Time Running Out for Video Choice Bill

It’s late summer and the House has already hit the turf campaigning in their districts. For the Senate there isn’t much left of this year’s legislative calendar, and as many commentators have noticed, their inability to pass much substantive legislation may cost Republicans control of Congress.

Despite unfulfilled promises to curb spending and to deliver on issues like individually owned retirement accounts and a radically simplified tax code, the Senate still has enough time to pass legislation that would resonate with voters by saving them $10.6 billion a year on their cable bills and adding $167 billion in gross domestic product while creating 212,000 jobs nationwide over the next five years. Passing meaningful telecom reform that opens the market for video programming to real competition would be a win for consumers while providing new opportunities for innovation and investment.

Already the House has moved a bill that would allow phone, Internet, and even power companies to compete against incumbent cable providers, giving consumers more choices, better service, and competitive prices. Unfortunately, the Senate bill has stalled, passing out of committee but languishing without floor action. Injecting competition into the traditional “cable TV” market and saving voters money seems like a no-brainer, but the Senate has yet to act on this important opportunity.

The legislation would pave the way for new entrants into the video programming market. The revolution in telecommunications is breaking down barriers and monopoly providers no longer have the protection and guaranteed profits that once existed. Wireless telephone service is surpassing land lines, cable companies are providing telephone services, and now phone companies want to provide video services. Unfortunately, while companies race to offer consumers the best in video programming, they are hamstrung by laws written for a different time and a different technology. The worst of these are franchise laws, which artificially constrain the number of providers serving consumers in any given area.

Unfortunately, franchise regulations continue to keep new technologies out of the hands of ordinary Americans. Regulatory barriers to entry continue to make it difficult for new entrants in the market for video programming. Given that the market is no longer a monopoly, it makes little sense to apply the old rules to new entrants. The FCC has found that head-to-head competition provides incentives for the incumbent cable operators to lower prices, provide additional channels at the same monthly rate, improve customer service, or add new services. Why not, then, open the way for new competitors, providing even more options for consumers? The real goal should be customer choice.

A big part of the problem is that the larger issue of video programming is being held hostage by the debate over “net neutrality.” Proponents of net neutrality have been pressing to expand federal regulation of the Internet to ensure access and nondiscrimination in the delivery of content. This has created an unholy marriage between liberal groups like MoveOn.org and the ACLU and the Christian Coalition, in concert with major content providers such as Google and Yahoo. Senators are hearing from this many headed beast that no legislation should pass without language granting the Federal Communications Commission new regulatory authority over Internet. Ultimately, this means creating a system of price controls for broadband providers. Yet the campaign is nothing more than a regulation in search of a problem. Consumers demand unbridled access to the Internet, and broadband providers would lose customers if they sought to restrict access. In addition, current laws provide ample remedies for anticompetitive behavior. Nonetheless, large content providers are seeking to use the political process rather than the marketplace to establish their terms of use with broadband providers.

Current cable laws are relics of a bygone era, and there is little economic justification that video programming services only can be provided efficiently through the current regulatory regime. Today’s market is vastly different from the market of even a few years ago, and the technology of high-speed networks is creating new possibilities for video programming. The telecom reform bill is a tremendous opportunity for Congress to free video programming from the current outdated and anticompetitive system and would result in billions in new investments as entrants seek to reach new customers. That’s something to take home to voters.