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| reply to Kaltes
Re: Bundled services quote:
a) They ONLY get in trouble for raising prices *IF* they would not risk a loss of market share by doing so. That is market power: the power to hike prices without losing customers.
I don't know that I would agree that setting prices (or raising (your word was "hiking") them to the point where you lose the least number of customers or risk losing a market share is anti-competitive action. ALL companies do this. Market conditions aren't dependent of 85,000 competitors of the same size, quality and price.
What most seem to want competition to be defined as is not really competition. Most here (by the posts, that is) think competition is multiple providers of identical products whereas each competitor offers the same exact product with absolutely no advantage over a competing product- at the same exact price, with the same exact terms. For example, many here would like to believe that DSL competition means that ALL companies (ideally, this is) offer the identical speeds at the identical rates and no company can offer any service or product that the others don't happen to offer too.
This isn't competition, though. Competition isn't defined as multiple companies offering the identical products across the board. Good, profitable and long standing companies continuously strive to innovate and change their product lines to keep an edge over the competition and to constantly offer something that the competition doesn't. This is in an effort to attract customers. This isn't anti-competitive. A good example of this is the fast food industry. After McDonalds came out with the Egg McMuffin, suddenly Burger King came out with the Bacon Croissandwich. Does this mean that McDonalds was anti-competitive? No. Does this mean that Burger King held out on selling breakfast food to the "starving morning crowds" to increase profits on Whoppers at 11:00am? Not in the least either. Another fast food example is Howard Johnsons. HJ used to be #1 (decades ago) in the fast food industry. They lost it. How?? They didn't keep up with the competition. They didn't innovate their products and change their lines to keep up. Now, they are more into hospitality. In the soft drink industry, PepsiCo never offered a "cherry" flavor until Coca Cola did it first. Coke came out with Surge to compete with Mountain Dew. Did Mountain Dew make PepsiCo anti-competitive because Coca Cola didn't offer a high caffiene citrus drink too? Not in the least. But high caffiene "users" will buy LOTS more Mountain Dew than Surge. And if PepsiCo wanted to, lets say, double the price of Mountain Dew, they would lose market share- but it wouldn't be illegal- no matter HOW bad Surge tastes.
Take this into the telecom field and you have the DSL issue. Many here would like to believe that the Bells "held out on DSL to punish those consumers (I still have trouble with this one) that subscribe to T1's in their homes." The fact is that the Bells had bigger fish to fry and made the choice not to invest in DSL because they never thought broadband would sell to the masses (and it's still not selling like it should) until cable came out and started offering cable internet services.
In the case of Comcast, their "ace in the hole" is that they can offer a better internet service than the satellite services can. Satellite Tv services hold the cards of price and in many cases quality of service. Do you think many would argue that cable held out on digital music channels to make people buy CD's (another "overpriced" item in the eyes of many here) until satellite tv started offering music audio channels first? How about the theory that cable held out on digital video and dolby 5.1 delivery until satellite offered it first?
Innovation and deployment aren't the same in any case- it's got to do with how much money is available to spend, what the competition is doing and whether you want to gamble on "making your move" to get an "up" on the competition this time or next time.
At any rate, competitors will ALWAYS be looking to "gain the advantage" to attract customers. This isn't illegal or anti-competitive- it's business.
Boogie | |
 KaltesPremium
join:2002-12-04
Los Angeles, CA | ""Competition isn't defined as multiple companies offering the identical products across the board.""
First, you identify the relevant market. Equivalents are part of the market: so all broadband services that can effectively provide for residential use would be a market. This means that DSL and Cable compete in the same market. Unfortunately, there are geographic considerations, and while in some areas in the USA Cable and DSL might compete vigorously, in other areas, only 1 of the 2 might be available.
""PepsiCo never offered a "cherry" flavor until Coca Cola did it first. Coke came out with Surge to compete with Mountain Dew.""
Umm, in all your examples you clearly indicate situations in which 1 party came out with a product first, then another company later released a product which was equivalent. Having a monopoly is not in and of itself wrong. As long as anyone else can make a cherry flavored drink, Cherry Coke can be a monopoly. If Cherry Coke was alone in the market, and then had its price increased to $5 a can, and many people still bought it (because it was the only cherry drink), many other companies would make their own cherry drinks to take away marketshare from Cherry Coke. That is capitalism. Comcast is not Cherry Coke. Comcast does not have to worry about some new company appearing tomorrow and laying a national copper/fibre/cable network. It cannot be done. So, the threat of competition cannot properly deter Comcast. Because of this fact, anti-trust steps in to prevent Comcast from abusing its position of unchallengable strength.
Satt internet is not an equivalent to cable broadband, just like dial-up is not an equivalent to broadband.
