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'Discounted' Competition
Comcast accused of unfair pricing by utility
by Optimized 12:05PM Sunday Jan 09 2005
Discounted pricing may help make the task of choosing a new high-speed Internet and cable television service provider easier for consumers, but at what point - if ever - does it become unfair competition. Braintree Electric Light Department, a Massachusetts municipal utility which also provides high-speed Internet and cable television service, is accusing industry giant Comcast Cable Communications of singling out its 4,900 broadband customers, offering them significant rate reductions not available elsewhere in an effort to drive it out of the business. According to Braintree Light, Comcast is offering its customers a 16-month discount on a combination digital TV and high-speed Internet package that would cut its usual price of $97 a month to $52. The municipal utility, which charges $76 for the same package, says the 16-month rate is not available in other towns or to Comcast's current customers in Braintree.


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BosstonesOwn

join:2002-12-15
Wakefield, MA
Reviews:
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reply to Combat Chuck

Re: I guess I'm the only one...

said by Combat Chuck:

Question... when the muni goes to get a loan, who does the bank consider to be the ultimate payor? Does the bank get to go after the taxpayers in any way if the HSI part of the muni defaults? Does this affect the decision of the bank as to weather to give out the loan or not? Who pays the bills if the muni can't from it's own funds? I bet you the taxpayers are the ultimate payors; if you have evidence to the contrary please post.
When the muni goes to get a loan they issue bonds to people who actually want to purchase a stake in this venture. No bank ever sees a loan request. A Bank officer may buy bonds on behalf of the bank or personally that is as close as they get.

If the muni ISP side runs under the venture is considered a loss, the bond holders don't have a thing to do besides take the beat, just like a stock holder, they get money from the equipment sold. And in a profit the muni buys back the bonds at a slightly higher rate from it's profits. Once there are no bonds left their profits are banked to provide cash in case the venture goes bad usually they also bank along the way to try and give what they can by lowering prices. Same way a real business should work, but I digress on that issue.

Like any chapter 11, a sell off, the equipment would be sold to the highest bidder in order to pay off all debts first then any and all bond holders would be given a split of the money left over based on the amount of bonds they have. Each bond is given a value based on the remaining money.

There is no reality when the money runs out to avoid seeing. When they run out of money they fold and sell it all. That is the risk you take when you play the market or bonds. Sorry but that is reality. The investors can not go after the city or tax payers for money, sure they can try but it would be struck down. That is the reality behind a muni. They never physically ask for money to get the ball rolling out of taxes.

Since the local community gets money from them they sometimes use tax money to fund "research" to see if it would be well accepted and a viable form of income for the community.

What the fud spewing shills never tell you is the muni's once profitable tend to repay the cash doled out for the surveys. While also tending to donate large amounts of equipment and bandwidth and other objects to the community. Such as reduced cost bandwidth to schools and community centers. Sometimes even computer equipment to area's as well. But the shills would never let you see that part of the equation since it does nothing for their portion of the argument.

Let me also state I am not pro or con muni's, I have been asked on a couple occasions to introduce a muni and try and figure out start up costs. I have also read much about them when I was considered for it and found that some of the best sources for information are from the citizens of area's served by both muni's and areas where a muni can/will be deployed.
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JTRockville
Data Ho
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join:2002-01-28
Rockville, MD

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reply to pnh102

Re: LAME

said by pnh102:

I'm sure the municipal utility is able to offer great discounts because they don't have to pay the same taxes and franchise fees that Comcast does. Of course, that's not considered "unfair."
It would be unfair if it were true. But the town of Braintree requires equal franchise fees from both cable providers: investor-owned Comcast and publicly owned BELD.

It's more likely BELD doesn't get the same tax breaks as Comcast.


oliphant
I Have 8 Boobies
Premium
join:2004-11-26
Corona, CA

3 recommendations

Predatory pricing is a Federal Crime

It's predatory pricing plain and simple and could be considered a violation of the Robinson-Patman Act.

»assembler.law.cornell.edu/uscode···00-.html

said by The Act:
TITLE 15 > CHAPTER 1 > § 13

§ 13. Discrimination in price, services, or facilities

Release date: 2004-05-18

(a) Price; selection of customers
It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them
The main exception being where the price difference is justified due to the cost of delivery or manufacture, meaning in Alaska where it costs more to deliver goods, or where labor may be more expensive a higher price may be justified, but when comparing prices here with say 80 miles away, they'd have a hard time proving that there is a significant cost difference.

And according to a different section of the act, it may even be illegal to receive the discounted price.

said by The Act:
(f) Knowingly inducing or receiving discriminatory price
It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section.
What it comes down to is the Act means to stop predatory pricing so that everyone gets the same 'deal' based on what it costs the seller to produce and deliver the goods. In Comcast's cast the Act would justify a nationwide pricing mandate (the similar mandate that DirecTV and Echostar agreed to when they tried to merge that would have protected consumers in rural areas against predatory pricing).
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