The Telecommunications Act of 1996 has shaped the nature of media today. In an attempt to address the increasing value of the Internet, the Act basically deregulated the all facets of the media, which is why companies like Clear Channel own more than 1,200 radio stations around the country and five companies own 75 percent of primetime television.
Cable channels are grouped together under so few parent companies that they basically don’t compete anymore. There are few enough cable or cell phone providers that they have effective monopolies. Most people only have access to one cable provider and are forced to pay whatever that company charges for whatever service they can get, and the handful of cellular providers do the same.
So what’s the problem? Beyond a wealth of issues like the erasure of local news impacting elections to the lack of diversity in the music industry, there are some pretty glaring economic problems. Why should Comcast or Verizon bother to innovate? They don’t need to compete with anyone, not really.
Capitalism and the free market are supposed to be built upon competition, which drives people to innovate or otherwise improve their product, reduce prices, and do what they can to attract customers. But big companies that have monopolies on media don’t have any reason to.
In the current environment, it’s hard for competitors to succeed. Part of the problem with monopolies is that they don’t leave room in the market for new companies to get a foothold. Small businesses can’t compete fairly because there’s no space for them to compete. Comcast might not want to drop its prices, but the company is more than capable of doing so if they need to squash a small competitor who doesn’t have access to the same capital as one of the giants.
What can be done to solve the problem? Depending on who you talk to, the solutions range from re-regulating the media market to providing more funding for small startup media companies.
What do you think about the current state of the media market? What would you do to help encourage competition in this area? Please share your thoughts in the comments.