Fostering Fair Competition: Reassessing Competition in the Market for Multichannel Video Programming Distributors
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Abstract
Seung Kwan RyuThis study explores the consequences of deregulatory policy on competition in the U.S. cable industry. Specifically, it examines how much effective competition is actually taking place in the multichannel video marketplace, focusing on cable's competition with other multichannel video programming distributors such as telephone companies (telcos) and Direct Broadcast Satellite (DBS). Second, by doing so this study seeks to find policy implications that can foster healthy competition leading to the promotion of public interests in the multichannel video market in the United States. Under deregulation, cable industry became more concentrated and barriers to entry contributed to keeping out rivals such as DBS and telephone companies. Also, the economies of scale of the cable companies leading to relatively low costs in programming services have been working as top barriers that new competitors hardly match. Looking at the entry of telephone companies to the multichannel video market, there has been only slight competition to cable from telephone companies thus far. That is, several cases of providing telephone services and other value-added services by cable companies seem to be more successful than those of providing video services from telephone companies.This study suggests that in order to minimize and rectify market failure a certain kinds of regulation, such as program access rules, reinforcement of checking competition level and anti-trust behavior by Federal Communications Commission (FCC) and Federal Trade Commission (FTC), the reexamination of retransmission consent, the reconsideration of current local franchise system, the policy invigorating the launch of IPTV by telephone companies, and policy of competition more emphasizing the public interest, needs to be invited.
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