Michigan passed a law, Public Law 480, about a year ago that lowered some barriers to market entry for incumbent cable company competitors. The goal was to encourage competition on the local level for cable TV services by allowing basically a statewide franchise. Multichannel News reports that a recent study reveals very little competition has actually arrived. Only 110 communities out of a possible 2,000 now have a legitimate competitor. Commenting on the study’s results, Michigan’s attorney general Jon Kreucher put a new twist on cable’s triple play accomplishments. “Unfortunately, cable companies scored the triple-play last year: Very poor levels of new competition, exceptionally bad levels of customer service, and prices that often increased ten times faster than the national consumer price index for other forms of recreation,” said Kreucher. Needless to say, Michigan authorities are disappointed in the lack of competitive progress.
The Michigan example illustrates the reality of the competitive landscape. Beyond major metro markets, competition takes time to develop. As Gary Kim points out in his IP Carrier blog post, competition is expensive and time consuming. The cable overbuilding business is not for the faint at heart. Outside of the urban and suburban markets targeted by AT&T, Verizon, and the few remaining cable overbuilders, your left with the independent telco sector to fuel competitive build outs. While independents have been quite active with triple play competitive offerings, they aren’t in a position to dramatically increase competition on a wide scale basis. They simple don’t have the scale. It’s generally one community at a time. At that pace, tens of thousands of communities across this country will be lucky if they ever see facilities based competition for cable. Some will argue DBS is enough and if the market conditions are right, a community regardless of location will eventually see competition. In other words, you can’t force competition on a market where the returns for multiple operators don’t warrant it.
