How can big cable operators get away with raising prices a whole bunch faster than the rate of inflation?

The NYT reports today that the head of the Federal Communications Commission wants to rein in the two largest cable operators, Comcast and TimeWarner, which together serve around 80 percent of U.S. subscribers.  The article notes that FCC Chairman Kevin J. Martin, a Republican, supports adoption of rules that would require the two cable giants to (a) charge competitors less for programming, (b) stop forcing competitors to buy programming in "bundles", (c) lower prices for using their systems, and (d) let subscribers choose (and pay for) only the channels they want.

Blawgletter expects a fierce fight.  As you might expect, Comcast and TimeWarner have huge legal staffs, public/government relations departments, and lobbying resources.  They also budget tens of millions of dollars to get their regulatory way.

The conflict reminds us of the cable companies’ campaigns to stamp out "theft of cable" services.  Each outfit offers online information regarding the subject — here and here.  They and their comrades even got Congress in 1984 to pass a law making cable theft a federal crime.  See 47 U.S.C. 553.

But the real theft may happen in the other direction.  Think about how many dollars that cable into your home sucks money every month out of your household budget.  If the cable companies got or kept their monopoly power in your market by anticompetitive means, your payments to them include overcharges.  Billions of dollars nationwide.

Theft of cable?  Theft by cable.

Barry Barnett

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