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Obama executive order to open up competition in set-top cable TV boxes
By Jazz Shaw
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.
Thinking Outside the Cable Box: How More Competition Gets You a Better Deal
By Jason Furman and Jeffrey Zients
Today, building on efforts over the last seven years, the President is launching a new initiative to stoke competition across our economy, so that no corporation can unfairly squeeze their competitors, their workers, or their customers at everyone’s expense.
Stronger competition matters because it can deliver lower prices, higher quality, and better customer service for consumers. It gives workers more of a voice and can help strengthen wage growth. And it’s what entrepreneurs need to get a fair shot at growing their businesses and creating jobs.
Before There Were Cable Boxes
Before getting into the details, a little historical context (and more on a specific action we’re taking today).
Millenials are often defined as the generation born after 1980. But they could also be described as the generation that doesn’t remember what it’s like to be forced to rent a big, overpriced, basic phone from the phone company.
Until the early 1980's, the phone company had a monopoly — not just on the wire to your house but, in many cases, on the phone you plugged into that wire.
And the result wasn’t pretty.
Phones had little variety, evoking the famous Henry Ford quote — "You can have any color, so long as it’s black” — and only the most basic functionality. Worse yet, households had to pay a fee each month to rent these phones that added up over time to many multiples of what they would have paid to purchase a similar (or fancier) phone themselves.
Then, all that changed when the Federal Communications Commission (FCC) and others took action to open up phones to competition. This competition and the technological progress it helped drive, led to a proliferation of digital dialing, built-in answering machines, a panoply of styles, cordless phones, and other innovations.
A similar dynamic has taken hold elsewhere in American homes today: According to a recent study, 99 percent of all cable subscribers lease a set-top box to get their cable and satellite programming.
It sits in the middle of our living rooms, and most of us don’t think twice about it. But that same study found that the average household pays $231 per year to rent these often clunky boxes. And, while the cost of making these boxes is going down, their price to consumers has been rising.
Like the telephones in 1980's, that’s a symptom of a market that is cordoned off from competition. And that’s got to change.
How We're Taking Action To Fix It
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.
Across our economy, too many consumers are dealing with inferior or overpriced products, too many workers aren’t getting the wage increases they deserve, too many entrepreneurs and small businesses are getting squeezed out unfairly by their bigger competitors, and overall we are not seeing the level of innovative growth we would like to see. And a big piece of why that happens is anti-competitive behavior — companies stacking the deck against their competitors and their workers. We’ve got to fix that, by doing everything we can to make sure that consumers, middle-class and working families, and entrepreneurs are getting a fair deal.
That’s why today, the President announced a broader new initiative through an Executive Order that calls on departments and agencies to make further progress through specific, pro-competition executive actions that empower and inform consumers, workers, and entrepreneurs. In 60 days, agencies will report back on specific areas where we can make additional progress.
Alongside that announcement, the White House Council of Economic Advisers (CEA) released a new issue brief that describes the many benefits of competition, highlights recent work by the independent antitrust authorities, and argues that consumers, workers, entrepreneurs, and small businesses would benefit from additional policy actions to promote competition within a variety of industries.
These new steps will build on pro-competition progress we’ve made — from cell phone unlocking to net neutrality, from cracking down on conflicts of interest in retirement advice to efforts to free up essential technologies so that big incumbent companies can’t crowd out their competitors.
In the coming months, we’ll be doing everything we can across government to build on that progress and deliver on the pro-competition initiative we’re announcing today.
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.
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.
By Jazz Shaw
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.
Thinking Outside the Cable Box: How More Competition Gets You a Better Deal
By Jason Furman and Jeffrey Zients
Today, building on efforts over the last seven years, the President is launching a new initiative to stoke competition across our economy, so that no corporation can unfairly squeeze their competitors, their workers, or their customers at everyone’s expense.
Stronger competition matters because it can deliver lower prices, higher quality, and better customer service for consumers. It gives workers more of a voice and can help strengthen wage growth. And it’s what entrepreneurs need to get a fair shot at growing their businesses and creating jobs.
Before There Were Cable Boxes
Before getting into the details, a little historical context (and more on a specific action we’re taking today).
Millenials are often defined as the generation born after 1980. But they could also be described as the generation that doesn’t remember what it’s like to be forced to rent a big, overpriced, basic phone from the phone company.
Until the early 1980's, the phone company had a monopoly — not just on the wire to your house but, in many cases, on the phone you plugged into that wire.
And the result wasn’t pretty.
Phones had little variety, evoking the famous Henry Ford quote — "You can have any color, so long as it’s black” — and only the most basic functionality. Worse yet, households had to pay a fee each month to rent these phones that added up over time to many multiples of what they would have paid to purchase a similar (or fancier) phone themselves.
Then, all that changed when the Federal Communications Commission (FCC) and others took action to open up phones to competition. This competition and the technological progress it helped drive, led to a proliferation of digital dialing, built-in answering machines, a panoply of styles, cordless phones, and other innovations.
A similar dynamic has taken hold elsewhere in American homes today: According to a recent study, 99 percent of all cable subscribers lease a set-top box to get their cable and satellite programming.
It sits in the middle of our living rooms, and most of us don’t think twice about it. But that same study found that the average household pays $231 per year to rent these often clunky boxes. And, while the cost of making these boxes is going down, their price to consumers has been rising.
Like the telephones in 1980's, that’s a symptom of a market that is cordoned off from competition. And that’s got to change.
How We're Taking Action To Fix It
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.
Across our economy, too many consumers are dealing with inferior or overpriced products, too many workers aren’t getting the wage increases they deserve, too many entrepreneurs and small businesses are getting squeezed out unfairly by their bigger competitors, and overall we are not seeing the level of innovative growth we would like to see. And a big piece of why that happens is anti-competitive behavior — companies stacking the deck against their competitors and their workers. We’ve got to fix that, by doing everything we can to make sure that consumers, middle-class and working families, and entrepreneurs are getting a fair deal.
That’s why today, the President announced a broader new initiative through an Executive Order that calls on departments and agencies to make further progress through specific, pro-competition executive actions that empower and inform consumers, workers, and entrepreneurs. In 60 days, agencies will report back on specific areas where we can make additional progress.
Alongside that announcement, the White House Council of Economic Advisers (CEA) released a new issue brief that describes the many benefits of competition, highlights recent work by the independent antitrust authorities, and argues that consumers, workers, entrepreneurs, and small businesses would benefit from additional policy actions to promote competition within a variety of industries.
These new steps will build on pro-competition progress we’ve made — from cell phone unlocking to net neutrality, from cracking down on conflicts of interest in retirement advice to efforts to free up essential technologies so that big incumbent companies can’t crowd out their competitors.
In the coming months, we’ll be doing everything we can across government to build on that progress and deliver on the pro-competition initiative we’re announcing today.
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.
[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.
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.
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