18 ms·

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

142 points by r0h1n 10y ago

Animats 10y ago
There's a nice analysis in this week's Economist on cellular competition in Europe. There's been a conclusion by some European antitrust regulators that it takes at least four competing cellular carriers before prices come down. Three isn't enough. The US acts as if one unregulated carrier is enough in cable.
- 0xcde4c3db 10y ago
  I think we still have some cultural inertia such that things like high-speed internet and cell service are seen as luxuries and not basic infrastructure (plus some who believe that the poor ought to be excluded from using basic infrastructure anyway). I'm also not convinced that Capitol Hill has fully realized that Comcast isn't competing with rabbit ears anymore.
  - ianlevesque 10y ago
    Oh they know, they're just all on the take: https://www.opensecrets.org/orgs/recips.php?cycle=2014&id=D000000461 https://www.opensecrets.org/orgs/recips.php?cycle=2014&id=D0... Relatedly, it's depressing just how cheaply you can buy the house/senate.
    - MaysonL 10y ago
      Almost makes you wish Apple, Facebook and Google would team up and buy them.
      - tstrimple 10y ago
        They buy them for their own purposes, not necessarily for the "greater good". http://www.wired.com/2015/07/google-facebook-amazon-lobbying/ http://www.wired.com/2015/07/google-facebook-amazon-lobbying...
        PascalsMugger 10y ago
        Since we invitably have legislatures heavily influence (and sometimes fully captured) by moneyed interests, often the best we can hope for is competition between the different factions of moneyed interests to shape policy such that the outcome is triangulated to be somewhat more beneficial to the public than if one faction had unchecked influence. Until the last 20 years or so, the media and telecoms industry were separate factions that had some competing interests and sometimes served as a checked on one another. Now they're merged/merging into media telecoms conglomerates, but the tech industry has recently risen as a competitor with even more directly competing interests. It'll be interesting to see how the lobbyist wrangling behind the scenes works out. The tech industry is the new kid on the block, especially in terms of their presence in Washington DC, and it takes time to build up relationships and influence in politics. It's not quite as quickly scalable as the tech industry is used to, but they also have vastly more resources.
    - ZeroGravitas 10y ago
      Buying politicians has a great ROI: http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes-biggest-corporate-political-interests-spend-billions-get-trillions/ http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes...
  - wtbob 10y ago
    > high-speed internet and cell service are seen as luxuries and not basic infrastructure I would never want to live without high-speed mobile Internet (which can provide the equivalent of cell service), but is it really a necessity to live? I was a boy before cell phones even existed, and anyone outside academia and a few tech companies had the Internet, and life was fine. It's certainly extremely convenient, but I don't think it's a necessity. > plus some who believe that the poor ought to be excluded from using basic infrastructure anyway Do you have evidence for that statement?
    - freen 10y ago
      From 2011: 80% of fortune 500 jobs accept only online applications. http://2010-2014.commerce.gov/blog/2011/12/30/look-ahead-2012-ntia-numbers http://2010-2014.commerce.gov/blog/2011/12/30/look-ahead-201...
    - nickpsecurity 10y ago
      I hear you but you can counter-claim it easily for high-speed Internet for business. Just look at how critical the Internet is to all kinds of firms these days. Even those that mostly don't need the Internet often have an expensive, leased line for main HQ. There's also the meme of traveling salespeople and such who benefit from higher speeds. So, with so much dependence, it stands to reason a country's businesses can be a bit more competitive and efficient if they have high-speed, low-cost Internet. The Internet part is necessary for most even if other attributes aren't. They're certainly useful, though, as they increase capabilities and profit simultaneously.
    - setpatchaddress 10y ago
      Do you consider basic telephone service a necessity?
    - Sreekar911 10y ago
      Even more previous generations' people would make the same argument: "Is telephone really a necessity? We lived without telephones and we were fine, our life was fine" and so on. Replace telephone with telegram or a car for even earlier generations. Now the problem with this argument is that we're not living in that generation. We're living in the present generation, where a decent, if not high speed internet is absolutely essential in order to progress. Can you still live without internet in the present generation? Sure. But is there a remote chance that such life would be comfortable and painless? Absolutely not. Not even a chance.
- dogma1138 10y ago
  The EU telecom market is just as horrible, most countries have only 1-2 "true" ISP's with actual infrastructure to their subscribers and 2-3 cell providers the rest are ISP's that rent fibers/coax access and MVNOs. Setting up infrastructure is extremely expensive especially in cities where allot of the European population lives. The US has a different problem where only 4% of the population lives in a major cities so ISP's have to lay allot of infrastructure and historically the more or less remain around their original starting zones and creep out very slowly. Fiber/Coax infrastructure in the US should be done on a state and municipal levels and then offered to ISP's at a fixed price to recoup the costs via a tender based on the cost to the end consumer
