Did you ever notice that when it comes to cable options you’re pretty limited to one cable company in your area? That’s because municipalities usually enter into exclusivity arrangements with cable companies. This is why one town can have Comcast while the next town over could have Time Warner or Cox. Of course these agreements can be financial boons for many cities.
These exclusivity agreements have been going on since the advent of cable TV. This lack of competition is also why cable companies feel they can charge outrageous monthly fees for a ton of channels that you will hardly ever use. Fast forward to today and the landscape of paid entertainment content has vastly changed. Services like Netflix have led many former cable customers to cut the cord. This means that many cities and towns aren’t getting the same financial benefit since cable subscriptions are down. In order to make up the lost revenue many municipalities are considering a ‘Netflix tax’.
Glendale, Santa Barbara, Stockton, and Sacramento are among the more than 40 California cities who are currently seeking guidance from municipal consultants as to how they might implement a Netflix tax.
Unfortunately it’s the regional monopolies that these cities have created for the cable companies that has led to the cord cutting movement. Monopolies breed complacency while competition breeds innovation and lower prices. Basically these cities are considering taxing the solution to the problem they caused. If that’s not governmental bureaucracy in a nutshell I don’t know what is.