Cable Television: An Unnatural Monopoly

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The invention of print...made it easier to manipulate public opinion, and the film and the radio carried the process further. With the development of television, and the technical advance which it made possible...the possibility of enforcing not only complete obedience to the will of the state, but complete uniformity of opinion on all subjects, now existed for the first time.
--George Orwell, 1984

It is 1984. Many of the more horrific Orwellian prophecies fortunately have not come to pass. Nonetheless, ours is an enlarged government, taking unto itself increasing functions that were once left to voluntary interaction among individuals.

In tribute to Orwell's book, consider the following scenario, which, if it occurred, could sow the seeds for theworld he envisioned. In this scenario, our benevolent cityfathers, concerned about the trend toward one-newspaper cities,decide that the increasingly monopolistic tendencies of newspapers in local markets necessitate governmental action toprotect the public interest. Assuming that newspapers arenatural monopolies, the city must act to protect consumersagainst such inevitable effects as price gouging, one-sidednews, and lack of public access to the medium. Because newspaper boxes, trucks, and carriers use the city streets, thelocal government concludes that it has jurisdiction to takewhatever action it deems necessary.

The city quickly realizes that if it supplants the marketplace and controls the mechanism that determines which companywill enjoy the local news monopoly, it can extract enormousconcessions in return from that company. It promotes an intense bidding war for the franchise, the winner of which mustbe not only wealthy enough to meet the costly requirementsdemanded by the city but possessed of sufficient politicalknow-how to appeal to the city's decision makers as well.

The competition is fierce. Each bidder spends $1 millionto curry favor with the city, staging media events, gatheringsupport from prominent community figures, and wining and diningthe decision makers. Finally a winner is chosen to serve thecommunity.

The franchise does not come cheaply, for the winningbidder must pay millions of dollars in tribute to the city,both now at the outset and then throughout the life of thefranchise. And for the first time in U. S. history, a newspaper must cede editorial control to government officials.It must publish verbatim transcripts of all city councilmeetings, make available and relinquish content control overaccess pages for specified special-interest groups, and providetraining centers to teach people how to write newspaper articles. Any changes in the initial editorial format are subjectto city approval, as are transfers of newspaper ownership.Free newspapers must be delivered to all city offices. Theprice of the newspaper -- 22 percent higher than before owingto the costly giveaways -- is controlled by the city as well.The newspaper is guaranteed a minimum rate of return. Theprimary quid pro quo, however, is a guarantee from the citythat the newspaper will be insulated from all competition forat least 15 years.

Of course, we know that this scenario is ludicrous. Itwould shock our consciences to allow government control ofour newspapers to this extent. Our Constitution, throughthe First Amendment, forbids government interference with thepress; it entrusts regulation of the press to the marketplaceand allows the people to determine their own interest. AsThomas Jefferson explained, in the area of information exchange, it is "better to trust the public judgment, ratherthan the magistrate...And hitherto the public has performedthat office with wonderful correctness."

Aside from constitutional prohibitions against government interference with the free flow of information, thisscenario is also improbable because of its faulty economicpremises. We know that newspapers are not natural monopolies.In many communities, two or more daily newspapers thrive.Even in one-newspaper cities, competition is provided bysmall specialized newspapers and by alternative media. Freeentry into newspaper markets furnishes omnipresent competitive pressures. And technology has made possible nationaldaily newspapers that provide competition throughout the country.Far from constituting a natural monopoly, the news industry isvigorously competitive, offering diverse sources of information as a by-product of our commitment to a free market inthe area of information exchange.

However, while wholesale government control over the pressdoubtless would cause public outrage, we have hardly blinkedan eye over the application of such an Orwellian scenario tothe newspaper of the future -- cable television. This dynamicmedium has been subject to the most pervasive regulation atevery level of government of any medium in American communications history. Yet no stronger economic rationale existsfor government regulation of cable than of newspapers. Givenour metamorphosis from print to electronic media as the mainstayof our information society, the implications of continued government control over cable are ominous indeed. As Ithiel de SolaPool has declared, "The issue of the handling of the electronicmedia is the salient free speech problem for this decade."[1]

Clint Bolick

Clint Bolick is an attorney specializing in constitutional litigation with Mountain States Legal Foundation in Denver, where he is counsel of record in a legal challenge to municipal authority to award monopoly cable franchises.