Monday, June 15, 2009

The Growing Cable Problem

There is a growing problem with cable television and the FCC needs to step in soon. Let me explain. First, all cable companies with wires (Comcast, Time Warner, etc.) and those without wires (DirectTV, etc.) have a finite amount of bandwidth. They cannot transmit 10,000 HD channels even if they wanted to. Therefore, they have to make choices, and that is where the problem starts. There are certain channels they must carry like ESPN and ABC, which happen to be owned by the same company. Now, when they are negotiating a price for ESPN and ABC with their parent company, the parent company says we will charge you $X for ESPN and $Y for ABC and we will throw in ESPN 2-10 and ABC 2-7 for FREE! The cable company probably doesn't want those 15 channels for free because they contain mostly crappy, unpopular content, but they do not have a choice since they must have ESPN and ABC. Now, why would the parent company throw in 15 channels for free --- especially when the content they carry is not completely free. Because, they know that Comcast et al can only carry so many channels, and by filling up their bandwidth with ESPN 2-10 they can indirectly force Comcast to drop potential upstart competitors to ESPN. The ABC/ESPN parent company is using their powerful channels to block possible competitors and gain a near monoply.

Solution: The FCC needs to step in an require: (1) ala cart channel availability to consumers, and, more importantly, (2) big content providers (i.e., ESPN) cannot bundle channels when negotiating with the cable companies --- they must negotiate a single price for ESPN, a different price for ESPN2, another for ESPN3, etc.