President Barack Obama issued an executive order that’s got many wondering if the cable service industry’s long-time monopoly is truly in its last days. According to the Wall Street Journal, the executive order is designed to promote competition across multiple markets.
“The order prods federal agencies to identify markets that the government might be able to help overhaul to the benefit of consumers and businesses.”
“Among the areas where the White House suggested possible future government regulatory action: the growing market for online customer data, price transparency in various markets, and recent changes in supply chains that could lead to further market concentration.”
“White House officials said federal action can do for the set-top cable box what regulators did for landline telephones more than 30 years ago.”
If you didn’t know, the historic break-up of Ma Bell landline phone monopoly occurred over 30 years ago. It was an event that marked the end of the company’s virtual stranglehold over large portions of the landline market. The end of Bell opened the door to a slew of new phone companies, competitive pricing, and consumer choice. The White House addressed this in its blog post about the executive order. It was directed primarily at Millenials, many of whom are too young to remember Ma Bell or imagine the world without smartphones.
“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 1980s, 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.”
Many feel that an event similar to what occurred with Ma Bell is both inevitable and necessary in response to Comcast and its cable monopoly.
The monopoly that Comcast has enjoyed for so long may be nearing its end thanks to President Obama’s executive order. During an exclusive interview with Yahoo Finance, Obama explained that “competition is good for consumers,” and that it’s also “good for business.”
“That’s the way the free market works. The more competition we have, the more products, services, innovation takes place.”
President Obama stated that part of the reason that Congress has failed to address concerns tied to Comcast-like monopolies and low competition is that the body has been “stuck,” and “partly for ideological reasons.”
Yahoo Finance reports that the Commerce Department has filed papers with the Federal Communications Commission to “increase competition in the set-top box market.” This effort follows analysis by the White House, which determined that despite price increases for cable set-top boxes — by a whopping 185 percent — there has been little to no innovation. By comparison, prices for items like computers, televisions, and mobile phones have dropped by as much as 90 percent within the same time frame.
The question is simple: How can companies like Comcast continue to justify price hikes for services while bringing virtually nothing new to the table?
Comcast’s behavior is markedly similar to that of Ma Bell ahead of being broken up. During the service’s heyday, as the Wall Street Journal writes, Americans paid “the phone company not only for their landline connection but for renting the physical phone itself.” They also had nowhere else to turn if they were fed up with price hikes or sub-par service.
Because of the low competition problem within the cable TV box industry, the FCC is again being called on to act on the problem — just as the agency did with the landline phone monopoly. It’s believed that stepping in now could usher in a new age of innovation and competition; that’s what followed the demise of Ma Bell.
Do you agree with Obama’s cable box executive order? Should Comcast go the way of Ma Bell? Share your thoughts below!
[Photo by AP Photo/Matt Rourke, File; Brendan Smialowski/Getty Images]