  - 0xcde4c3db 10y ago
    > The US has a different problem where only 4% of the population lives in a major cities That requires a rather narrow definition of "major cities".
    - dogma1138 10y ago
      The largest 10 cities are home to 16M Americans, the 10 largest cities in the UK are host to 12M Brits. The 100 largest cities in the US are home to 59M Americans, the 100 largest cities in the UK are home to 34M Brits. The US is 5 times as populous but there is only 30% difference between the top 10 cities in the US vs UK and 50% in top 100. Most people in the US live in cities under <100K residents, most people in the UK live in cities with over 250K residents. The rest of Europe isn't that much different. WW2 caused a major shift of population to major cities while in the US it didn't while the US population is still very urban they size of cities/towns is smaller in general. Also i really hate when people compare the US to a specific EU country the US is bigger than Europe go out of major cities in Europe and you'll have shitty internet, there are towns and cities in Germany where the best you can get is a 10mbit DSL and it's not a unique case in Europe.
      - 0xcde4c3db 10y ago
        Many small/medium American "cities" are municipalities that are directly attached to (or even surrounded by) a larger urban area. It's basically a quirk of how local government is structured rather than anything that has to do with population or infrastructure density. For example, it's unlikely that many residents of Beverly Hills (<50K residents) think of themselves as living in a small town outside of Los Angeles.
riskable 10y ago
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 as the municipal provider had ever-increasing speeds as one of their primary purposes/guiding principals. I'm not a communist but I think evidence shows that municipal broadband outperforms both telecom and cable operators in all terms of performance from costs to speeds to reliability.
- ytpete 10y ago
  My understanding was it's seen as an incentive for the massive upfront infrastructure costs needed to run cable to every house. Much like power or other utilities. But of course cable companies don't want to accept the regulation that is the flip side of being treated like a utility (e.g. net neutrality).
- ams6110 10y ago
  What evidence is that. The evidence in my town is that the city can't walk and chew gum at the same time. I have zero confidence they could operate a broadband utility with anything approaching competence. Municipal broadband just replaces one monopoly with another -- one that doesn't even have profit as a requirement, since it is also a taxing authority.
- harryh 10y ago
  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.
  - noobermin 10y ago
    ...and 200x slower than those in Korea.
    - 10y ago
Afforess 10y ago
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 distances are made an excuse for large differences in rates favorable to the Standard Oil Co., while large differences in distances are ignored where they are against the Standard. Sometimes connecting roads prorate on oil—that is, make through rates which are lower than the combination of local rates; sometimes they refuse to prorate; but in either case the result of their policy is to favor the Standard Oil Co. Different methods are used in different places and under different conditions, but the net result is that from Maine to California the general arrangement of open rates on petroleum oil is such as to give the Standard an unreasonable advantage over its competitors" [1] Cable companies regularly adjust prices based on the entrance of competitors (Google Fiber), or when a cable company enters a new market, prices are initially low to prevent competition and then slowly raised to a much higher level. The excuses for vast differences in rates in metropolitan cities are usually paper thin, but accepted by the media and government at face value. Cable companies also operate secondary businesses with a conflicting interest to their cable operations (Cable TV packages now directly competes with Broadband Internet, also see: NBC/Comcast), not unlike Standard Oil's purchase of many railways and control of shipping lanes. This arrangement vastly stacks the deck in favor of cable companies, and further cable company "cooperation" with state and national officials have created new restrictions on municipal competition. Cable companies are our 21st century Standard Oil. [1] https://en.wikipedia.org/wiki/Standard_Oil#Monopoly_charges_and_anti-trust_legislation https://en.wikipedia.org/wiki/Standard_Oil#Monopoly_charges_...
- nickpsecurity 10y ago
  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.
- imgabe 10y ago
  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.
niels_olson 10y ago
> I can’t overbuild another cable company, because then I could never buy it, because you always block those I'll buy that. For a dollar.
ryao 10y ago
This also takes a stab at explaining why cable companies do not compete with one another: http://www.youtube.com/watch?v=0ilMx7k7mso http://www.youtube.com/watch?v=0ilMx7k7mso
- cperciva 10y ago
  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.
  - ryao 10y ago
    The video might have a few inaccuracies, but it is hilarious.
andrewclunn 10y ago
So effective monopolies are unintended side effects of anti-monopoly laws?
- wtbob 10y ago
  That's the real lesson here: if there were less regulation then companies would compete with one another — which would cost them profits, which is why they lobby for more regulations.
  - setpatchaddress 10y ago
    Nonsense. See Afforess's comment above. Read the history of Standard Oil.
