Size Limits on Cable Operators Mean Less These Days

The U.S. Court of Appeals for the District of Columbia has tossed out an appeal over the maximum size of cable companies, saying it's not a big deal. That shows how far the telecommunications industry has come.

The court rejected for the second time Federal Communications Commission rules that cable companies can serve no more than 30 percent of the nation's subscribers. The court ruled the same way in 2001. The rules, of course, were set by previous FCC leadership. The agency hasn't said whether it will appeal.

The news is not important for two reasons – and that’s news. The first reason – ably described in this Wall Street Journal story – is that the cable television business has hunkered down and that the possibilities that operators will move beyond the 30 percent barrier are limited. Comcast has about 25 percent of the cable market, and it would have to make a big purchase – perhaps of Cox or Charter – to go over the 30 percent threshold. Such deals seem unlikely, and the marriage of Comcast and second-place operator Time Warner Cable would raise regulatory questions galore, even without the restrictions on size.

The other issue, one that is not discussed in the story, is that the lines between all forms of communications are so blurred that they almost are irrelevant. Cable companies are data and voice providers, phone companies traffic video and people get anything they want over the Internet. Giving Comcast or another cable company 32 percent instead of 28 percent just doesn’t matter as much as it did a few years ago, when operators had near strangleholds on entertainment video in the areas they served.

Those days are long gone, of course. The first hit to cable's hegemony were the direct broadcast satellite (DBS) providers. While the DBS players took a healthy bite, the industry's influence took an even more dramatic hit when the techies figured out how to reliably send video over the Net and companies such as YouTube and Hulu came to be.

Restrictions on ownership still are important in general terms. Huge companies have more control over program creation and regulatory affairs through lobbying than merely big companies. They also have a greater ability within the industry to set political, operational, technical and other agendas. But the days in which ownership levels are life-and-death matters clearly are over.