A vote today inside the FCC could lead to tighter regulation of the cable industry. The five commissioners from the FCC are set to vote on a proposal to include several issues.

First, they are to consider whether or not it should cut rates charged by cable operators to lease channel access to programmers by as much as 75% in order to encourage more diverse programming. Cable operators are required to offer leased space, but it isn’t used widely — mostly carrying infomercials and programming from religious groups.

Secondly, they are to decide whether cable operators should have to settle disputes with programmers through a new FCC-governed arbitration process. Some cable programmers, notably the NFL Network, have complained that cable operators, including Comcast (CMCSA: chart, web, Y!) and Time Warner (TWC: chart, web, Y!), are placing their channels on specialized or sports-related tiers instead of expanded basic tiers, which have more subscribers.

Third, and most controversial, is the decision on whether to accept “state of video” data.

I’ll explain.

For the past couple years, the FCC has used multiple sources to collect data on what percentage of people with the option to subscribe to cable actually do. This year, however, they’re only relying on once source for that data which states that 71.4% of the homes with the option to subscribe to cable actually take the bait.

The reason this is important?

There is a 23 year old rule within the FCC that allows the regulatory authority to impose new regulations to the cable industry if more than 70% of the households exposed to cable service actually subscribe.

Naturally, the cable companies are vastly opposed to this, as they fear that the government could tell them how to run their show. One of the FCC commissioners pet projects is to convince the cable companies to offer channels individually, a-la carte fashion, rather then package them up in bundles like most of them do now.

The FCCs argument is that the consumer would win, and pay for only what they want. The cable operators argue that this would in fact increase costs, as much of the cost to distribute the bundled channels is picked up by the channels that you don’t want, or watch for that matter.

I’m against regulation… or am I?

Surprisingly, I’m torn on this issue. I’ve written in the past on my aggravation with Comcast, and how the cost of basic cable services are getting absurd ($100 per month for basic cable and basic internet). I also am strongly opposed to paying for something I don’t use, which includes 80% of the cable channels available to me through the basic package.

However, I’m also in favor of free enterprise, but only in the setting of fair competition. This gives the most power to the consumer to choose what he wants to buy. If he doesn’t like Comcast’s service, quit using it.

My problem for a long time was that there was no cable competition in my area, until AT&T’s U-verse came to town, at which point I promptly dumped Comcast.

In this regard, I can see the FCC’s point, in that there may not be enough competition in all areas of the sector to provide the consumer adequate choices when it comes to services.

I suspect though, that two things are going to drive regulation in the cable sector without the influence of a government agency:

1. A looming recession, in which the consumer will no longer be able to afford to pay exhorbitant prices for non-essential monthly services.
2. The internet.

What is your take?

Should the FCC further regulate the cable industry, or should the government let the economy, competition, and the power of the internet regulate it on its own?

Tags: cable | Comcast | FCC | regulation | Time Warner

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