Think About That For A Minute

Lobbyists for the "public interest" groups who are permanent residents of the Washington scene are at it again, but this time it seems even they aren’t listening to their own arguments. In the last couple of days articles and press releases have issued forth from these folks both attacking the cable industry for "cross subsidizing" services, and at the same time demanding cross subsidies! Granted, this is not new. But it has reached a pretty arcane level. It has long been obvious that these special interest lobbyists felt no need for consistency. On the one hand they demand a la carte sale of all channels, and say that if some channels don’t make it, too bad. On the other hand they demand that "PEG" channels be part of the basic tier, along with broadcast channels, and lobby for "must carry." The message: the cable operator should not be an editor, but the Consumer Federation knows what’s good for you, and on what you must spend your money. Now we are hearing the argument that "basic" cable subscribers should not be "forced" to "subsidize" the upgrade of cable plant to digital, and the provision of broadband data services. Those folks who only want basic or expanded basic tiers shouldn’t have to pay for things they are not buying. Well, to begin with that argument displays a serious lack of understanding of our technology. The $80+ billion upgrade that the industry is just completing helped ALL our customers, not just those who bought newly available services. A vastly improved infrastructure means that the pictures are better (even the analog pictures), the delivery is more reliable, and the service has become so much better that consumer satisfaction has increased significantly. That means all customers benefited. And yes, all customers have had to pay for those improvements. In this way we are no different from any other industry. When the telcos shifted to new digital switches, everyone paid more for phone service even though "plain old telephone service" did not change much. When superhighways were built with funds from gas taxes, grandma’s price for gas was higher even though she still didn’t drive more than five miles from home. And when Consumer’s Union added a comprehensive Web site, part of the increased income to CU paid for that site, even though some magazine subscribers don’t have computers; same with BusinessWeek, The New York Times and every other publication that added an Internet service. That’s the way new services are developed. Cable was asked to develop these services by our customers and policy makers. Even the Consumer Federation, for years, demanded the development of a competitive, facilities-based competitor to the telephone company. Well, here we are. And yes, we charge for our infrastructure in the most efficient way to maximize our income so we can provide broadband, and telephone service as well as video delivery. That’s the way our economy works, and in this case it has worked better than anyone expected. Few believed, even five years ago, that there would be a true telco competitor or that cable would have more data customers than the telephone company. Yet that’s what has happened. The system is working despite the continued bleating of the lobbyists that government should now regulate the price of broadband as well, because they have decided our charges are too high. The answer to the question "who pays" for new services is that we all do, and there is nothing wrong with that.