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February 10, 2004
CONTACT: David Fish
(202) 289-8928

GAO Wire-Based Study Not Realistic, May Says
Digital Multi-Channel Marketplace Has Broader Array of Competitors

WASHINGTON, D.C. - The General Accounting Office’s new study, “Wire-Based Competition Benefited Consumers in Selected Markets,” contains some interesting observations concerning the benefits that may result from one form of competition in the subscription television market, but it ignores the larger story of facilities-based competition provided by a broad variety of multi-channel providers. So says Progress & Freedom Foundation Senior Fellow and Director of Communications Policy Studies Randolph J. May, who believes the agency should have taken a more realistic view of the fast-growing digital, multi-channel marketplace.

In its report released today, the GAO concludes “there are measurable consumer benefits in markets with Broadband Service Providers compared with markets without such competition.” The agency acknowledges that there are doubts about “the degree to which the BSP model is replicable throughout a broader set of markets.”

The following is May’s reaction, having read the new report:

“Putting aside particular questions relating to the study’s methodology, such as the very small sample of markets studied, I wonder about the value of GAO’s focus only on ‘wire-based competition’ for multi-channel video services,” May says. “Sure, more competition is welcome from any quarter, although GAO does question the soundness of certain BSP business and marketing plans.

“Most important, as the FCC’s just released annual Video Competition Report makes clear, the cable industry faces plenty of competition in the digital multi-channel marketplace from a variety of facilities-based providers using different technologies, not least of which are the still-growing direct-to-home satellite service providers,” May continues. “Presumably, that’s why GAO is not recommending saddling cable operators with any new regulatory requirements.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation