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 gwionwild colonial boyPremium,ExMod 2001-08
join:2000-12-28
Pittsburgh, PA
kudos:1 | A monopoly by any other name... The solution is competition, not governmentalization. Why topple one monopolist and install another??? In a small community near here, he local independent telco came in with a competing cable system - at the time, the monopoly provider was charging around 35 a month (quite a few years back, too), and insisted that fiber and additional premium services were cost prohibitive for the market. Service was terrible. Persistent, prolonged outages (including a controversial superbowl sunday catastrophe  )... upgrades were out of the question, and the system could never survive as it was without a rate increase. So went the cableco's rhetoric.
Enter the cavalry, in the form of the local telco. They applied for and received a franchise from the council, and were granted a waiver by the FCC, after lots of legal wrangling, and a careful promise to not cross-subsidize the two entities (aside: now you see why even the "mighty Verizon" has to keep two separate entities - the FCC frowns really HARD on "cross-subsidizing" cable or internet from telephone revenues). There are now two cable providers available. The town of ~2500 has two 70 channel full service carriers. The average bill is under 30 dollars for both. Both provide state of the art fiber networks, and both are in a constant battle to out do the other... seniors even get discounts  ... it works. Nobody's leaving town, either, for lack of revenues. In fact, that original provider suddenly "found" hundreds of thousands of dollars to perform those needed upgrades... even despite having to lower the rates that they originally claimed were already unprofitibly low...
Ironic, to me, that we have such a violent push for competition in phone service, which, arguably, is far more of a "natural monopoly" than entertainment and cable, yet we allow and encourage localized monopolies over an industry in which free competition is demonstrably better, here. Yet we cling tenaciously to a model that was designed to be a temporary accomodation, to induce businesses to establish the networks at a time when cable's future and public appeal were seriously in question, and the technology was significantly more costly.
Instead of transfering a private sector monopoly into the bureaucratic black hole of a public sector monopoly, why not entertain the idea of awarding multiple franchises as the norm, rather than the exception? It seems that every community that's franchised more than one cable provider has gotten better service, more customer satisfaction, and lower rates than any community that has retained the one franchise monopoly market model. Face it, the only people who benefit from the monopolies are the cablecos. The municipalities will realize better franchise fee revenues, if you ask me, because the lower rate and active competition will mean more market penetration. Makes a whole lot of sense to me.
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A man who carries a cat by the tail is getting experience that will always be helpful. He isn't likely to grow dim or doubtful. Chances are, he isn't likely to carry the cat that way again, either. But if he wants to, I say, let him. --Mark Twain | |
| the problem with this approach is that it's almost impossible to have competition at last mile except an extremely high density areas such as urban centers. The reason for this is simple economics. Anytime you try to provide infrastructure level service to a fixed population in a given area, increasing numbers of competitors create increasing per subscriber cost.
If it costs X million dollars to wire a town to service Y customers, adding one competitor means it costs 2X to service the same number of customers. Adding a third competitor means it costs 3X and so on. Whenever you have a situation where increasing competition increases the per subscriber cost, you have a natural monopoly.
unless your costs of infrastructure are extremely low in relation to the population served, having more than 1 service provider in a natural monopoly market means that either no one will make money or the cost of service will increase. I suspect that your situation is one where the companies are either subsidizing the service from out-of-town markets or they are burning buckets of cash waiting for the other company to fail. | | |
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| I couldn't have said it better myself esjatharvee
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| reply to gwion
In the case of the Illinois towns, they would give any company a franchise in a second...the reality is that there are no private enterprises that want to overbuild. Ameritech just sold their fledgling Cable TV service, so so much for the local telco's providing competition. Competition is a great thing when it works. When it doesn't work it is a market failure, and the only way to deal with market failures is government intervention. It is a fact of living in a market society and I wouldn't prefer it any other way. Local government should not be compared to State and Federal government, and really shouldn't even be compared to County government. Local government can be as efficient as the people living in the area want to make it. I will except local government that is effectively as large as County and State governments. The beauty of local government is that the self-determination of the people can prevail right where they live. None of these initiatives would succeed if the people living there didn't support it - and support it for a reason. | |
| reply to esjatharvee
The math is right. Its the logic thats flawed said by esjatharvee:
If it costs X million dollars to wire a town to service Y customers, adding one competitor means it costs 2X to service the same number of customers. Adding a third competitor means it costs 3X and so on. Whenever you have a situation where increasing competition increases the per subscriber cost, you have a natural monopoly.
That assumes that all the providers will use the methods and technologies to do the job. Even if they did one may be able to get a better deal then another on the job.
While more providers may mean higher over head it doesn't not have to mean a higher cost to the consumer. With competition there is more incentive to do things cheaper and better. With out it complacency is much more likely to set in.
Would you like to go back to the days of Ma bell? .30 $ to .50$ per min of long distance and having to rent telephones?
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My hart is the darkness. | |
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