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| reply to Romney2012
Re: Why should cabl/telco eat higher programming costs? Is it possible that Karl's point is that in a regulated rate system, there can be more incentive for service providers to negotiate hard on rates because they don't want to drop services and piss off customers, while they cannot raise prices much?
In a far-less-regulated duopoly, while collusion is illegal, they both increase prices in a little tit-for-tat game so that no matter who you use, you get screwed.
But it's also important to consider who-owns-what all the way back to the studio. Think about the gold standard of AT&T and Western Electric: AT&T's revenues were limited by regulation, but WE's prices were not. Since WE made all of AT&T's and the RBOCs' equipment, WE just set the prices high, and the operating companies submitted "cost plus" ROI plans to regulators. AT&T was a guaranteed moneymaker.
Things are not quite as cozy and locked up now, but in cable companies and content providers we don't have the transparency to see who is really paying for what. We don't have a good accounting of lineage, ownership, bundling, and back-scratching arrangements that might indicate conflicts of interest or ludicrous concessions. Vertical monopolies are bad for consumers, except the rich lazy ones. (See story on Comcast buying NBC.)
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