The wave of state video franchise reform legislation, beginning in Texas and improved in Indiana, continues this year in many states, and the benefits are already apparent. Consumers are seeing lower prices and new products and services, and local economies are seeing new capital investment, job creation, and increased revenues.
The Federal Communications Commission (FCC) has also recognized that market competition for video is good for consumers. FCC Chairman Kevin Martin recently noted that competition is "desperately needed in the video market," citing FCC actions designed to streamline the rollout of video competition.
In his comments, Chairman Martin also expressed outrage that cable rates have risen 93 percent since 1995.
A 93 percent increase in 12 years seems substantial but is it really? Postage stamps have increased 78 percent in the same period, and a ticket to see a movie will set you back more than 66 percent, and yet while you pay more you still get what you got 12 years ago.
Even a quick computation at Inflationdata.com reveals that inflation alone is responsible for raising the price of video service by 34.67 percent over those 12 years, but the communications industries, including cable, are delivering much more value than they did 12 years ago.
Today, both traditional video and voice companies are providing customers with an option to bundle all their communications needs, reducing the consumer cost of any one service. Also, the number of video options has increased, allowing consumers to watch anything from “Dora the Explorer” to “Fish TV” to “Happy Days” almost 24/7 thanks to digital video recorders included in some “cable boxes” or via products such as On Demand. In addition, the upgrade to digital delivery has greatly enhanced video service over the same period.
The marketplace for provision of communications services – voice, video and Internet access – is increasingly competitive. The mechanism of an open competitive market will itself regulate prices effectively and correctly. The FCC should not use out of context price point data as justification for its actions – even when those actions are correct.