A planned merger between Echostar Communications and Hughes Electronics, which run Dish Network and Direct TV respectively, has been in the works for months. That is, until the FCC denied the transaction Thursday claiming that it would amount to a satellite television monopoly. We couldn’t agree more.
The satellite TV guys object to this assertion, saying that only a merged, “mega-satellite” provider can compete in local markets with the real monopoly cable television. They’re correct about one thing, cable TV is a monopoly. But allowing Direct TV and Dishnetwork to consolidate would only result in two wrongs trying to make a right.
Ever since it’s inception, cable television has been provided with franchise agreements allowing a municipal monopoly due to the capital costs of installing and maintaining a cable system. These agreements last decades and are rarely challenged unless the cable system is purchased by another company. Residents could only show their dissatisfaction with cable by canceling their subscription while wrapping aluminum foil around the “bunny ears” of their TV sets.
Satellite has offered an alternative at least for those whose homes face the southern sky. For a similar monthly fee, viewers can usually watch the same, if not more, channels. Most consumers have two choices of satellite providers, which is one more alternative than cable subscribers. Allowing Dishnetwork to merge with Direct TV would give customers only one choice. The executives of these companies claim that only a consolidated company can effectively compete with the cable monopolies. That’s comparing apples to oranges especially when considering those consumers who have no cable access.
For now, we still have competing satellite providers. Executives with these two companies, however, can submit changes in their plan by Oct. 28 addressing the FCC’s concerns. Hopefully, the FCC will continue to see the value in competition and not allow a satellite monopoly especially considering what monopolies have done with local cable service.