Tuesday, April 19, 2005 - The Progress & Freedom Foundation Blog

Your Telephone Company Will Be Your Next Cable Company

Verizon announced yesterday that it has struck a major deal with NBC Universal to carry all of NBC's 12 cable networks on Verizon's new fiber lines. This comes on the heels of Verizon penning deals with cable giants Discovery Communications and Liberty Media's Starz Entertainment Group to carry the networks produced by those programmers. Now that they've got their foot in the door in a major way, expect Verizon to sign waves of programmers up for carriage on their new fiber networks.

Let's step back for a moment and think about this. Verizon--one of the nation's largest and most respected telecom operators--is about to become a full-fledged multichannel video operator. Since the mid-90s, telecom operators have been trying to figure out the best way to bust into the video market, but the numbers (or the technology) just didn't work out right. Now the stars are aligned properly and telcos like Verizon are itching to jump into this market to justify the billions they are investing in those speed-of-light fiber systems. More importantly, the telcos know they have to do this NOW to stop the further hemorrhaging of customers to cable operators, which can now offer a communications "triple play": voice, video, and data--all over a single line with a single bill.

Welcome to the brave new world of communications in which everyone is essentially becoming a media provider. Forget about those silly old labels of "telcos," "cable," "broadcaster," or "satellite." Today, you are either a media provider or you are dead. Traditional voice service will soon become just another application, much like e-mail. You'll get it bundled into your media bill for a small fee, or perhaps for no charge at all.

The problem is, these developments are being held back by Industrial Age-era laws that make no sense. Among the illogical regulations that could retard the growth of this new world:

* Burdensome state and local regs, taxes and fees still exist that could burden new networks. In particular, many are proposing to roll local franchising requirements and fees onto new video operations, such as the fiber systems the Bells hope to offer.

* Old telecom era phone regulations still shackle efforts by the Bells to expand service offerings. In particular, the Bells have still not been completely freed of the Telecom Act regulations that have held them back for the last decade.

* Old broadcast industry regulations could be imposed on the Bells, slowing their rollout efforts. For example, "must carry" mandates, "indecency" regulations, and other program restrictions or mandates could be imposed.

* Threats of "Net Neutrality" regulations are lurking at the federal level. These regs would allow the FCC to regulate conduct on broadband networks and potentially open the door to price controls on broadband services.

These are just a few concerns off the top of my head. There are many other threats to the rise of more competition in this market. And that's really too bad when you think about it. After all, why do we need all these unique rules and regulations when we have so much competition for our eyes and ears?

posted by Adam Thierer @ 10:52 AM | Cable , Communications , Mass Media