act covered broadcast basic service, usually local channels and a handful of home shopping and local public access channels, as well as enhanced basic service, usually called “standard service” these days, which included popular basic cable networks like CNN, The Weather Channel, and ESPN. Your cable company could not raise prices on these services willy-nilly without authorization from regulators, which helped keep the price of cable down. It also guaranteed that competitors could buy access to popular cable networks, many of which were owned or controlled by cable operators themselves.
But the Cable Act also provided a way out of rate regulation — when a local community enjoyed competitive choice among pay television providers, and when a certain percentage of local residents subscribed to that competitor. For the remainder of the 1990s and early 2000s, that competition largely came from satellite providers DirecTV and DISH Network. Unfortunately for cable, most communities didn’t have enough residents subscribing to satellite service to lift rate regulation, so the cable industry sent in the lawyers to sue over the Act’s constitutionality (they claimed it violated their freedom of speech) and the lobbyists to convince Washington to deregulate them once again.
The Clinton Administration presided over the wholesale deregulation of the industry once again in 1996, proof that lobbyist influence and big campaign contributions are about as bi-partisan as Washington gets. But the revised law left in place access rights to cable programming, and rate regulation of the broadcast basic service. It was open season for rate increases on standard service, and cable didn’t disappoint. In most areas, the basic package quickly rose to nearly $50 after 1996.
Since only a small percentage of cable customers choose broadcast basic service, one might wonder why cable companies remain intent on bugging the FCC to get those rates deregulated as well, especially when the industry claims it won’t be dramatically raising prices on service post-deregulation.
Yet companies like Cablevision have employees who sit around and file “waiver requests” with the Commission to get rates deregulated across their service area. Recently, they managed to get a waiver for service across Westchester County and Long Island, New York. The FCC has determined Verizon FiOS provides sufficient competition for Cablevision, so the rate brakes are off.
Cablevision files for competition waivers routinely and does not expect the change to affect prices, a Cablevision spokesperson said.
“This is a routine acknowledgment by the FCC that Cablevision operates in a highly competitive marketplace, and we have received hundreds of these certifications across our service area over the last several decades,” the company said in a statement.
That leaves only one major point of contention between Cablevision and Verizon – access to the MSG Network, a regional sports channel. Cablevision owns it and has it, Verizon wants it but Cablevision won’t let them have it. Verizon contends that’s illegal under the program access provisions of the Cable Act, and the dispute is ongoing.
[Clarification: Cablevision will sell MSG in standard definition to Verizon, but refuses to provide the HD feed for FiOS customers, although it happily does so for some of its cable industry friends -- Comcast and Time Warner Cable among them. Further details in the comments.]
Other stories of interest:
- Protecting Your Turf: Cablevision Seeks to Provide Wi-Fi On Long Island/Metro North Railways
- Cablevision-owned ‘Newsday’ Rejects Verizon FiOS Ads – Another Argument for Net Neutrality?
- Cablevision Spins Off Madison Square Garden, Appreciates 2nd Quarter Broadband Profits
- Deregulation + Lack of Competition = Rate Increase for Alabama AT&T Customers
- HissyFitWatch: Cablevision-Scripps Dispute Over HGTV and Food Network Drags On… And On…
“That leaves only one major point of contention between Cablevision and Verizon – access to the MSG Network, a regional sports channel. Cablevision owns it and has it, Verizon wants it but Cablevision won’t let them have it. ”
You may wish to clarify this statement. Verizon does have access to the SD MSG Channel but not the HD Channel.
Verizon considers it the equivalent of providing a black and white feed of a cable channel that viewers increasingly will watch in HD. Here is their position:
Verizon Petitions FCC to Rule on Cablevision’s Refusal to Make MSG Channels Available in HD
The Federal Communications Commission should compel Cablevision and its Madison Square Garden network to provide Verizon with local sports programming in high definition (HD), a unique asset that they have intentionally and unlawfully refused to make available, Verizon requested in a complaint filed Tuesday (July 7).
In a Program Access Complaint, Verizon stated that Cablevision “continually has denied Verizon access to the high-definition (HD) versions of its regional sports programming on any terms.” Specifically, Cablevision has refused to sell the HD rights to local coverage of the New York Knicks, New York Rangers, New York Islanders, New Jersey Devils and Buffalo Sabres games.
At the same time that Cablevision has denied customers of competing cable service access to local sports programming in HD, the Long Island-based cable TV company “has bragged to analysts and the public about its anticompetitive efforts, trumpeting that Cablevision is the only HD source for four of the nine professional sports teams in the New York City metro area,” Verizon said in its filing.
