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One reason cable companies won’t willingly compete against each other

washingtonpost.com

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Re: One reason cable companies won’t willingly compete against each other

#11

Post by harryh »

riskable wrote: post #3

Can someone explain to me what innovation cable companies provide that they deserve their anti-competitive monopolies? If we were to replace them all with municipal broadband what would the short and long term consequences be? I'd wager that the short term (~10 years) consequences would be vastly superior service for every day citizens. In the long term, not certain but I suspect it would be much of the same as long…

My internet speeds today are an order of magnitude faster than they were even a few years ago. Does that not count as innovation? It certainly required a fairly massive capital investment.

Re: One reason cable companies won’t willingly compete against each other

#12

Post by cortesoft »

riskable wrote: post #3

Can someone explain to me what innovation cable companies provide that they deserve their anti-competitive monopolies? If we were to replace them all with municipal broadband what would the short and long term consequences be? I'd wager that the short term (~10 years) consequences would be vastly superior service for every day citizens. In the long term, not certain but I suspect it would be much of the same as long…

I think it is mostly because having multiple companies laying physical wires is problematic. It is very capital intensive, and disruptive to infrastructure (digging up lots of ground). In the end, it might not be better for customers; for example, imagine 4 different cable companies spend all the capital to lay 4 sets of cables to every house in a town of 100,000. Since there are 4 choices of cable company to choose from, then you can imagine each company will only get around 25% of the subscribers. The infrastructure costs to cover running cable to 100% of the houses now has to be supported by only 25% of the subscriber base.

In other words, the same number of subscribers now have to pay for 4x the infrastructure costs.

Re: One reason cable companies won’t willingly compete against each other

#14

Post by noobermin »

harryh wrote: post #11
riskable wrote: post #3

Can someone explain to me what innovation cable companies provide that they deserve their anti-competitive monopolies? If we were to replace them all with municipal broadband what would the short and long term consequences be? I'd wager that the short term (~10 years) consequences would be vastly superior service for every day citizens. In the long term, not certain but I suspect it would be much of the same as long…

My internet speeds today are an order of magnitude faster than they were even a few years ago. Does that not count as innovation? It certainly required a fairly massive capital investment.

...and 200x slower than those in Korea.

Re: One reason cable companies won’t willingly compete against each other

#15

Post by en4bz »

Cable companies don't compete because the market has reached a Nash equilibrium. This is Game Theory 101. If one company lowers their prices or increase their services then as soon as others start seeing attrition they simply lower their prices in response until attrition stops. At the end of the day no one gains any customers and they've all lowered their prices. No one wins.

Similar things happen with turf wars. If I install services in one community then the incumbent can simply lower prices to match mine very easily. At the end of the day I've spent a bunch of money and may not gain any of my competitors customers. Even if my competitor is still paying off infrastructure in that region and may now be running at a lose the companies are so large one community isn't going to make a difference.

Even if you offer faster services the majority of people don't care, they just want to be able to watch Netflix as cheap as possible.

Re: One reason cable companies won’t willingly compete against each other

#16

Post by cperciva »

ryao wrote: post #10

This also takes a stab at explaining why cable companies do not compete with one another: http://www.youtube.com/watch?v=0ilMx7k7mso

Not entirely accurate though. "In closed-door meetings where we've secretly agreed to not have differing prices" is called price-fixing, which is 100% illegal.

Re: One reason cable companies won’t willingly compete against each other

#17

Post by hrrsn »

noobermin wrote: post #14
harryh wrote: post #11

Earlier quoted context omitted.

My internet speeds today are an order of magnitude faster than they were even a few years ago. Does that not count as innovation? It certainly required a fairly massive capital investment.

...and 200x slower than those in Korea.

My home broadband speeds are, apparently, 15x the 2013 South Korean average of 13.3 Mbps.

Re: One reason cable companies won’t willingly compete against each other

#18

Post by nickpsecurity »

Afforess wrote: post #5

At this point, Cable companies are all members of a single large shadow monopoly not unlike Standard Oil was in the early 20th century. The rational the justice system used to break up Standard Oil is shockingly similar to the situation we now face with cable: Rates have been made low to let the Standard into markets, or they have been made high to keep its competitors out of markets. Trifling differences in distance…

Great analysis. Cartel behavior as I call it should never be ignored in discussions on these subjects as it's been discovered so many times. Even more so when organizations are both non-competitive and taking taxpayer subsidies.

Re: One reason cable companies won’t willingly compete against each other

#19

Post by imgabe »

Afforess wrote: post #5

At this point, Cable companies are all members of a single large shadow monopoly not unlike Standard Oil was in the early 20th century. The rational the justice system used to break up Standard Oil is shockingly similar to the situation we now face with cable: Rates have been made low to let the Standard into markets, or they have been made high to keep its competitors out of markets. Trifling differences in distance…

It really is shockingly similar and a lot of the arguments against net neutrality try to dismiss it as applying "laws made for railroads" to the Internet.

Back when oil was getting to be useful, lots of people discovered it. Usually, it was in a remote area. The only way to make money off it was to get it to a refinery and then the market. Standard Oil bullied and bribed the railroads into giving them preferential rates and charging high rates for competitors. It's exactly like what cable companies would like to do by subverting net neutrality, give preferential treatment to the traffic that profits them most. It's just information instead of oil, which is even more insidious since it can control the public discourse.

Re: One reason cable companies won’t willingly compete against each other

#20

Post by nickpsecurity »

hrrsn wrote: post #17
noobermin wrote: post #14

Earlier quoted context omitted.

...and 200x slower than those in Korea.

My home broadband speeds are, apparently, 15x the 2013 South Korean average of 13.3 Mbps.

Averages are meaningless except when measuring trends. What you said has no bearing on whether you or they are getting a better deal. You'd instead have to look at what work went into proding what speeds at what rates in whatever geography. That would be more fair comparison.

Note: I can't get unrestricted Gigabit for around $30 almost anywhere in States because companies don't want it to exist.

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