Competition is the best solution to ending exorbitant rate increases and poor service in the cable television industry says a Southern Illinois University economics professor.
Stanford Levin, chairman of the university's Economics Department, said two studies he conducted indicate that monopolistic control of franchise areas and the lack of regulatory control are the main reasons cable television prices have increased substantially the past five years with little or no improvement in service quality.Levin spoke at this week's 6th Annual Conference on New Directions for State Telecommunications Regulation sponsored by the Utah Public Service Commission, Utah Division of Public Utilities and the University of Utah.
Levin said reinstituting the regulation that was eliminated by the Cable TV Act of 1984 is not likely to improve service quality. Nor is it likely to force cable companies to reduce prices.
"Allowing customers to vote with their dollars is much more effective than letters to regulators," Levin said. He noted that companies would be far more likely to respond to customer complaints and concerns if faced with the real prospect that customers might move to a competing company.
"We have to remove barriers to competition and allow more companies to move into the market," Levin said. "We need to think about removing barriers to both service and technology. This will create better service, a higher quality network and lower prices."
Levin said cable television is not an essential service and there is a need to eliminate political arguments that use regulation to prevent effective competition.
Lisa Gursky, a telecommunications policy analyst for the Telecommunications and Finance Subcommittee, House Committee on Energy and Commerce, said she expects Congress to pass a new cable television act this year. She said it is likely the new bill will include short-term regulation while new policies aimed at fostering industry competition are put into place.
"We want consumer protection from exorbitant rate increase and we are also concerned at poor customer service response," Gursky said. "Rate hikes have consistently outstripped inflation, almost by a 2-1 margin, since 1986."
Gursky said Congress is also likely to consider additional legislation that would allow telephone companies to get into the cable television market, a move supported by Levin. He noted that 160 small telephone companies that have received exempt status are already providing cable television service.
Nancy Norling, chairman of the Delaware Public Service Commission, said prior to the 1984 act, her state had found limited success in regulating cable television rates. She said regulation was tough because of poor recordkeeping by companies that made it difficult to determine the actual costs involved in providing cable service.
Reinstituting regulation would be very difficult, Norling said, because recordkeeping has probably deteriorated under the present deregulation. She said allowing more competition is probably a better solution for controlling the cable industry.
Jayne Gerdeman, executive director of the Kenton/
Boone County Cable Television Board in Kentucky, said trying to force cable companies to provide quality service is practically impossible. She said the volume of complaints reaching her office is unreal and that the average complaint letter is more than two pages long.
Gerdeman said a strong cooperative effort between local and state leaders is needed to bring cable television operators in line.