Commentary—

Not Much Choice For Cable Or Phone Service

By William A Collins

Competition,

Nearly dead;

String and soup cans,

Lie ahead.

In this great competitive nation of ours, there is just one thing that communications giants hate to do. Compete. When faced with a serious rival, there is a whole different course of action that they much prefer. Merger.

Connecticut’s phone company, SBC, is a great practitioner of this art. Once part of that dominant octopus, AT&T, SBC was spun off, along with four others, in order to provide more competition. Right. But now SBC is buying back the remnants of AT&T in order to again reduce competition. And the Federal Communications Commission (FCC), which ordered the original breakup, just sits on its hands. Likewise, it is watching soundlessly from the sidelines as Verizon similarly gobbles up MCI.

This contrasts with the good old days when Connecticut’s late, lamented native phone company, SNET, ran its own tightly regulated show. Indeed, we still witness SNET’s ugly never-used black cables along many city streets. The plan in installing them was to offer blessed competition to the state’s various monopolistic cable TV companies. Nice try. But before a single reality show could be transmitted, SBC bought up SNET and proclaimed that it wasn’t interested in cable.

Thus, years later, those lines still hang there idle. But not for want of outside interest. Another company, Connecticut Telephone, offered to buy all that expensive infrastructure from SBC and to start its own competitive cable business. No dice. SBC wouldn’t sell. Analysts say that it still looks forward to the day when it, too, can offer its own broadband Internet service over those ugly lines, along with cable TV and telephone.

But for today, the only ones who can offer such breadth of service are the cable companies, and they love to bundle everything together into one catastrophically expensive package. SBC naturally covets that monopolistic opportunity, too. But more likely than any delicious competition in our future is the industry’s preferred mode of operation — merger. Once their hardwire business is fixed securely in their grasp, just watch for SBC and Verizon to start acquiring cable companies, and then satellite companies. With the lapdog FCC as their only monitor, there really isn’t much standing in their way.

But the purchase price for cable companies will be high. They have broken free from the cruel bond of public regulation and can now charge whatever they want (They began at $4.50 per month.). They may also keep their franchises as long as they want. Of course part of the price they paid for deregulation was periodic review of their performance, to see if they were acting in the public interest. What a joke! No serious mechanism was ever set up to carry out that review.

Yes, Congress does occasionally get interested in this monopoly for a moment or two. There were bills this year to force cable companies to let subscribers order just those channels that they really want. For instance, my sainted aunt in the nursing home only watches the oldies channel. Sorry, to get it she has to pay $50 per month for the whole 100-channel package. And pity the guys who just care about sports. They have to pay for Martha Stewart. Cablevision, Comcast, and the rest have plenty of lobbyists in DC to fend off any reform of such behavior.

Meanwhile each merger creates thousands of layoffs. That’s one nice thing about monopoly — it’s efficient (You’d think we’d have figured that out about health care by now.). Thus duplication can be eliminated and customer service cut back. After all, where can unhappy customers go? Further, with the mergers there are already fewer bidders for government communications contracts. That jacks up the price for taxpayers.

But perhaps the chief driving force for most mergers is executive pay. Top dogs always make out like bandits. There are bonuses, options, retirement packages, apartments, and countless other perks. These find their way down to our utility bills camouflaged as legitimate expenses. With such good friends in Washington, communications giants can nibble generously from their own private cornucopia, and join forces in restraint of trade all they want.

(Columnist William A. Collins is a former state representative and a former mayor of Norwalk.)