Modern economics and history teach us that competition can be a powerful tool in spurring economic growth. In the computer industry, for example, spirited and at times cutthroat competition has led to faster and better computers being introduced year after year.
These improved machines benefit businesses and consumers in ways that have sparked economic growth and transformed lives in South Carolina and throughout the nation.
If only this same dynamic existed in the cable sector. As tens of thousands of South Carolina consumers know from experience, cable enjoys much less competition, which means sluggish innovation, fewer economic benefits, and — too often — erratic customer service.
Policymakers have taken different approaches to encouraging cable competition. Unfortunately, the nature of this industry has made it difficult to foster competition.
For example, simply deregulating the industry would not increase competition, as the high cost of creating a cable infrastructure tends to discourage competing companies to enter a given market.
Instead, the Federal Communications Commission has tried different tactics to increase competition. One of them is encouraging the use of CableCARD, which gives customers added flexibility in how they use the cable feed that comes into their home.
The CableCARD technology allows consumers to add on devices such as the video recording device TiVo, which enables viewers to watch programming at a time convenient to them.
More than 8,000 South Carolinians currently have TiVo retail boxes in their homes. Many thousands more would like to install it.
But the FCC has failed to ensure that the cable companies play by the rules on CableCARD. Consequently, while the FCC has stood idly by, TiVo and others are being shut out of their markets by cable companies putting incompatible technologies in their cable boxes.
Given the FCC’s half-hearted CableCARD enforcement, most consumer electronics companies have thrown in the towel. Manufacturers such as Sony, LG, and Panasonic have all but abandoned their efforts to develop complementary cable technologies.
The Consumer Electronics Association has lodged protests against tepid FCC decision-making on CableCARD. The commission’s lack of initiative is undercutting the very things it’s supposed to encourage: competition, innovation and new entry in the marketplace. As a result, South Carolinians and others are at the mercy of the cable monopoly.
To her credit, native South Carolinian Mignon L. Clyburn, the current Acting Chairwoman of the FCC, has been an outspoken advocate for cable subscribers and competition.
She recently vowed that the FCC “should explore all relevant issues to ensure that consumers are not harmed, that our [communications] networks are resilient and reliable, and that we continue to promote universal service and competition.”
This summer, Acting Chairwoman Clyburn has an opportunity to put those words into action by ensuring that the industry adheres to the rules governing CableCARD.
In doing so, she’ll be giving cable competition a big boost — and giving consumers in South Carolina and elsewhere the choice they’ve earned.
Calvin Blackwell, Ph.D., is a professor of economics at the College of Charleston.