Fiber Makes New York Cable Market Competitive

Published February 1, 2009

The Federal Communications Commission recently declared certain parts of the New York City cable market competitive due to Verizon offering its fiber optic service (FiOS TV) in the area.

The ruling means FCC has revoked the ability of municipal authorities in New York to regulate how Time Warner Cable sets its basic cable rates, which will likely mean lower rates for consumers.

Increased Competition Works

The move once again shows the benefits of competition and proves exclusive cable contracts keep people from receiving better pricing and better service, according to Barbara Esbin, senior fellow and director of the Center for Communications and Competition Policy at the Progress and Freedom Foundation in Washington, DC.

“It is always good news when a significant competitor enters a major market and provides competitive services,” Esbin said. “Competition is a far better protector of consumer interests than government regulation.”

The ruling provides New Yorkers with access to technology considered superior to coaxial cable.

Benefits of Fiber

FiOS technology is quite a bit different from cable. Still in its infancy with a few East Coast rollouts underway or planned, FiOS uses fiber to the home instead of coaxial cable. The fiber provides higher speeds and greater capacity than cable.

“Ultimately, the FiOS fiber-to-the-home approach is technologically superior to pure coaxial cable,” said Jonathan L. Kramer, who heads the Los Angeles-based Kramer Telecom Law Firm, P.C.

Vince Vasquez, senior policy analyst with the San Diego Institute for Policy Research, agrees.
“FiOS takes a fiber-to-the-premises (FTTP) strategy that directly plugs homes with the full benefits of cutting-edge fiber optic cable, which is more capable than the outdated networks built with coaxial cable or copper wires, and even the hybrid fiber/coaxial networks used by many of the larger cable companies,” Vasquez said.

Franchise System ‘Broken’

Vasquez said he is “ecstatic” to hear that “cable choice is finally making its way to New York City.” And he hopes other municipalities will learn that “the old cable franchise system is broken, and has to change.

“For decades, too many municipal politicians have abused their franchising authority, restricting competition and lining their pockets with millions of dollars in franchise fees and ‘goodies’ from service providers,” Vasquez said. “It was, in fact, former New York Mayor John Lindsay who was quoted in the 1960s as saying that cable companies are ‘urban oil wells beneath our streets.’

“Regulations should be reduced for all video providers, especially on the state level, removing the need for cable companies to pen franchise agreements with cities—which are too often loaded with pork projects and terms that can raise the cost of business, pushing price hikes onto paying consumers,” Vasquez said. “Companies can provide better packages and rates when industry rules foster capital expenditures and new market investment.”

Phil Britt ([email protected]) writes from South Holland, Illinois.