en4bz 10y ago
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.
- argonaut 10y ago
  Your first description isn't a Nash equilibrium because you're considering second-order effects (you're considering the reaction of other players to your changes), when Nash equilibrium only concerns itself with first-order effects - you assume other players do not change and if under that assumption every player is at the best action already, then you're in a Nash equilibrium. I don't think cable companies are at a Nash equilibrium, but they may be at other forms of equilibrium that I'm not familiar with. Also this game is iterated so there are other (crucial) dynamics at play that I am not familiar with.
  - en4bz 10y ago
    Good point. Subgame perfect Nash equilibrium [1] would be more accurate since it applies to dynamic games. [1] https://en.wikipedia.org/wiki/Subgame_perfect_equilibrium https://en.wikipedia.org/wiki/Subgame_perfect_equilibrium
  - nerdponx 10y ago
    It's not Nash equilibrium, but this is a standard result in industrial organization. Companies "collude" by threatening to start price wars. The threat of a price war is enough deterrent to prevent anyone from undercutting anyone else.
luckydata 10y ago
I think this article is the best proof we need to show that basic connectivity infrastructure should be paid with tax dollars and licensed to operators by the federal government since there's no incentive whatsoever to create a real market around it.
- ryao 10y ago
  Having the federal government own the infrastructure would simplify the process of doing the more common forms of wiretaps.
  - SturgeonsLaw 10y ago
    They seem to be pretty handy at that anyway
gumby 10y ago
An increasing number of people are getting their net connection via 4G-to-the-terminal rather than a central pipe. Cable is probably on its way out.
yk 10y ago
The problem with burying cables is, that the first mover advantage can not be overcome. The calculation of the first guy is, that he has some cost X for N subscribers who will have to pay a monopoly rate M. The calculation of the second guy is, he has to pay X to bury a cable to capture some fraction of the subscribers fN who each pay a competitive subscription rate C much smaller than M. (In fact close to the marginal cost of an additional subscriber, that is basically 0). So the first guy expects to break even after X/(MN) and the second guy at X/(CfN). This suggests the interesting possibility, that it may be worthwhile for the neighbors in a street to build their own cable and just give it to a competitor of the cable provider.
transfire 10y ago
I fully expect the only competition will ultimately come from Google and Facebook.
gruez 10y ago
I like how detailed the caption for the (stock) header image is A coaxial cable is displayed for a photograph in front of a Time Warner Cable helmet in Manhattan Beach, California, U.S., on Monday, August 12, 2013.
- imtringued 10y ago
  Blind people might want to know what those images are supposed to be showing them.
shmerl 10y ago
> What Charter really wants is the flexibility to buy up other cable companies in the future, and it'll have a harder time selling those deals to government regulators if Charter has been competing with the target firms the whole time. So, FCC wants them to enter a territory to increase competition, and Charter says "we want to reduce competition down the road buying the competitor". FCC should simply make it a requirement, that Charter should be forbidden from buying competitors in that market. That's all, problem solved. And Charter must be really stupid to claim they want to reduce competition when talking about monopoly restricting conditions for the merger.
Gaelan 10y ago
Headline is clickbait; could the HN title be changed to something like "cable companies won't compete because they want to leave acquisition options open?" About as long, and far more informative.
LordKano 10y ago
Where I live, it's a legally mandated monopoly. Before Verizon FIOS came on the scene, there was one cable provider here. Way back when, it was CableVision, then Adelphia, then Comcast. We now have the choice of Comcast or Verizon. I've been switching back and forth between them for years. As soon as my promotional price ends and they start inching up my rate, I jump ship, rinse and repeat. I'd love to have a third player in the game to add more pressure to keep the prices low.
solotronics 10y ago
It may be to little too late, but I am an engineer for Charter and we are doing a few things that I think are worth noting. This is my own opinion and not an official statement from the company. - bringing back all help desk type jobs that were offshored. All of our call center jobs were in the US until recently and some idiot started outsourcing some of them. We are bringing them back immediately. - EPON fiber build outs everywhere (we realize fiber is better than cable but there is existing cable infrastructure and the protocol can support 1gig/s with the current DOCSIS 3.1 standard so for now we are both upgrading the cable system and building fiber EPON) - no data caps in any form - getting rid of DVRs and having both live video and on demand/saved video stream from servers over IP I would place us as much more techie friendly than ATT but less so compared to Google. Most of the problems with peoples cable service come from poor install jobs, if you have a problem with lost packets or dropping video please be persistent in getting a tech that is knowledgeable on how to troubleshoot line issues. p.s. use namebench to find the best DNS servers for your area and use those instead of ours.
dredmorbius 10y ago
WashPo's clickbait head, bury-the-lede copy, is getting beyond annoying.

