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March 12, 2013

Top 25



It's time we all acknowledged reality, especially those who debate, write and adopt telecommunications regulations. The truth is, we don't really know where the businesses, technology or consumers are going, or who's going to do what, when—but we do know that it's changing fast, so now's the time to stop making believe it's still all the same!

Regulating, or even talking about, for instance, "cable television," as though that's a monolithic, understandable, identifiable business that can be classified and regulated as such, is just nonsense. We have long tried to explain the difference between "large" systems and "small" systems, and to some degree that's worked with a few efforts at reducing the regulations for the "small" ones, but it's not really effective any more. The fundamental differences in infrastructure make-up and capabilities, the competitive and financial landscapes, the power and leverage of "scale" in negotiations have gotten so enormous that it's time to recognize and act on the notion that we are really dealing with different industries.

The problem, of course, is how to define these differences in ways that justify alternative forms of regulation (or, hopefully, non-regulation). In the antitrust sphere, which some argue could be a better way to approach dealing with size, power and the need for additional oversight, the calculations as to who is "too big" or who has significant effects on "competition" are so complex and arcane that they tend not to be used. The Cablevision suit against Viacom over pricing and bundling negotiations provides a great reality check of both the problems and the prospects of using those laws to deal with the obvious difficulties.

I would like to suggest some other approaches, especially since we have the "small" cable operators in Washington this week banging their heads against the Congressional and regulatory walls. Once again, they're trying to get someone to understand that what they do, the problems they face, and the need to "oversee" them for "the good" of the nation is quite different from the mega-corporations competing with each other in the major metropolitan areas and influencing a vast majority of the population.

I'm not against those big companies, and I'm not saying "big is bad" as some would argue. But to think the same regulations and expectations that are applied in multi-million plus, highly concentrated urban centers should also be applied nationwide is just absurd. It should be stopped.

So what is the measure? Well, there are lots of alternatives once we overcome the first hurdle of getting folks to acknowledge—both those who argue and promote various laws and those who write them—that these are, indeed, different businesses and need to be addressed separately. That first step is critical. It's the one we should focus on. Once that's done, reasonable alternatives can be debated.

Here are some ideas I've floated in the past; on rate regulation and program negotiations, limit the power of those program owners whose channels demand fees more than 100% of the mean average cost of all channels. That's a self-selecting group. They decide if they want to fall into that category. How about establishing cable and broadband regulations only for the top 25 markets? Degregulate everyone else. You cover a significant proportion of the population. The costs for things like network access are basically equivalent, and you stop making believe, for instance, that an ISP elsewhere has the same connectivity cost structure as one in New York! OK, maybe the top 50. You get my point.







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