I still remember the thrill when we first got cable. Gone were those silly rabbit ears. In came channel after channel of marvelous, magical TV. As a big fan of television, I naturally fell in love with cable. I liked the high-speed access but, if I didn’t want a satellite dish growing from my balcony, it was also pretty much my only choice.
Choice is the hallmark of a free economy. We have numerous car manufacturers and dozens of cars to choose from. Even within the individual makes and models, we have options — color, 2-door, 4-door, hatchbacks, and accessories. The list is almost endless.
But with TV we only have a couple choices — at most. And if we don’t like them, our only choice is to turn the set off. The reason for this is that many cable firms work hand-in-hand with local government whether we like it or not. Local governments have set up monopolies across the nation and control them and our TV options through myriad taxes, fees, and franchise regulations.
But now there is another option — that is, if our government doesn’t stifle progress with excessive regulation. TV fans can look toward a new service called IPTV — Internet protocol television. It’s high-tech TV delivered via your computer. According to the Aug. 8, 2005, issue of Fortune magazine, this technology can “deliver to consumers just the video content they want, when they want it, rather than broadcasting every program to millions of homes.”
IPTV offers a wide range of choices including standard and premium channels and even high-definition TV. The line-up also includes video-on-demand, pay-per-view, and digital music. The difference between this new technology and traditional cable is that IPTV subscribers will be able to tailor their viewing experiences to their own personal desires. Imagine the Burger King slogan “Have it your way” applied to TV and you’ll know what I mean.
If government — at the local, state, and national level — doesn’t continue to embrace the cable monopolies, then IPTV will eventually come to your home through upgraded fiber optic lines. Viewers would receive top-flight video service through what was once a mere telephone line.
Several companies are working on developing IPTV. Verizon’s proposed “FiOS TV” service would reach millions of residents and offer them more channels and increased viewing flexibility. SBC Communications calls its IPTV project “Lightspeed,” but the meaning is the same — more choices. And Microsoft has devoted 12 years of research to this sort of product. When industry representatives met with Congress in the spring, they urged legislators to keep regulations to a minimum and let IPTV grow.
It’s no shock that all this doesn’t make the cable giants happy. They simply don’t like the idea of free-market competition. After all, what monopoly would? Consequently, they are marshalling their forces and fighting IPTV with the archetypical Washington solution — lobbying. Of course, that’s their right. And if they were lobbying for a system where the consumer would win through competition, then I would be on their side.
In reality, they want anything but that. Indeed they are struggling to thwart the introduction of this technology and the new services it would offer to American television viewers. Choice brings competition. Choice means prices drop because you and I get to pick the service that works best for us at the price we can afford.
And that is the exact opposite of what we have now. For years, cable companies have had access to captive customers whose only real choice was to have TV or not. Those of us who have chosen to pay have seen our bills continually rise as new channels appear on our cable system. They don’t even have to be channels we want: We pay for them anyway. Cable customers have had their bills increase an average of more than 40 percent in just the past five years. Forty percent? Is cable 40 percent better than it was in 2000? Not on my set.
In fact, the only place that has seen true innovation and advancement in media is the Internet. Of course, the federal government hasn’t been heavy-handed with Internet regulations or taxes, so that makes sense.
Now these two major technologies are meeting head-to-head: Cable versus Internet. Monopoly versus choice.
In an ideal world, they’d compete and let the consumer decide. But before we get to that paradigmatic ideal, everyone from the FCC on down has to look into the issue. There are bound to be regulatory concerns, tax problems, and who knows what else. That’s natural. What we need now, however, is for government to help ease the transition, not stop it.
Sen. John Ensign (R., Nev.) has proposed one possible solution. According to Congressional Quarterly, his new bill would let phone companies “provide video without obtaining a municipal or state franchise, but those authorities could require the companies to pay an annual fee of up to 5 percent of gross revenues in order to offer service.” This bill is an important start as legislators grapple with the introduction of this technology. Congress needs to figure out some answers, but at least Sen. Ensign understands the pertinent questions.
– Dan Gainor is Director of the Media Research Center’s Free Market Project .