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But the collective action as you've described would be disrupted as soon as it becomes a big enough issue that a newcomer to the market can profit from a differ

But the collective action as you've described would be disrupted as soon as it becomes a big enough issue that a newcomer to the market can profit from a different business model. Equal service and no contract for instance. Eventually perhaps better service and no contract. Actually, last year I switched to a provider who does exactly that. No contracts is part of the business model. You can't get a long term contract from them if you tried.

AnthonyMouse 14y ago
You're assuming a low barrier to entry. That is clearly not the case for a business requiring the licensing of multibillion dollars worth of wireless spectrum. Moreover, the availability of service without a contract doesn't break the cartel, because that provider has no incentive to induce a price war by offering it at a more attractive price point than on-contract service from competitors. They can instead offer off-contract service for a premium (or offer lower-quality/coverage service for the same price), which is worse than what you would get if long-term contracts were prohibited and all providers had to compete in the market for off-contract service. You would know if there was a wireless company offering an off-contract plan that was actually more attractive than their competitors' on-contract plans because everybody would switch to it -- customers don't want to be locked into a long-term contract, they only do it because the providers have the incentive to make off-contract plans more expensive.
- grannyg00se 14y ago
  An off-contract plan that is actually more attractive than the competitors is exactly what is being offered. WIND mobile is the company I'm talking about. I didn't want to get that specific, but there ya go. I am not affiliated. And while I see your point about the high barrier to entry, all that does is delay the process. Eventually...if a profitable market opportunity is there to be taken, someone will take it. If it requires a big player, then a big player will do it. Granted there may be a longer period of suffering.
  - AnthonyMouse 14y ago
    >WIND mobile is the company I'm talking about. So kind of like I was saying then... their coverage map has more holes than coverage. But they still get to charge about as much as the big players by offering no contracts, and it doesn't break the cartel because customers will never switch to them in large numbers as a result of the poor coverage. Why do you expect price competition to ever be a profitable strategy in a concentrated market? If you lower your prices to gain market share, so will your competitors, and so lowering prices doesn't actually gain you any share, it just lowers everyone's margins. Nobody has any incentive to be the first to do it. > If it requires a big player, then a big player will do it. Granted there may be a longer period of suffering. Maybe if you wait long enough. But if the waiting period is measured using the geological timescale, it may be prudent to weigh other alternatives.

AnthonyMouse 14y ago

You're assuming a low barrier to entry. That is clearly not the case for a business requiring the licensing of multibillion dollars worth of wireless spectrum. Moreover, the availability of service without a contract doesn't break the cartel, because that provider has no incentive to induce a price war by offering it at a more attractive price point than on-contract service from competitors. They can instead offer off-contract service for a premium (or offer lower-quality/coverage service for the same price), which is worse than what you would get if long-term contracts were prohibited and all providers had to compete in the market for off-contract service. You would know if there was a wireless company offering an off-contract plan that was actually more attractive than their competitors' on-contract plans because everybody would switch to it -- customers don't want to be locked into a long-term contract, they only do it because the providers have the incentive to make off-contract plans more expensive.

grannyg00se 14y ago
An off-contract plan that is actually more attractive than the competitors is exactly what is being offered. WIND mobile is the company I'm talking about. I didn't want to get that specific, but there ya go. I am not affiliated. And while I see your point about the high barrier to entry, all that does is delay the process. Eventually...if a profitable market opportunity is there to be taken, someone will take it. If it requires a big player, then a big player will do it. Granted there may be a longer period of suffering.
- AnthonyMouse 14y ago
  >WIND mobile is the company I'm talking about. So kind of like I was saying then... their coverage map has more holes than coverage. But they still get to charge about as much as the big players by offering no contracts, and it doesn't break the cartel because customers will never switch to them in large numbers as a result of the poor coverage. Why do you expect price competition to ever be a profitable strategy in a concentrated market? If you lower your prices to gain market share, so will your competitors, and so lowering prices doesn't actually gain you any share, it just lowers everyone's margins. Nobody has any incentive to be the first to do it. > If it requires a big player, then a big player will do it. Granted there may be a longer period of suffering. Maybe if you wait long enough. But if the waiting period is measured using the geological timescale, it may be prudent to weigh other alternatives.