As explained in the filing, Cablevision acknowledges that it retains a competitive advantage by virtue of its control over this unique and nonreplicable HD regional sports programming, which it obtained before Verizon began its competing services.
The refusal to provide this programming, Verizon said in its filing, “has significantly hindered or prevented Verizon from providing its competing programming service …to the many customers for whom this regional sports programming is ‘must have.’” The filing stated: “For these customers, a service lacking their teams’ games in HD is not a meaningful choice at all.”
Verizon also noted in its filing that Cablevision previously refused to market its MSG networks in standard-definition TV. It was only after Verizon filed a program access complaint similar to the one filed Tuesday that Cablevision agreed to sell the sports networks in SD to Verizon.
Verizon asked that the commission rule on the company’s complaint within five months.
My view is that if you have a established product (TV Channels) that you own and run then being forced to provide that product to your competition is wrong. If you purchase a product that is already being shared then that sharing should of course continue.
If I own a Pizza shop and Joe Blow opens another one down the street, I would be very pissed if I was forced to share my secret pizza recipie with him and be forced to cook Pizza’s for him to resell. I dont see any difference.
The difference of course is that the cable industry established its foothold initially as a monopoly provider of pay television in virtually every American city. They were able to firmly establish themselves in the programming of those systems by owning, investing in, or controlling the majority of cable networks. I clearly recall Dr. John Malone (former CEO of TCI) and others near-insisting that new cable networks allow TCI investment/ownership interests in new cable networks that sought carriage on TCI, then the largest cable system in the country.
Exclusive franchises were part of the deal for early cable system development. In the 1970s and early 1980s, the industry argued it needed a monopoly in order to assure return on the investment required to wire towns and cities. It wasn’t until years later than exclusivity was eliminated from franchise agreements, but that posed no challenge as no major cable operator has ever mounted a significant challenge by overbuilding a competing system into another’s service area. It’s effectively a cartel.
When competition from satellite began to come into fruition, the only chance it could establish any sort of foothold was assurances it could gain access to programming that Americans would recognize and desire.
DISH Network was founded by a guy who made and sold satellite dish equipment (Echostar). He barely had the resources to launch satellites, much less build programming networks from scratch. DirecTV was in a slightly stronger position, but would still never survive a programmlng blockade.
These battles over programming access almost always involve sports programming, especially with regional sports networks.
One of the major benefits of vertical integration — owning and controlling programming and the distribution of it, is that you can effectively shut out competition, and that is precisely why the cable industry has tried to keep such programming away from telco TV. It’s nothing new. Back in the 1980s, satellite dishowners like myself were compelled to buy certain satellite programming from cable operators. TCI, later AT&T Cable, later Comcast, sold access to five Denver-area TV stations to home dishowners, but you had to buy it from the nearest TCI cable systems, even though you weren’t a TCI cable customer. It was mighty odd to get a bill from TCI Cable in Schenectady, one of the nearest TCI regional billing centers, for satellite programming received in Rochester.
The industry even occasionally refused to sell programming to dishowners at any price, if you lived within a cable service area. So much for competition.
More to your point, the major difference between cable and pizza is that there are few impediments to launching a pizza store and consumers can often choose between dozens of places to find pizza. In virtually every American city, they can only choose one cable company, Satellite is often an option, and telco TV is becoming available in limited parts of the country.
Setting up shop as a cable competitor requires a lot more than an oven, sauce, and a great recipe.
I’d also remind you cable companies like Cablevision benefit themselves from mandatory access provisions — to telephone or electric company-owned poles. Imagine what would happen if Verizon suddenly demanded Cablevision get their cable-TV wires off Verizon telephone poles. The cable industry itself argued it should have the right of access to those poles at a fair and reasonable price.
So Verizon should have the same right to MSG HD programming that Cablevision freely sells to its fellow cable cartel members, but not Verizon.
I subscribe to the FCC Daily Digest which covers such actions as this. I can tell you this this waiver is pretty routine (2-3 a week). So what you see in this case is fairly routine. Often the extent of satellite competition alone is sufficient to gain certification of “effective competition” – it does not take FiOS to push the stats over the threshold.
Yes, I’m aware of this, when a sufficient number of subscribers to the competitive service is achieved. This has become much easier to reach with the advent of U-verse and FiOS.
