Consumer Choice Without Extra FCC Help

With the FCC thinking of imposing new regulations that would require all households to have a new cable box, it is worthwhile reviewing how consumers are already getting competitive choice in video entertainment without extra government help.

Today consumers’ communications choices are like mosaic tiles in a box.  Consumers can pick any grouping that suits their fancy.  The tiles don’t need to be the same shape or weight.  The colors don’t need to match.  If one disappoints, it can be replaced with something better.   Consumers can suit the products to their needs.  That’s as it should be.

TV programming has deep connections in American homes.  In the 1960s through 1990s, it delivered much of the information and shared experience that shaped our culture and revealed our hopes and concerns.  Cable TV networks improved the quality and quantity of that programming flow and Cable video serves 53 million homes today.  Consumers also have the choice of renting DVD’s from Redbox, subscribing to satellite service programming or getting their shows directly with over-the-air broadcast for free.

Our evolving Internet now delivers alternate choices in programming and information.  The Internet delivers voice communications, short text messaging, electronic mail, music, social networks, video-grams and the streaming of programs that are either original or which had origins in cable TV or broadcast networks.

That rich flow of “content” is carried by satellite, cable networks, mobile wireless systems and telephone networks.  In many instances, a TV program is available across all carrier types (e.g. Charlie Rose).  On a few occasions, a specific program is unique to a broadcast network (e.g. Ken Burns’ Civil War being exclusive to PBS).

Our high speed Internet has allowed streaming to become a viable service that is independent from any one carrier.  HULU, Amazon Prime and Netflix have 9, 40 and 46 million US subscribers respectively.  Amazon Prime offers benefits beyond streaming programs.  Acorn, at a mere $5 per month, offers a strong lineup of UK, New Zealand and Australian dramas, comedies and mysteries.  These streaming services are available nationwide over the Internet regardless of whether the consumer accesses the Internet from cable, wireless mobile or telephone infrastructure.  Based on the paid subscriber numbers, consumers understand the strong value that streaming brings to their viewing and entertainment diet.

CBS streaming, Sling TV and HULU have further reduced cable TV’s grip on programming through their plan to offer live news and sports.  Until now cable operators had included the sports as a “must have” ingredient in their cable TV bundles.  Now, it can be enjoyed without a clutch of unpopular (and costly) channels cluttering the program menu.

Earlier this month, the FCC greenlighted the Charter-Time Warner-Bright House merger, creating a cable TV / Internet access juggernaut as big as Comcast.  The new Charter will have 25.4 million residential and commercial customers compared with Comcast’s 28 million.  The two giants have attracted almost 70% of the 25 Mbps broadband market.  Wireline broadband via telephone infrastructure (25 Mbps+ fiber to the premises or DSL) accounts for another 5.7 million subscribers or 14% of the broadband market.

There are 287 million Internet users in the US and most use non-broadband landline, public Wi-Fi hotspots or mobile wireless.  They are typically served by speeds between 1 Mbps and 8 Mbps.  Satellite Internet access would be hugely popular were it not for the excruciatingly slow upload speed.  The services that occupy the least bandwidth such as voice, messaging and email are available at little to no charge with most Internet access services.

The 84 million 4G wireless subscribers in 2014 were served by an average Internet download at 6.5 Mbps, adequate for most Internet interactions including video, but less than the 25 Mbps aspirational target the FCC uses to define “broadband.”  By 2020, we can expect 5G wireless to be widespread and super-fast.

A half-dozen streaming operators have created meaningful competition among TV program distributors and today, consumers have a wide degree of choices.  They can select a cable TV or satellite TV bundle, and/or a serviceable Internet access subscription (from cable, telephone, or mobile infrastructure), pick a speed tier, and then pick from the streaming content providers that can supplant or enrich a cable bundle.  Voice, messaging and email follow along effortlessly.

Long gone are the days of sparse communications choices for consumers. With all of this choice, why is the FCC thinking of requiring video consumers to have a new cable box?

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