There was a "gentleman's agreement" not to compete? What an
interesting way of looking at things.
Who wants to be the second cable company in a market? Not many firms
are willing to incur the expense of pulling cable for that
privilege, so most cable TV competition has come from satellite
until quite recently.
So what about that other network that already has wire? Oh, my, they
were forbidden by law from entering the cable TV business until the
'96 Telecom Act:
"Although the 1992 act did much to encourage competition, it did not
address the 1984 act's ban on ownership of cable companies by local
telephone utilities. This ban was challenged in Chesapeake &
Potomac Telephone Co. v. United States, 42 F.3d 181 (1994), in
which the Fourth Circuit Court of Appeals held that it violated the
telephone companies' First Amendment right to free speech. The ban
was removed by the Telecommunications Act of 1996 (110 Stat. 56),
which President bill
clinton signed in February 1996."
http://legal-dictionary.thefreedictionary.com/Cable+franchise
The "gentleman's agreement" idea doesn't capture anything real,
although it is appealing to some, I'm sure.
RB
On 3/17/2011 12:38 PM, Ellrod, Rick E. wrote:
Richard -- In this case, the
authors of The Free Dictionary are mistaken. (As I said,
it's a common misunderstanding.) I've worked with local
cable franchises for close to twenty years, and I've seen
few if any that were exclusive, even among those dating from
before 1992.
To be sure, it was a common
assumption in those days that cable was a "natural
monopoly." The economics of the business, and what the
trade press has called a "gentleman's agreement" among the
early multiple system operators, generally discouraged
competitive entry. But if one looks at the actual
documents, one finds that the franchise agreements and
ordinances were not written to forbid possible competition.
I'll refrain from taking up
your point about municipal ownership of communications
systems -- that would seem to take us somewhat off-topic for
the listserv. A good source on this subject is the American
Public Power Association's site at
Other information can be found
at sites such as
Rick Ellrod
Right about the 1992 act, wrong about the history. See:
"When Congress deregulated the cable industry with the 1984 Cable
Act, its primary intent was to promote competition. The 1984 act
sought to balance the government's dual goals of providing cable
access to all areas and deregulating rates. The industry had
argued that competitive market forces would produce competition
and stabilize rates. However, competition did not occur in the
ensuing years, and cable operators continued to enjoy a Monopoly
in virtually all service areas. Before 1992, exclusive cable
franchises were granted to the bidders who promised the widest
access and most balanced programming. The government felt that
this was the best way to ensure that cable's new and expensive
technology was available to people in poor and rural areas as well
as more affluent areas. As a result, bidders who promised more
than they delivered were protected from competition. The 1992
Cable Act eliminated many of the barriers to competition that
existed before. Most important, it abolished the exclusive
franchise agreement, which had been a powerful monopolistic tool."
http://legal-dictionary.thefreedictionary.com/Cable+franchise
The current problem is cities and towns who want to function both
as a regulator of capitalistic services and as a competitor.
RB
On 3/16/2011 2:24 PM, Ellrod, Rick E. wrote:
Mr. Bennett's comment includes a common misunderstanding on one point.
Exclusive franchises or "licenses" from local governments were always
very rare and have been unlawful since 1992. 47 U.S.C. sec. 541(a)(1).
Rick Ellrod
-----Original Message-----
From: Richard Bennett [mailto:richard@bennett.com]
Sent: Tuesday, March 15, 2011 7:11 PM
To: nnsquad@nnsquad.org
Subject: [ NNSquad ] Re: Fight over municipal broadband rules in North
Carolina
Interesting comment, Bob. The rural broadband issue actually has more to
do with cable TV-type services than with Internet services, actually.
Muni broadband networks have copied the triple play revenue model from
cable, and always have substantially more cable TV customers than
Internet customers.
There's a huge element of bad faith bargaining on the part of the towns
that operate their own triple play networks in competition with the
cable company. Towns previously granted the cable company an exclusive
license to offer cable TV, which encouraged the cable companies to
invest in a community network on the expectation that their investments
would ultimately pay back the investment and earn a profit.
It seems to me that communities should be able to operate their own
networks, but before they go into the cable business they need to
compensate the cable company for their investment, preferably by buying
them out. They're obviously not going to do that, of course.
The larger issue is that demand for broadband Internet simply isn't very
high in rural communities, so when you carve up the demand among two
wireline providers and the two satellite TV providers, it's hard for the
wireline networks to break even. The ultimate solution to this problem
is government-funded demand creation programs that enable people to get
cheap PCs and education in the benefits of the Internet.
There's already a lot more broadband Internet deployed in the US than
there is demand for it; something like 95% of Americans can get
broadband if they want it, but only 65% actually sign up. You don't
solve that problem by building more networks.
RB
On 3/15/2011 1:39 PM, Bob Frankston wrote:
While the cable companies have a visited interest in limiting
competition we need to be more concerned about framing the debate on
the presumption that the only funding model is "cable".
There's the implicit assumption that simply having a city create its
own broadband network is automatically a good thing. But as I keep
pointing out the business model of expecting people buy services in
order to fund infrastructure is problematic, even more so when it is
competing with commercial providers with deep funding. As we've seen
in Burlington VT, if a city borrows from bondholders it is in hock to
them but doesn't have the scale and deep pockets a company like
Comcast has to cover the debt even if the particular cable system is
not profitable.
Think of the 911 example -- why does the emergency respond system
depend on people making enough phone calls to fund it. If the model
makes sense we'd use it to fund fire and police services. But it
doesn't make sense and we fund the fire and police services. So why do
we fund the emergency signaling system by taxing phone calls. Even
worse, we then use this funding model abused
<http://www.alternet.org/news/150132/how_politicians_are_using_911_emerg
ency_services_to_scam_millions_of_consumers/?page=1>
and used as a way to make some VoIP services illegal by demanding they
pay for 911 service in an arbitrary location.
What cities need to do is change the framing and build a common
infrastructure as an asset for the city that they pay for once and
own. They can then use it all purposes ranging from police and traffic
lights to exchanging bits for consumer applications like video and
medical monitoring and home fire detection.
We need to assure the legislation doesn't prevent a city from
investing in new fiber or Wi-Fi or using existing copper as
infrastructure completely distinct from services be they "cable" or
simply exchanging bits (sometimes called "Internet").
Too bad some of the loudest voices are the most conservative --
advocating that cities emulate the old line cable companies rather
than embracing the future by creating new infrastructure and
opportunity.
The cable companies would still oppose funding infrastructure but we'd
have to explain the wires are like sidewalks and not like television.
I'd welcome a real debate.
-----Original Message-----
From: nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org
[mailto:nnsquad-bounces+nnsquad=bobf.frankston.com@nnsquad.org] On
Behalf Of Lauren Weinstein
Sent: Tuesday, March 15, 2011 14:48
To: nnsquad@nnsquad.org
Subject: [ NNSquad ] Fight over municipal broadband rules in North
Carolina
Fight over municipal broadband rules in North Carolina
http://j.mp/fGNZe9 (Innovation Policy Blog)
--Lauren--
NNSquad Moderator
--
Richard Bennett
--
Richard Bennett
|