Industry Indicators

The Government Accounting Office (GAO), in a departure from its traditional role as Congressional watchdog, weighed in on cable competition in late October. The GAO says in spite of rising cable rates, it’s better if the government keep its hands off those prices because regulating rates is less desirable than fostering competition among the cable providers.

“Everyone had open gateways,” says Warren Saunders, business manager for telecom for The Anite Group, a British company that provides interconnect and managed services for the telecom industry. “We’ve seen wireless carriers clamping down. They’re beginning to charge for access to their SMS gateways and block some carriers as well.”

The charge is a fixed, or flat fee per message, “usually less than a cent,” Saunders says, but gateway access will likely become more expensive as more large graphic attachments ride the text. “Obviously, that has to change when you start moving into the next generation of SMS and text capabilities. They will take up more network capacity, so wireless SMS providers will have to start attaching value to things in a more proactive way than they’ve done so far,” he says.

In its report, the GAO cites several trends to bolster its argument. First, 2 percent of the nation’s markets are served by more than one cable company; customer bills are 15 percent lower in those markets than in places where only one cable operator operates.

Satellite service—such as DirecTV—is increasingly providing alternatives for cable subscribers, the report states, parroting FCC Chairman Michael Powell’s theory of “inter-modal competition.” Satellite service claims about 20 million of the nation’s 90 million pay-TV subscribers, according to the GAO.

Though the report says competition is being served through alternatives to cable, one consumer group says that if every market had two cable operators, the nation’s viewers would save more than $4 billion a year.