October 6, 2013

Industry’s history has put power in cable TV’s hands

For potential competitors to companies like Time Warner, roadblocks became formidable.

Many cable companies have virtual monopolies in television service because of the way the industry developed and because TV programming has become so much more expensive a commodity than anyone could have imagined years ago.

When cable TV was being developed in the 1970s and ’80s, cable companies agreed to build infrastructure and transmission lines in towns and cities in exchange for exclusive rights to be the cable provider in those locales, said Lauren Wilson, policy counsel for Free Press, a Washington D.C.-based nonprofit group working to promote competition and consumer advocacy in the TV and telecommunications industries. So there was a “land grab” by cable companies divvying up territories, Wilson said.

Over the years, the main way a cable company has acquired territory is by buying out another company. By the time the cable industry was regulated by the 1992 Cable Act, the cost of a competitor building infrastructure and buying programming was a formidable roadblock to competition. Then it was deregulated in the mid-’90s, leading to massive consolidation.

Time Warner had about 57,000 customers in Maine in 1994 but added at least 130,000 when it bought Adelphia in 2005. Joli Plucknette-Farmen, Time Warner’s public relations manager for the Northeast region, would not say how many customers the company currently has in Maine, only that there are about 400,000 in Maine and New Hampshire combined.

Today competition is allowed among cable TV providers, but it mainly takes place in urban areas with enough customers to make competition economically attractive to a new competitor. New York City, for example, has RCN, which was founded shortly after the 1992 Cable Act, and it goes head to head with Time Warner.

Wayne Jortner, senior counsel in the state’s Public Advocate’s Office, said there have been attempts by other TV service providers to operate in the same Maine towns as Time Warner, but operating costs have been prohibitive.

— Ray Routhier

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