Wednesday, January 16, 2013

Competition Restricted When Distributors Own Content

The cable industry is something of an oligopoly, few companies controlling the marketplace.  For years, your only choice for watching cable networks was to by a subscription from the cable operator in the market. In major cities, some customers have access to overbuilders like RCN offering a competitive service; across the country, if you didn't take cable, you may have opted for a satellite service like DirecTv or Dish.  In the last decade, Verizon and AT&T came out with a competitive cable service although their footprint is also quite limited.  So the choices for cable service have been quite limited.

How nice to know that Google is trying to break into that space with their own fiber footprint and have been testing their service in the Kansas City market, but the incumbent, Time Warner Cable, does not appear pleased.  So how does TWC find a competitive edge, by restricting access to programming.  As they spun off almost all of their cable networks into Time, Inc. TWC does not have much leverage, but they do own a Regional Sports Network.  And Google believes that TWC is not negotiating in "good faith" for them to put on the line-up.  And Google wants the FCC to get involved.

But this is not the first time for this kind of fight.  Back when Verizon was introducing FIOS into the Long Island system, Cablevision was accused of withholding their sports network, MSG from Verizon.  Finally, the FCC was brought in and a deal was struck.  So to will be the case for Google.  But it is the issue that a market faces when their is limited choice and access is denied for new entrants.   In cases like this, when free market is stalled, regulation is needed when it helps to promote growth.

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