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.]
“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… Read more »
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… Read more »
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… Read more »
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,… Read more »