Get ready for a rumble in the free market, folks. The President has unveiled a new executive order which – if all this goes as planned – will open up the cable television industry to competition in the field of set-top control boxes. The full order is here but the crux of it sounds fairly simple. After describing how competition in the once Ma Bell dominated phone business led to more innovation and a wider range of choices for consumers, the President describes his plans to do the same for cable TV.
That’s why today the President announced that his Administration is calling on the FCC to open up set-top cable boxes to competition. This will allow for companies to create new, innovative, higher-quality, lower-cost products. Instead of spending nearly $1,000 over four years to lease a set of behind-the-times boxes, American families will have options to own a device for much less money that will integrate everything they want — including their cable or satellite content, as well as online streaming apps — in one, easier-to-use gadget.
But we’re not stopping there. In many ways, the set-top box is the mascot for a new initiative we’re launching today. That box is a stand-in for what happens when you don’t have the choice to go elsewhere—for all the parts of our economy where competition could do more.
Yahoo Finance has an interview with Obama which you can watch here. In it he answers some of the basic questions about the plan, such as why he’s doing this now and what we can expect in the future.
Why two-thirds of Americans think we’re on the wrong track despite improvements to the economy since he took office —
[Wages and incomes] haven’t gone up as quickly as people had been accustomed to in previous generations… But the fact of the matter is it is indisputable that the economy is much better now than it was when I came into office. We’re continuing to make progress. And my hope is that during this debate we focus very practically on what are the additional steps we can take to make a difference.
Why he is taking these actions now as opposed to focusing on broader issues —
I think that Congress has been stuck, partly for ideological reasons, in taking some common sense steps that would improve the economy and help working families. But I will tell you that consumer actions like this, or the actions that we took with respect to financial advisors… they seem small bore initially ’cause they don’t get a lot of attention, but they can add up to billion of dollars out of the pockets of consumers.
This is all still fresh off the presses and to be honest I’m not sure where I’ll eventually come down on this one. The President’s arguments about the bad old days of phone service ring true, though there are some who still make a capitalist argument that breaking up Bell was outside the bounds of governmental power. In this case we’re talking about cable TV and it will take a lot for me to fight back a reaction of wanting to cheer at the idea of forcing more competition into the market. Cable TV service is too expensive and you get locked into packages of channels picked by the company, many of which you may never watch. If you talk about forcing the individual companies like Time Warner to offer more customized choices they simply say they’ll “have to” raise all their prices to compensate if we do that.
But there are still nagging worries in my mind about forcing the cable companies to allow competitors to come in and make use of all the billions of miles of cable they’ve installed around the country and profit off the incoming signal. It does feel as if they own that signal since they invested in the infrastructure to provide it. But at the same time, it’s that same infrastructure which presents a huge barrier to anyone else trying to compete in that market space. It’s a rather tangled web.
I’ll give this one some more time to shake out before making up my mind. In the meanwhile, if the President really wants to open up competition, perhaps he could think of a way to do that in the airline industry. That’s where we really need more competition for the consumer dollar.