| For the last time, competition does not work... Say it with me - "COMPETITION DOES NOT WORK."
Think about it. I want to get into XYZ industry. I look around and the going rate for my service is $100 by the established player. I poke around at their financials and find out that gives them decent returns.
As a businessperson, why would I price myself at $75, make 3/4 as much on my return as my competitor? Why would I do that?
If nothing else, I'm going to start at $75 and raise my rates to what the other guy is charging. That way I can make those profits and be a good businessperson.
If you truly think competition brings about lower rates, you're crazy. Basic economic theory states that in order to maximize profit (the goal of EVERY FOR PROFIT BUSINESS) you charge as much as the market will bear. |
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elray
join:2000-12-16
Santa Monica, CA Reviews:
 ·SONIC.NET
 ·RoadRunner Cable
| Competition works. But one or two sellers is not competition. You need to have at least 4, before you can see any results.
In our building, we have a choice of TWC, or TWC. Some day, we might have the choice of FIOS-TV. But again, that's two. Not four. Not six.
Cable-TV is a natural monopoly, and should be regulated locally. |
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cwh
join:2006-05-14
San Antonio, TX | reply to itguy05
Competition is working, it just takes time. There are much better deals to be had now that u-verse is in town. |
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| reply to elray
"But one or two sellers is not competition"
Many many gas stations, blocks apart, prices
neraly the same. |
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| said by anengineer:"But one or two sellers is not competition" Many many gas stations, blocks apart, prices neraly the same. Where does oil for gas come from?
OPEC & Hugo Chavez (mainly) - two sellers |
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Reviews:
·RoadRunner Cable
·AT&T Midwest
 ·voip.ms
·MyPhoneCompany
| reply to cwh
This is not "real" competition. There is no real competition when there are vertical monopolies and the monopolies have only small changes in the balance of the customer base.
The networking effect creates a natural monopoly. For example all the sports fans want ESPN. They may also want Fox Sports, the Big Ten Network and Joe & Mary's Sports, but everybody wants ESPN. There is really no equal to ESPN. It's not like Ford, Chevy, Chrysler, Honda, where all the cars get you from here to there.
Voila. ESPN has a monopoly. They have a number of exclusive contracts making the barriers to entry very high. So they say to cable providers "You want ESPN? OK, great, but we only sell that as a package with all of our other channels and you have to offer them as part of your standard package."
Meanwhile, these same media conglomerates own interests in cable systems, right? So which titan can afford to break into that market and compete on those systems?
First stop the bundling. I know this is going to eliminate some channels with small followings. Boo Frickin' Hoo. Welcome to capitalism.
Second stop the vertical monopolies. Programming providers cannot own interests in the distribution systems. They provide a downlink only and negotiate prices with brokers or distributors.
Third itemize the bills. Show the cost of each channel, the set top box, the remote, the DVR, distribution overhead. Bundling is nothing but a sales tool that helps keep consumers stupid (and since they are watching TV all the time to get their money's worth, they just keep getting stupider).
Not as profitable? Too bad. Go find another way to fleece the public. It's a free country. These guys are in business for one reason: To make a profit. Nothing wrong with that, but that means they only serve the public to the extent that people are not running away. The government's job is to serve the public interest. In this case, they are not doing that.
We all know the real reason for throttling and bandwidth caps is to preserve profitable subscription television offerings. But if {Google} ever gets their hands on enough capacity to put in a 1 Gbps link to your house at a good price, are you going to tell me you wouldn't want to use it for A La Carte video? That's the way to think about this issue: Sooner or later, it's not going to matter anymore. The question is who will be smart enough to find an appealing model so they can televise everyone else going belly up.
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cwh
join:2006-05-14
San Antonio, TX | You may not consider it real competition, but it has lowered prices for the consumers. The consumer is very much benefiting from competition.
While bundling is an imperfect system, it is a far better system than itemizing the cost of 500 channels. |
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elray
join:2000-12-16
Santa Monica, CA Reviews:
·SONIC.NET
·RoadRunner Cable
| reply to anengineer
said by anengineer:"But one or two sellers is not competition" Many many gas stations, blocks apart, prices neraly the same. That's competition - the prices have settled out as low as they can go, within the constraints that each station owner operates. (We can sidetrack and talk about anti-competitive behaviors at the refinery level, but you were citing stations, not oil companies.)
But it not a legit comparison to cable tv content. |
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Reviews:
·RoadRunner Cable
·AT&T Midwest
·voip.ms
·MyPhoneCompany
| reply to cwh
said by cwh:While bundling is an imperfect system, it is a far better system than itemizing the cost of 500 channels. That's a good point. In consideration of the practical effects, I would say that bundles should not be prohibited, but that each channel should be available as a standalone item with its own price. I would probably even sign up for a bundle with just the basics, even if I never watch EWTN and BET.
Also you're right concerning consumer benefit. A duopoly or triopoly is much better than a monopoly, but again, the barriers to entry and vertical ownership ensure that there is not true competition.
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elray
join:2000-12-16
Santa Monica, CA Reviews:
·SONIC.NET
·RoadRunner Cable
| reply to cwh
said by cwh:You may not consider it real competition, but it has lowered prices for the consumers. The consumer is very much benefiting from competition. While bundling is an imperfect system, it is a far better system than itemizing the cost of 500 channels. Nonsense. C-Band resellers were able to offer ala carte channels a decade ago, for very low prices. With today's STB's and online billing technology, there is no obstacle to itemization, other than the MBA school desire to force us to buy things we don't want.
It ain't competition if there is only one seller. |
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