A regulatory play in two acts.

• Author: Wallsten, Scott

CHARACTERS

Chorus

Cable VP

Cable CEO

FCC Chair

Trusted Staffer

PROLOGUE

Enter Chorus

Chorus

An old regulatory rule says the Federal Communications Commission can strictly regulate the cable industry once cable penetration passes two tests. First, it must be available to at least 70 percent of all homes. That's been true for a long time. Second, 70 percent of those homes must actually subscribe. One source now says that cable may have surpassed that second milestone.

Let's listen in to some conversations about this development:

ACT I. BIG CABLE COMPANY HEADQUARTERS

Enter Cable VP and Cable CEO

Cable VP

Bad news, sir. A public interest group says that 70 percent of all households that could subscribe to cable actually do so.

Cable CEO

Isn't that good news?

Cable VP

No. A regulation from 1984 allows the FCC to regulate us like never before once we meet that 70 percent.

Cable CEO

George Orwell controls the FCC?

Cable VP

No, I mean the FCC adopted the regulation in 1984.

Cable CEO

Oh. Well, VP, I'd hoped it wouldn't come to this, but we have only one choice.

Cable VP

I hear you loud and clear, boss. We have to fight back with everything we've got.

Cable CEO

And pay all those lawyers? Forget it. We have to terminate cable service to a few million people.

Cable VP Sorry?

Cable CEO

Yes, the share of households we serve is the number of subscribers divided by the number of households that could subscribe, right? So if we disconnect a few million lines, we'll be just fine.

Cable VP

I see.

Cable CEO

We should also build some lines to pass houses that can't get cable now.

Cable VP

But I thought you wanted to get rid of subscribers?

Cable CEO

Try to keep up. The new cables should just pass new houses, not actually connect them. Cutting off subscribers will bring down the numerator, and installing new lines will bring up the denominator. We'll be back below 70 percent in no time.

Cable VP

Brilliant, sir!

Exeunt except Chorus

ACT II. AT THE FCC, A YEAR LATER

Enter FCC Chair and Trusted Staffer

FCC Chair

We have a problem. Consumers are clamoring to subscribe...