FCC Bans Exclusive Cable Contracts – Comcast has another excuse to raise rates…

In: broadbandreports.com|Site Feeds|VoIP

31 Oct 2007

As expected (see previous report), the FCC today ruled to ban cable operators from striking exclusive deals with MDU (multiple dwelling unit) landlords. According to the FCC press release (pdf), 30% of Americans live in MDUs, and cable providers are locking many of them into exclusive deals that prevent consumer choice. In a statement, FCC boss Kevin Martin takes aim at rising cable rates:

As the Commission has found, from 1995 to 2005, cable rates have risen 93%. In
1995, cable service cost $22.37 per month. Prices for expanded basic cable service have now almost doubled. The trend in pricing of cable services is of particular importance to consumers. Since 1996 the prices of every other communications service (such as long distance and wireless calling) have declined while cable rates have risen year after year after year.

However, the new rules aren’t an automatic competitive miracle, as they don’t force landlords to provide tenants with access to any ISP they choose. Landlords can still deny an ISP access, they just can’t use exclusivity clauses as the excuse. The ruling may also not stand up to a legal assault from the cable industry.

The cable industry has previously stated they believe the FCC lacks the legal authority to intervene in such agreements. Comcast, pretending consumers don’t consistently face rising TV rates come hell or high water anyway, tells the Associated Press the decision will result in — you guessed it — rate hikes.

“The net result is that many consumers are likely to wind up paying more for services if the FCC’s interference in the competitive marketplace stands,” Comcast spokeswoman Sena Fitzmaurice said in an e-mailed statement. . . . The cable industry, which had previously said it is unlawful for the government to invalidate existing contracts, said the deals provide apartment residents with better pricing and service.

The FCC actually ruled four years ago that such exclusive contracts didn’t stifle competition, but that was before AT&T and Verizon decided they wanted to get into the TV business. With some serious collective lobbying firepower, this is more about appeasing the telcos than pleasing consumers, though hopefully the latter will get something vaguely resembling choice out of the new deal.
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