142 points by r0h1n 10y ago

There's a nice analysis in this week's Economist on cellular competition in Europe. There's been a conclusion by some European antitrust regulators that it takes at least four competing cellular carriers before prices come down. Three isn't enough. The US acts as if one unregulated carrier is enough in cable.

0xcde4c3db 10y ago
I think we still have some cultural inertia such that things like high-speed internet and cell service are seen as luxuries and not basic infrastructure (plus some who believe that the poor ought to be excluded from using basic infrastructure anyway). I'm also not convinced that Capitol Hill has fully realized that Comcast isn't competing with rabbit ears anymore.
- ianlevesque 10y ago
  Oh they know, they're just all on the take: https://www.opensecrets.org/orgs/recips.php?cycle=2014&id=D000000461 https://www.opensecrets.org/orgs/recips.php?cycle=2014&id=D0... Relatedly, it's depressing just how cheaply you can buy the house/senate.
  - MaysonL 10y ago
    Almost makes you wish Apple, Facebook and Google would team up and buy them.
    - tstrimple 10y ago
      They buy them for their own purposes, not necessarily for the "greater good". http://www.wired.com/2015/07/google-facebook-amazon-lobbying/ http://www.wired.com/2015/07/google-facebook-amazon-lobbying...
      - PascalsMugger 10y ago
        Since we invitably have legislatures heavily influence (and sometimes fully captured) by moneyed interests, often the best we can hope for is competition between the different factions of moneyed interests to shape policy such that the outcome is triangulated to be somewhat more beneficial to the public than if one faction had unchecked influence. Until the last 20 years or so, the media and telecoms industry were separate factions that had some competing interests and sometimes served as a checked on one another. Now they're merged/merging into media telecoms conglomerates, but the tech industry has recently risen as a competitor with even more directly competing interests. It'll be interesting to see how the lobbyist wrangling behind the scenes works out. The tech industry is the new kid on the block, especially in terms of their presence in Washington DC, and it takes time to build up relationships and influence in politics. It's not quite as quickly scalable as the tech industry is used to, but they also have vastly more resources.
  - ZeroGravitas 10y ago
    Buying politicians has a great ROI: http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes-biggest-corporate-political-interests-spend-billions-get-trillions/ http://sunlightfoundation.com/blog/2014/11/17/fixed-fortunes...
- wtbob 10y ago
  > high-speed internet and cell service are seen as luxuries and not basic infrastructure I would never want to live without high-speed mobile Internet (which can provide the equivalent of cell service), but is it really a necessity to live? I was a boy before cell phones even existed, and anyone outside academia and a few tech companies had the Internet, and life was fine. It's certainly extremely convenient, but I don't think it's a necessity. > plus some who believe that the poor ought to be excluded from using basic infrastructure anyway Do you have evidence for that statement?
  - freen 10y ago
    From 2011: 80% of fortune 500 jobs accept only online applications. http://2010-2014.commerce.gov/blog/2011/12/30/look-ahead-2012-ntia-numbers http://2010-2014.commerce.gov/blog/2011/12/30/look-ahead-201...
  - nickpsecurity 10y ago
