Real-life Case Study: Regulating Cable Television
Government
Cable television systems offer more than 100 channels featuring continuous news, sports, weather, business reports, and coverage of local activities. This growth in popularity, however, has led to a need for regulation.
The FCC The Federal Communication Commission (FCC) oversees the cable industry. During the 1950s, the FCC maintained a “hands-off” policy. In the 1960s, however, the FCC began to impose regulations. Responding to complaints from over-the-air broadcasters that cable stations were refusing to carry local stations, the FCC ruled that every cable system had to carry the programs of all local stations as well as those of their own.
By the 1970s, the FCC began to impose more regulations. The agency mandated that cable systems provide at least 20 channels in major markets, provide public access channels, and obtain public approval of changes in their rates.
Many cable channels run specialized programming, such as all home improvement shows or all sports.
Deregulation In the 1980s, the FCC ruled that rates for cable services would be deregulated. This led to skyrocketing cable rates and poor service in certain parts of the country. This resulted in a move in the 1990s to regulate the industry once more.
The Cable Television Consumer Protection Act of 1992 allowed competition in the cable industry for the first time. It was hoped that competition would cause cable rates to stabilize or even decrease, while service would improve.
Today, cable television has grown so popular that cable networks now challenge and often surpass the popularity of the original broadcast giants ABC, CBS, and NBC. How much further will cable television grow? No one is sure. What seems certain, however, is that with growth will come further regulation.
Applying Economic Ideas
- Should government regulate the cable television industry? Why or why not?
- The table below shows the number of cable subscribers from 1970 to 2000. What do you think accounts for the increase in subscribers in the 1980s and 1990s?
| Year | Number of Subscribers |
|---|---|
| 1970 | 4,500,000 |
| 1975 | 9,800,000 |
| 1980 | 16,000,000 |
| 1985 | 32,000,000 |
| 1990 | 50,000,000 |
| 1995 | 58,000,000 |
| 2000 | 70,000,000 (est.) |
Source: Statistical Abstract of the United States
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