Wednesday, December 21, 2005

The Economics of Cable TV

Two articles I've run across deal with cable TV.

The the first is an idea that people want to pay for cable channels "a la carte" instead of in packages. Groups of advocates believe this will lower the cost, especially if customers don't want the channels offered in a typical package. This article explains why this logic is flawed.

The second article talks about lowering the barriers to entry into the cable television market. It cites the telecommunications act of 1996 which deregulated long-distance and other telecom companies. The result of which was greater choice to consumers at lower costs. Currently, a startup company like Internet TV has to negotiate with individual communities (over 33,000 in the US) for the right to compete with the local cable monopoly. A proposed law in Texas aims to eliminate some of this redundancy by giving the state the authority to negotiate the contracts for the state, thus eliminating the need to waste time and money talking with every community.

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