    I hear you but you can counter-claim it easily for high-speed Internet for business. Just look at how critical the Internet is to all kinds of firms these days. Even those that mostly don't need the Internet often have an expensive, leased line for main HQ. There's also the meme of traveling salespeople and such who benefit from higher speeds. So, with so much dependence, it stands to reason a country's businesses can be a bit more competitive and efficient if they have high-speed, low-cost Internet. The Internet part is necessary for most even if other attributes aren't. They're certainly useful, though, as they increase capabilities and profit simultaneously.
  - setpatchaddress 10y ago
    Do you consider basic telephone service a necessity?
  - Sreekar911 10y ago
    Even more previous generations' people would make the same argument: "Is telephone really a necessity? We lived without telephones and we were fine, our life was fine" and so on. Replace telephone with telegram or a car for even earlier generations. Now the problem with this argument is that we're not living in that generation. We're living in the present generation, where a decent, if not high speed internet is absolutely essential in order to progress. Can you still live without internet in the present generation? Sure. But is there a remote chance that such life would be comfortable and painless? Absolutely not. Not even a chance.
dogma1138 10y ago
The EU telecom market is just as horrible, most countries have only 1-2 "true" ISP's with actual infrastructure to their subscribers and 2-3 cell providers the rest are ISP's that rent fibers/coax access and MVNOs. Setting up infrastructure is extremely expensive especially in cities where allot of the European population lives. The US has a different problem where only 4% of the population lives in a major cities so ISP's have to lay allot of infrastructure and historically the more or less remain around their original starting zones and creep out very slowly. Fiber/Coax infrastructure in the US should be done on a state and municipal levels and then offered to ISP's at a fixed price to recoup the costs via a tender based on the cost to the end consumer
- 0xcde4c3db 10y ago
  > The US has a different problem where only 4% of the population lives in a major cities That requires a rather narrow definition of "major cities".
  - dogma1138 10y ago
    The largest 10 cities are home to 16M Americans, the 10 largest cities in the UK are host to 12M Brits. The 100 largest cities in the US are home to 59M Americans, the 100 largest cities in the UK are home to 34M Brits. The US is 5 times as populous but there is only 30% difference between the top 10 cities in the US vs UK and 50% in top 100. Most people in the US live in cities under <100K residents, most people in the UK live in cities with over 250K residents. The rest of Europe isn't that much different. WW2 caused a major shift of population to major cities while in the US it didn't while the US population is still very urban they size of cities/towns is smaller in general. Also i really hate when people compare the US to a specific EU country the US is bigger than Europe go out of major cities in Europe and you'll have shitty internet, there are towns and cities in Germany where the best you can get is a 10mbit DSL and it's not a unique case in Europe.
    - 0xcde4c3db 10y ago
      Many small/medium American "cities" are municipalities that are directly attached to (or even surrounded by) a larger urban area. It's basically a quirk of how local government is structured rather than anything that has to do with population or infrastructure density. For example, it's unlikely that many residents of Beverly Hills (<50K residents) think of themselves as living in a small town outside of Los Angeles.

