Monday, February 23, 2015

Fischer v. Time Warner Cable (Cal. Ct. App. - Feb. 23, 2015)

Of course you want to sue Time Warner Cable.  Hardly a sympathetic defendant.  Of course cable rates are too high.  Undisputed.  Of course it's absurd that cable companies should allow consumers to pick stations a la carte rather than cramming dozens of channels down your throat that you'll never watch in a million years.

Finally, for those in the L.A. area, of course it's absurd that Time Warner paid $11 billion to broadcast the Dodgers and Lakers games and included those games as part of its basic cable package, raising basic cable rates $9/month for everyone -- even the 60% of consumers who have no interest in watching those games -- rather than permitting consumers to opt out.

But while you can (justly) bitch about it, you can't sue.  The Court of Appeal holds that state law unfair competition claims are preempted by the various federal regulations that govern the cable industry.  So you're stuck paying for something you don't want.

Whenever I think of cable television, I think of manifest market imperfection, and how our antitrust and other laws don't seem to capture whatever's going on here.  Sure, I understand that at least in theory, the cable companies compete with plenty of alternatives:  satellite, broadcast, Netflix, internet, etc.  So, in theory, the cable companies don't have a monopoly, and hence are subject to competitive pressures.

But if that's really true, then why do we see the world as it is?  Why are people as fundamentally unhappy with the cable companies as they are?  Today's example is a perfect example:  Why, in a truly competitive market, would cable companies be able to effectively cram down an expensive service on half its customer base that didn't want it?

The truth is that they couldn't.  These competitors do indeed "compete" at the margins -- and I say this as someone who switched off cable long ago -- but only at the fringe.  For the core population, there's really not a tenable alternative.  So the cable companies can, and do, put the screws to them.  As much as they want.

We love to believe in the power of a competitive marketplace.  I wonder if our belief in this regard is really tenable in a wide variety of contexts.  With cable television being an extraordinarily good example.

Admittedly, in the long run, I think this will all work out.  Cable will die.  And there are tons of people who will dance on its grave.

But in the meantime, people continue to be (effectively) forced to pay for things they manifestly do not want.  In an industry that I'm not at all confident is, in fact, substantially constrained by market -- or legal -- forces.

Witness today's case.