Kyle McSlarrow

No Doubt, There's Competition
December 8, 2006

After nearly two years on the job at the National Cable & Telecommunications Association, I have found one our most perplexing tasks to be responding to the annual requirement that we file a detailed report proving to the federal government that cable exists in a competitive environment. After all, anyone who has worked in cable or the media business for more than a few minutes knows that we live and breathe competition every day.

Just a few days ago, the NCTA again submitted to the Federal Communications Commission our annual update on the status of competition in the video marketplace. The results were not surprising, and any suggestion that consumers don't have choices in today's marketplace simply ignores the facts.

The reality: The marketplace for multichannel video services has never been more competitive. More than 30 million consumers now subscribe to a pay TV provider other than cable. We have multiple video providers vying for customer loyalty, and each is trying to provide unique new products while working hard to meet basic customer needs.

Whereas 15 years ago, cable commanded 95% of the multichannel-television market, cable's market share today has fallen to 68% of pay TV households. And we all know that the big goliaths in telecommunications -- the former Bell telephone companies -- have jumped headfirst into video. They now offer their own service to millions of consumers.  

But beyond cable's typical competitors, new ways to consume media are exploding and directly competing with cable, satellite and telephone providers. Digital technology -- which has given wings to services and products such as Web sites offering streaming video, mobile phones and iPods -- has completely transformed the way programming is delivered to consumers. 

Broadcast and cable networks are creating Web "channels" that show live performances, how-to videos and news clips. ABC this year started showing full episodes of its most popular television shows. Wireless-communications companies have started to offer news, sports highlights, music videos, movie trailers and television programming on cell phones.

These new video options are viable because cable and its competitors have invested hundreds of billions of dollars over the past 10 years to build national fiber-optic broadband networks that provide ample bandwidth. Cable was first out of the gate to provide American consumers with a robust residential high-speed-Internet service, and it didn't take long for others to follow. 

Despite competition being alive and well in other areas of our industry, there is still one glaring holdout that is just beginning to erode: the market for local phone service. Yes, cable and other Internet-phone providers are beginning to make strides -- cable is now the nation's largest provider of digital-phone service -- but more than 87% of all households still purchase telephone service from their local phone company. 

This emerging market provides a huge business opportunity for cable and a huge savings opportunity for consumers. One recent economic analysis suggested that consumers could save $100 billion over the next five years if robust competition in the telephone market develops. Now that's an opportunity that policymakers and consumer groups should support.

This message of improving competition for telephone service is one that the NCTA has talked about before and will continue to advocate. And cable is again leading the way by helping to open up a competitive market in voice services that is providing consumers with more options, better service and exciting innovations.

Posted by Kyle McSlarrow on December 8, 2006 | Comments (0)