riskable 10y ago

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 as the municipal provider had ever-increasing speeds as one of their primary purposes/guiding principals. I'm not a communist but I think evidence shows that municipal broadband outperforms both telecom and cable operators in all terms of performance from costs to speeds to reliability.

ytpete 10y ago
My understanding was it's seen as an incentive for the massive upfront infrastructure costs needed to run cable to every house. Much like power or other utilities. But of course cable companies don't want to accept the regulation that is the flip side of being treated like a utility (e.g. net neutrality).
ams6110 10y ago
What evidence is that. The evidence in my town is that the city can't walk and chew gum at the same time. I have zero confidence they could operate a broadband utility with anything approaching competence. Municipal broadband just replaces one monopoly with another -- one that doesn't even have profit as a requirement, since it is also a taxing authority.
harryh 10y ago
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.
- noobermin 10y ago
  ...and 200x slower than those in Korea.
  - 10y ago

Afforess 10y ago

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 distances are made an excuse for large differences in rates favorable to the Standard Oil Co., while large differences in distances are ignored where they are against the Standard. Sometimes connecting roads prorate on oil—that is, make through rates which are lower than the combination of local rates; sometimes they refuse to prorate; but in either case the result of their policy is to favor the Standard Oil Co. Different methods are used in different places and under different conditions, but the net result is that from Maine to California the general arrangement of open rates on petroleum oil is such as to give the Standard an unreasonable advantage over its competitors" [1] Cable companies regularly adjust prices based on the entrance of competitors (Google Fiber), or when a cable company enters a new market, prices are initially low to prevent competition and then slowly raised to a much higher level. The excuses for vast differences in rates in metropolitan cities are usually paper thin, but accepted by the media and government at face value. Cable companies also operate secondary businesses with a conflicting interest to their cable operations (Cable TV packages now directly competes with Broadband Internet, also see: NBC/Comcast), not unlike Standard Oil's purchase of many railways and control of shipping lanes. This arrangement vastly stacks the deck in favor of cable companies, and further cable company "cooperation" with state and national officials have created new restrictions on municipal competition. Cable companies are our 21st century Standard Oil. [1] https://en.wikipedia.org/wiki/Standard_Oil#Monopoly_charges_and_anti-trust_legislation https://en.wikipedia.org/wiki/Standard_Oil#Monopoly_charges_...

nickpsecurity 10y ago
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.
imgabe 10y ago
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.

niels_olson 10y ago

> I can’t overbuild another cable company, because then I could never buy it, because you always block those I'll buy that. For a dollar.

ryao 10y ago

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

cperciva 10y ago
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.
- ryao 10y ago
  The video might have a few inaccuracies, but it is hilarious.

andrewclunn 10y ago

So effective monopolies are unintended side effects of anti-monopoly laws?

wtbob 10y ago
That's the real lesson here: if there were less regulation then companies would compete with one another — which would cost them profits, which is why they lobby for more regulations.
- setpatchaddress 10y ago
  Nonsense. See Afforess's comment above. Read the history of Standard Oil.

en4bz 10y ago

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.

argonaut 10y ago
Your first description isn't a Nash equilibrium because you're considering second-order effects (you're considering the reaction of other players to your changes), when Nash equilibrium only concerns itself with first-order effects - you assume other players do not change and if under that assumption every player is at the best action already, then you're in a Nash equilibrium. I don't think cable companies are at a Nash equilibrium, but they may be at other forms of equilibrium that I'm not familiar with. Also this game is iterated so there are other (crucial) dynamics at play that I am not familiar with.
- en4bz 10y ago
  Good point. Subgame perfect Nash equilibrium [1] would be more accurate since it applies to dynamic games. [1] https://en.wikipedia.org/wiki/Subgame_perfect_equilibrium https://en.wikipedia.org/wiki/Subgame_perfect_equilibrium
- nerdponx 10y ago
  It's not Nash equilibrium, but this is a standard result in industrial organization. Companies "collude" by threatening to start price wars. The threat of a price war is enough deterrent to prevent anyone from undercutting anyone else.

