News Release

October 24, 2003

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GAO Cable Report: Deregulation Works
Report outlines improvements in cable quality and competition; rejects rate reregulation

WASHINGTON--Adam Thierer, Cato Institute director of telecommunications studies, made the following comments after reviewing the new report by the U.S. General Accounting Office on "Issues Related to Competition and Subscriber Rates in the Cable Television Industry":

"The GAO's important new report on cable rates has sent Congress a very clear message regarding cable industry re-regulation: Don't do it. In addition to confirming that cable industry deregulation has benefited consumers and resulted in increased competition in the video programming marketplace, the GAO report also makes it clear that the costs of re-regulating the cable sector would far outweigh the benefits.

"Hopefully this report puts to rest any ongoing concerns Congress has about competition in this sector and derails any future efforts to reregulate cable rates or programming options. In particular, the GAO report should serve as the nail in the coffin of rumored efforts that some legislators are considering a la carte regulation of the cable sector, which would demand that cable operators separate and sell each individual channel that they offer. The report notes that a mandatory à la carte approach could reduce advertising revenues for cable and result in higher per-channel rates for consumers; could lead to less diversity in program choice because many niche channels would likely disappear; and, would require cable operators and consumers to adopt new technology to provide à la carte functionality, which would raise costs for both groups.

"In sum, the GAO report makes it clear that à la carte regulation ignores the old lesson that the whole is greater than the sum of the individual parts. Regulations demanding that every channel be offered separately would ultimately destroy the value and quality of the larger bundle of services that cable offers its customers.

"Finally, the GAO report makes it clear that the cable industry faces more competition than ever before and has met that competitive challenge head-on by expanding consumer options, ramping up investment in system upgrades, and offering all-new services that consumers demand, such as high-speed Internet access. In sum, consumers are getting a lot more for their money than ever before.

"Instead of threatening to punish success through the re-imposition of price controls or à la carte regulation, Congress should acknowledge the cable industry's achievement as one of the great capitalist success stories of recent American history."