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CONTACT: Patrick Ross or Amy Smorodin
September 9, 2005
(202) 289-8928
Cable Ownership Limits Unnecessary
Thierer, English Cite Digital Migration in FCC Comments

WASHINGTON D.C. - Cable ownership limits are outdated and irrelevant in today's media environment, argue Adam Thierer and Daniel English in comments filed Thursday with the Federal Communications Commission. The comments, filed in a proceeding addressing the FCC's Cable Horizontal and Vertical Ownership Limits (MM Docket No. 92-264), note that because of the array of new distribution platforms and the resulting increase in outlets and competition, cable ownership caps are not needed. The authors suggest that the old regulatory model is obsolete in light of recent technological innovation and that any future market power issues in the media sector can be better handled by relying on the nation's antitrust laws.

Thierer, Director of PFF's Center for Digital Media Freedom, and economist English, state that media content is no longer tied to "specific distribution platforms and receiving devices" because of the transition to digital formats. " The combination of ongoing digital convergence and an increase in market innovation and entry makes it nearly impossible for any media company to restrict the flow of programming in the market." According to Thierer and English, cable ownership regulations are specifically geared towards an outdated media environment and no longer apply to today's video marketplace. The authors suggest that a platform-neutral regulatory model should be adopted for the entire media industry. "The distinctions of the regulatory past would melt away under this new model. We would no longer consider 'cable,' 'satellite,' 'broadcasters,' 'telecom,' 'Internet providers,' and others in isolation."

In addition to the changes brought about by the transition to digital formats that can be accessed on a variety of platforms, the decreased cost of distribution, especially via the Internet, has dramatically amplified the volume and diversity of content available to consumers, Thierer and English write. "Lower distribution costs coupled with the availability of many new distribution channels is opening up new content markets and enabling nearly anyone with content to affordably distribute it to large audiences. As a result, it is now nearly impossible for any one media firm to restrict or impede the flow of content to consumers." The increase in content available to consumers has also allowed media outlets to tailor programming or content towards specific groups or interests, leading to an unprecedented increase in niche markets, they note. The fundamental shift from content that appeals to a mass audience towards the now economically viable niche markets has resulted in more outlets and more competition in these once seldom exploited markets.

The media market changes described in the filing have led to an increase in the number of video networks available to consumers, they say, a fact outlined in data provided by the Federal Communications Commission. "The FCC has found that while there were only 70 video programming networks available in 1990, by the end of 2004, 388 video programming networks existed. The agency has also noted that in 1992 most cable systems only had the capacity to carry between 30 and 53 analog channels of service. Today, by contrast, cable operators provide, on average, 70 analog and 150 digital video channels."

The authors conclude that these important changes that have occurred in the media industry have rendered ownership caps obsolete. "Overall, the number of sources for programming and the variety of programming has grown dramatically. The relevant market for evaluating cable ownership caps must now include DBS, telecommunications companies and the Internet. It is our conclusion that these ownership caps are no longer necessary given the degree of competition and diversity in this marketplace."

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