If Cable internet is superior to satt, but satt Tv is superior to cable, then we should all be watching satt tv and using cable modems. | |
 LegoPower77AbecedarianPremium
join:2002-08-03
Midlothian, VA | said by Kaltes:
""
Comcast is not Cherry Coke. Comcast does not have to worry about some new company appearing tomorrow and laying a national copper/fibe/cable network. It cannot be done. So, the threat of competition cannot properly deter Comcast. Because of this fact, anti-trust steps in to prevent Comcast from abusing its position of unchallengable strength.
You had it but lost it. Over the long term, there will be competition to Comcast. Monopolies do not last. Nature does not like inequality and so even if Comcast was the only game in town, the windfall profits it makes —assuming it prices to make them (see my other post here)— would attract someone to lay the fiber. This sort of thing happens time and time again and there's no reason to expect the Internet to be any different.
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"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." —Ronald Reagan | |
KaltesPremium
join:2002-12-04
Los Angeles, CA | ""Nature does not like inequality and so even if Comcast was the only game in town, the windfall profits it makes —assuming it prices to make them (see my other post here)— would attract someone to lay the fiber.""
Even if someone decided TODAY to 'lay fiber' they could not begin to compete with Comcast for possibly years., if ever. Look at how much BS tri-city broadband is putting up with. Tri-city wont be available for quite a long time, and that proposal is something like a year old already. The threat of market entry does not exist for Comcast. If it did, Comcast couldnt hike prices to $57/month when it was already making substantial profit at $43/month. This new price is plain and simple gouging. It is also a tax on our freedom to choose whatever TV service we want.
Also, what is to stop Comcast from gouging now, then taking a loss once competition starts up, running the 'enemy' out of business, then resuming gouging? Anti-trust.
Im not spouting off emotion here, Im making well-reasoned arguments.
""When the market is open, i.e., not encumbered by barriers to entry""
There are a large number of practical barriers to entry with cable and dsl. There is 1 infrastructure. Creating a duplicate infrastructure would be an exceedingly difficult if not impossible endeavor, and in any event it would take years to get off the ground.
As for your posts regarding monopolies reducing prices... I have to laugh. Anyone who has taken high school economics can see through your argument. If a monopoly drastically lowers prices, it is only temporarily to kill whoever dares attempt to enter their market.
Since you brought up Microsoft, maybe you'd like to explain to me how their 600%+ profit margins on their OS and office software is a GOOD THING for anyone but MSFT? | |
| You're expecting too much of giants like Comcast (or any of the Bells) if you wish them (or anyone else that large, for that matter) to turn on a dime and compete at the snap of your fingers.
There is MUCH more involved in this equation than you give credit for. There is no reason that a company (or municipality) can't lay fiber and compete within a few years of continuous deployment and growth. It's already been done with many companies and several municipalities.
What you are asking for, though, is for competing services in the type of service that YOU would like to subscribe to- all at the price that YOU would like to pay- EVERYWHERE. And your claim seems to be that since that can't be done instantaneously, it must be the opposite end of the spectrum and impossible to do in less than a century.
I ask you this as well... while there is technically nothing to stop Comcast from "gouging until competition comes, then give it away till competition is gone- only to gouge again," Comcast (and any other company) will ALWAYS be in that cycle if they choose this- and they will have ZERO long term customers, a TERRIBLE reputation, a bad credit rating for investors- as no rating service will see the constant gain and loss of customers along with ZERO revenue overall as a good business plan. So Comcast won't be doing that- as they probably prefer to be in business and prefer that investors buy their stock.
Telephone service is the same- but with different rules. What regulators are trying to do is to "manufacture" competition by encouraging consumers and businesses to choose to purchase their telecom products ANYWHERE but a Bell by limiting the Bells ability to innovate, deploy and market new (and some older) technologies. The regulators are sort of playing the game of "let's increase costs, lower revenue and prevent the Bells from competing for a while" in order to "force" the public to go elsewhere- even if they are COMPLETELY HAPPY with their phone service.
By following the equation of "innovation is an effect of competition" (it's not ONLY caused by competition, but it is a possible effect of it), one only need "solve" for competition to realize that competition can be achieved by limiting innovation from one competitor and allowing other competitors to be more marketable and attractive. This is akin to preventing Burger King from offering french freedom fries to get more people to go to McDonalds instead. And it works- at least in theory. The problem in telecom regulation is, however, that the new market entrants are dependent on the incumbents- meaning that if the incumbents are prevented from innovating, the new entrants won't survive either. The equation needs tweaking that encourages new entrants to gain independence from the incumbents. The reality is that the incumbents aren't thrilled at all to be required to support the new entrants- and it shows. The incumbents aren't going to innovate if they are required to allow the new entrants back stage too. We are now at gridlock.
So what is the answer? No one knows yet- but long term time will solve all current problems- and create new problems- but isn't that what keeps people employed?
Boogie | |
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