luckydata 10y ago

I think this article is the best proof we need to show that basic connectivity infrastructure should be paid with tax dollars and licensed to operators by the federal government since there's no incentive whatsoever to create a real market around it.

ryao 10y ago
Having the federal government own the infrastructure would simplify the process of doing the more common forms of wiretaps.
- SturgeonsLaw 10y ago
  They seem to be pretty handy at that anyway

gumby 10y ago

An increasing number of people are getting their net connection via 4G-to-the-terminal rather than a central pipe. Cable is probably on its way out.

yk 10y ago

The problem with burying cables is, that the first mover advantage can not be overcome. The calculation of the first guy is, that he has some cost X for N subscribers who will have to pay a monopoly rate M. The calculation of the second guy is, he has to pay X to bury a cable to capture some fraction of the subscribers fN who each pay a competitive subscription rate C much smaller than M. (In fact close to the marginal cost of an additional subscriber, that is basically 0). So the first guy expects to break even after X/(MN) and the second guy at X/(CfN). This suggests the interesting possibility, that it may be worthwhile for the neighbors in a street to build their own cable and just give it to a competitor of the cable provider.

transfire 10y ago

I fully expect the only competition will ultimately come from Google and Facebook.

gruez 10y ago

I like how detailed the caption for the (stock) header image is A coaxial cable is displayed for a photograph in front of a Time Warner Cable helmet in Manhattan Beach, California, U.S., on Monday, August 12, 2013.

imtringued 10y ago
Blind people might want to know what those images are supposed to be showing them.

shmerl 10y ago

> What Charter really wants is the flexibility to buy up other cable companies in the future, and it'll have a harder time selling those deals to government regulators if Charter has been competing with the target firms the whole time. So, FCC wants them to enter a territory to increase competition, and Charter says "we want to reduce competition down the road buying the competitor". FCC should simply make it a requirement, that Charter should be forbidden from buying competitors in that market. That's all, problem solved. And Charter must be really stupid to claim they want to reduce competition when talking about monopoly restricting conditions for the merger.

Gaelan 10y ago

Headline is clickbait; could the HN title be changed to something like "cable companies won't compete because they want to leave acquisition options open?" About as long, and far more informative.

LordKano 10y ago

Where I live, it's a legally mandated monopoly. Before Verizon FIOS came on the scene, there was one cable provider here. Way back when, it was CableVision, then Adelphia, then Comcast. We now have the choice of Comcast or Verizon. I've been switching back and forth between them for years. As soon as my promotional price ends and they start inching up my rate, I jump ship, rinse and repeat. I'd love to have a third player in the game to add more pressure to keep the prices low.

solotronics 10y ago

It may be to little too late, but I am an engineer for Charter and we are doing a few things that I think are worth noting. This is my own opinion and not an official statement from the company. - bringing back all help desk type jobs that were offshored. All of our call center jobs were in the US until recently and some idiot started outsourcing some of them. We are bringing them back immediately. - EPON fiber build outs everywhere (we realize fiber is better than cable but there is existing cable infrastructure and the protocol can support 1gig/s with the current DOCSIS 3.1 standard so for now we are both upgrading the cable system and building fiber EPON) - no data caps in any form - getting rid of DVRs and having both live video and on demand/saved video stream from servers over IP I would place us as much more techie friendly than ATT but less so compared to Google. Most of the problems with peoples cable service come from poor install jobs, if you have a problem with lost packets or dropping video please be persistent in getting a tech that is knowledgeable on how to troubleshoot line issues. p.s. use namebench to find the best DNS servers for your area and use those instead of ours.

dredmorbius 10y ago

WashPo's clickbait head, bury-the-lede copy, is getting beyond annoying.