Remember when the only telephone service you could get was from AT&T? From 1913 to 1984 the company had a government-sanctioned monopoly. The company argued that telephone service, by the nature of its technology, would operate most efficiently as a monopoly providing universal service.
Of course, we now know how expensive that lack of market competition turned out to be. After deregulation, phone services exploded while rates plunged.
Now it’s time for cable TV customers to also reap the benefits of competition. In the last twenty years cable TV rates have risen more than twice as fast as inflation, while technologies such as TV equipment, telephone services and Internet services have either dropped in price or risen far slower than inflation. The differences can be attributed in large part to whether the industry is competitive or not.
Lack of competition has hampered innovation in the cable market. Just look at the computer you own today, compared to the one you owned ten years ago. Compare the Internet access you have today to what you had then. The differences are like night and day. Cable TV service, in comparison, has changed very slowly. Again, the difference is all about competition.
The Mount Hood Cable Regulatory Commission voted recently to allow Qwest to compete with Comcast for cable customers in Multnomah County. On November 14th the Portland City Council agreed, and voted unanimously to allow Qwest to offer cable TV service.
Unfortunately, just one week after recognizing the benefits of telecommunication competition, the city council fell back on its “government knows best” approach and voted to move forward on a $500 million government broadband fiber-optic system. The two private cable operators that the council has authorized to provide video services in the city both blasted this new move toward government involvement in telecommunications.
Perhaps the Portland City Council should take a look at last week’s Catalyst post, Broadband Blunders in the Beaver State, to learn how such efforts have failed elsewhere and why they’re likely to fail in Portland.
Cable TV is where phone service was in 1984. It’s time to bring it, and broadband services, into the 21st century and let consumers reap the benefits of competition.
Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based think tank.