There’s just ONE problem with the satellite TV providers’ (DirecTV’s and DISH Network’s) “effective competition”…NOT EVERY PERSON CAN GET Satellite TV!!
What happens if a person is a resident of an apartment complex, and THAT complex EXPRESSLY FORBIDS the usage of ANY satellite dishes on their property? THAT IS THE CASE with my current residence!! I CANNOT order DISH Network OR DirecTV because it’s EXPRESSLY FORBIDDEN in my Lease agreement to do so!!
I am just LUCKY to be living in a state which allows municipalities to have a vote to build and start up their own advanced fiber-optic Telephone/Cable TV/Broadband Internet service when the local Telephone/Cable TV/Internet provider refuses to upgrade their services.
Here in Storm Lake, Iowa, back in the mid-1990′s, TCI Cable WAS THE LONE Cable TV provider for our town. Prior to 1998, they NEVER wanted to upgrade their system to allow for such new services as Digital Cable, Broadband Internet, or Voice-Over Internet Protocol telephone services!! We were STUCK with an early-1980′s-era 35-channel cable TV system which was NO LONGER considered “state-of-the-art” by that time, and the prospects for getting them to upgrade our cable system were ALMOST ZERO!!
TCI GOUGED the cable subscribers here by billing them VERY HIGH PRICES for cable TV, and OFTENTIMES, provided a DISMAL, PITIFUL LEVEL OF SERVICE to our viewers!! The cable service would go down SEVERAL TIMES A DAY, and all the Installers would say about that is that “we’re in an older part of town where the system is older”, and they would HARDLY EVER really repair the cable service so that there WOULDN’T be intermittent outages like that!!
To make matters EVEN WORSE, by 1997, TCI was TAKING POPULAR CHANNELS OFF the cable system here in town, and REPLACING THEM WITH UNTESTED, OR NEW, cable channels which, compared with the channels they replaced, were of DISMAL quality!!
When TCI removed MTV from the channel lineup here, I was FINALLY FED UP with TCI and their “arrogant shenanigans”!! Luckily, at the apartment building I lived in at that time, the landlord DID let me get a DirecTV dish, and the service on that was 100 TIMES BETTER than what TCI did!!
But back to what I stated at the very beginning…NOT EVERYONE CAN GET A SATELLITE DISH in their homes or apartments!! If you’re an apartment-dweller, and the landlord DOES NOT provide a satellite dish service, and they REFUSE to allow you to GET a dish (through the lease agreement that you sign upon moving in to the complex), AND/OR your apartment DOES NOT HAVE windows facing the southern to southwestern sky, YOU ARE OUT OF LUCK as far as getting Satellite TV is concerned!!
In 1998, after about a YEAR of DISMAL-quality service and BROKEN PROMISES from TCI, the people of Storm Lake were pretty much FED UP, just like I was, and wanted the City of Storm Lake to build its own “state-of-the-art” telecommunications facility with fiber-optic based Cable TV/Broadband Internet/Telephone srevice.
The issue came up for a vote in May of 1998 (a requirement under state law, which requires a 60% “supermajority” of voter-approval to pass). In the weeks leading up to the day of the vote, TCI ran NUMEROUS ads in the local newspapers talking about “Fair Competition”…THAT from a company which KEPT our cable system STUCK in the 1980′s!! They stated that a city-owned telecommunications system would be an “unfair” competitor to TCI. Luckily, the voters here in town DIDN’T BUY A WORD of what TCI was saying, and at the end of the day of the vote, the telecommunications measure PASSED BY 70%…10 PERCENTAGE POINTS BEYOND the required 60%!!
It so happened that, once word got around of the measure’s passage, another private telecommunications provider, Dakota Telecommunications Group (or DTG) decided that, in light of this passed measure, they wanted to “overbuild” a brand-new, state-of-the-art, fiber-to-the-node-based, telecommunications system here in Storm Lake!! In the latter half of 1998, a public franchise vote was held to decide if DTG could get the go-ahead to build the new system. The vote passed by an OVERWHELMING MAJORITY once again!!
Once all of that happened, suddenly, TCI (which became AT&T Broadband) started to FINALLY UPGRADE their cable system!! First, in late-1998, they started offering Digital Cable to customers, and then, in early-2000, rebuilt their cable system with their own “fiber-to-the-node” system, and started adding channels even to their Analog cable lineup…among them, VH1 (which I LOVED watching on DirecTV). Then FINALLY, in September of 2000, AT&T Broadband RETURNED MTV to the Analog cable lineup!!
