The FCC has held that when satellite MVPD subscriptions reach a certain level in an area served by a cable MVPD, a state of effective competition exists and local franchising authorities lose their right to negotiate rates. Sen. Bernie Sanders (I-VT) thinks this is nonsense, and wants his state to have the right to have a say in cable rates.
Sanders said that there is no effective competition. In a release, he made his case, saying, “Comcast’s cable rates continue to rise in Vermont. At the end of 2009, just two of Comcast’s 10 Vermont service areas charged more than $20 a month for comparable basic cable packages. One year later, at the end of 2010, Comcast was charging more than $20 a month in six of its 10 service areas. Even as monthly prices for basic cable rose by at least 10 percent in four Vermont service areas, the number of channels offered to Comcast’s basic cable customers in those areas decreased.”
In a letter to the FCC, he wrote, “Comcast has at least 113,000 subscribers in Vermont. Many of these are captive customers, and for this reason, Comcast has been able to raise its rates again and again without justification.”
Sanders noted that the mountainous terrain of his state makes it impossible to get satellite reception. And he wants to get the Vermont Public Service Board back in the business of having a say in rates, since in his opinion natural competition is lacking.
RBR-TVBR observation: Cable and satellite do compete with one another, and in some places telco is also in the mix, but the primary point of competition is at the initiation of service phase. When a consumer is starting out, it’s possible to weight the pros and cons and pick one or the other. But after that, service contracts and installation hurdles inhibit true competition.
Let’s look at how competition works in a normal business. We buy some meat at the local grocery store. We discover that it was cleverly packaged so that a skanky unappetizing portion was hidden by clever packaging, and it’s the third time this month that’s happened. We can simply go to a competing grocer for our next trip to resupply our pantry. Simple.
Here’s the problem with MVPDs. If we make a date with an MVPD and take off work to be available for a service call, and they don’t show up, and this is the third time it’s happened this month, we can’t just fire the MVPD and switch to a competitor. And until we can do that, the competition is not what it should be, and providers of MVPD service will continue to have little or no motivation to improve their legendary reputation for horrible customer service.