How the cable industry became a monopoly

[Commentary] Cable companies keep looking at industry regulation through a video-centric lens. Most Americans enjoy television, with the cable industry having invested heavily to extend the reach of over-the-air TV beyond the bounds of antennas. Given the reach of over-the-air TV and the proliferation of multichannel video competition to the cable industry (first from satellite, then telecommunications such as Verizon, AT&T, and now Google Fiber and Internet-based video providers such as Sling TV and Sony Vue), the risks posed by video consolidation are relatively minimal with the courts twice striking down legislation to limit marketshare held by video distributors to 30 percent of all US subscribers.

Remember, the primary argument in support of investing in cable stocks over the past five-plus years has been that the current “pipe” is so robust, it will not require digging up the streets again to add capacity. While the government clearly appreciates the investment the cable industry has made to build high-quality broadband access across the US, they are concerned that cable has built its way into a powerful position that is dangerously close to a monopoly. This will ultimately change as Google rolls out Fiber, AT&T T 0.36 percent improves U-Verse by offloading video via, and municipal broadband efforts accelerate. However, for the next several years, if not longer, most Americans will have little to no choice for high-end broadband beyond their local cable operator.

[Richard Greenfield is a media and technology analyst with BTIG Research]