The Federal Communications Commission has a proposed rule to save cable subscribers an average of $231 a year. It's a pretty straightforward idea: break the monopoly cable companies have on how you watch their content by making them make the content you subscribe to available on devices other than the one they now force you to rent and pay for every month. President Obama likes the idea so much, he's promoting it, and proposing it as a model for expanding competition in all kinds of areas.
"The potential here is for cheaper, more effective services that are provided," Obama said in an interview with Yahoo. "Across the board, if we have more players that can potentially participate, fewer barriers to entry, the rules aren't rigged, then you get more people trying to get your business and you get better products at cheaper prices."
Jason Furman, who advises the president on economic policy, said the administration sparingly weighs in on FCC rulemaking. When the president gets involved, Furman said, the issue is of "real great importance in his mind to consumers, to competition and to the economy more broadly." […]
Obama also signed an executive order calling on federal agencies to explore areas in which they could promote more competition. The agencies will be required to report back with their findings in 60 days. The White House called the cable box issue a "mascot" for the broader initiative.
Of course there's industry opposition, because that's what this industry does—oppose anything that could cut into their profit margins, regardless of whether it's good for the consumer. They threaten the typical stuff, that "the FCC's proposal could lead to higher prices, 'eliminates security protections, and provides no reassurance on privacy rights.'" Because, don't you know, your privacy is their highest priority.
But it's really about their profits, and at Vox, Matt Yglesias explains why that's a problem for the Obama administration, and why they're asking all the agencies to do something about it.
The big-picture concern is that corporate profits have risen to an unusually high level as a share of total national income, and then stayed high. Profits are, of course, an integral part of a capitalist economy. But in a healthy capitalist economy the idea is that high profits inspire businesses to invest more in order to capture a share of the profits for themselves. That investment creates jobs and innovation, and leads to competition that whittles away the profits.
In recent years, we've seen the profits but not the investment.
Obama wants to end his term in office having done something to reverse that. The cable box rules might be relatively small ball, but they could pave the way for much bigger things.