IMHO, I think that the ONLY reason they returned MTV to the lineup was because THEY KNEW that DTG was in the process of building their telecommunications system, and INTENDED to offer MTV as part of their basic service!!
The new DTG system went online in 2001, and my folks were among the first to ditch AT&T Broadband and switch to DTG’s service. In that same year, DTG (after a failed “joint-venture” with McLeodUSA) changed their name to PrairieWave, and sold their services under that name. PrairieWave was THE FIRST of the 2 providers to start offering high-speed Internet service to subscribers in 2001, and in Autumn of 2003, PW launched their own Digital Cable TV service, with which I was VERY IMPRESSED with!!
By 2001, I had moved to my present location at McCord Manor Apartments here in Storm Lake. Since they didn’t, and STILL DON’T, allow Satellite dishes to be used here, I HAD to switch back to Cable. Luckily, at THAT time, AT&T Broadband (which later in 2001 was bought out by Mediacom), had the channels I wanted to see, and I tool their package deal!! In 2003, I upgraded to Mediacom’s High-Speed Internet service.
But by the time PW’s digital cable was available, I wanted to switch to PrairieWave. All that it took for me to drop Mediacom and switch to PW was for them to add a UPN station to the PW lineup in Autumn of 2004, along with Video-On-Demand (PW was also the FORST to offer Video-On-Demand service to us).
With the exception of a few months last year, I have had PW service since that time. In 2008, PrairieWave was bought out by Knology, who has continued to offer “state-of-the-art” Digital Cable TV/Broadband Internet/Telephone services to us here in town!!
And since BOTH Mediacom AND Knology COMPETE for subscribers here in Storm Lake, they BOTH try to maintain “parity” with each other as to the quality of service they provide, as well as comparable channel line-ups, comparable Broadband Internet, and telephone services!!
Here in Storm Lake, the competition between the 2 providers has, overall, been GOOD for our town’s 10,000 residents!!
The SAD thing, though, is that Storm Lake is STILL the “exception” and NOT the “rule” when it comes to TRUE competition between telecommunications providers!!
In MOST towns here in Iowa and nationwide, they have only ONE Cable TV provider, one Phone provider, and are STUCK in a “duopoly”.
In Sioux City, for instance, their cable system is Cable One, and unfortunately for them (as has been noted here in Stop The Cap!), their subscribers are in such a “duopoly”. Cable One is the ONLY Wired telecommunications provider in MOST of the Sioux City Metro area, and Cable One is ONE OF those companies which has started switching their Online Subscribers to “Usage-based” billing!! Each day, they are limited as to how much they can download per day, and once the limit is reached, they are either THROTTLED DOWN to “dial-up” speed, AND/OR are assessed a WHOPPING $10.00 for EVERY GB they go over the daily allowance!! Sioux City’s ONLY alternative to that is to get DSL Internet from Qwest Communications!! As for the TV provider competition, Cable One is the ONLY wired provider in most of the Sioux City metro. The ONLY competition comes from either DirecTV or DISH Network!! IMHO, Sioux City metro is in DIRE NEED ot a NEW wired competitor to come into the city and compete with Cable One!!
ONLY TRUE competition between 2 WIRED providers of Cable TV/Phone/Broadband Internet services will help to bring new “state-of-the-art” services to a community!!
Dean
I think it is against the law to forbid people to put up Sat even in apartments. As long as they are in your space, and are not permanently attached.
I wonder what the profit margin on Cablevision cable service is after all the programmers etc. are paid for. iIf it’s a relatively low number (like $10 per month) then just sell MSG HD as a one-off channel, viewable online, for $15 per month, like a premium channel on cable. Push the bitrate up enough that FiOS customers are the only ones that can get the channel (12Mbps should be fine…CV customers could also get it but VZ DSL folks couldn’t) and tell Verizon to shut up. The people who want MSG but don’t have CV TV will pay up, and Verizon can’t squawk about fairness of media because their internet customers can view the stream just fine. CV has plenty of bandwidth to do this, and it might even balance out their traffic ratios to get even more peering from bigger providers, or something like that.
Sure, it’s an expensive precedent, but it at once downs a la carte TV, placates regulators Re: Verizon FiOS not having MSG, trumpets that CV is doing internet video before Verizon is, etc. Plus it drives up demand for Cablevision internet in areas where people don’t want to get CV cable but want MSG and can’t get FiOS.
Anyone see anything wrong with the above dastardly plan?