4 ms·

What if there's not another paper because the margins are so low that neither of you would make a profit if you had to compete for customers (and your service w

by exelius 13y ago

What if there's not another paper because the margins are so low that neither of you would make a profit if you had to compete for customers (and your service was mutually exclusive)? And the government says that you have to drive by every house when delivering papers whether they subscribe or not? Even if telecom/cable were fully deregulated, this is the situation you would face. A cable company may make $1 billion in revenue off of a city, but it probably costs them $900 million to serve the city. If someone else comes in and is able to radically undercut their costs at $600 million while simultaneously winning 50% of the market, both companies would still only make $500 million and lose money. The incumbent cable company probably has enough of a war chest to wait out the challenger's funding. Infrastructure businesses are very expensive. There is no easy solution short of the government seizing the cable infrastructure, which would set such a dangerous precedent that it would probably destroy our economy.

mullingitover 13y ago
> There is no easy solution short of the government seizing the cable infrastructure, which would set such a dangerous precedent that it would probably destroy our economy. Sure, I mean, there's no way that the government could simply recognize the monopoly and regulate it as such.
- exelius 13y ago
  What does that regulation look like to you? It's easy to say "regulation is the solution" but regulation can mean a lot of things. What's the easy regulatory solution?
  - mullingitover 13y ago
    Exactly like it did before the cable companies were allowed to kick out all their competition. In 1998, when I leased a DSL line I had a full page listing all the ISP options I had. Now that we're 'deregulated' and have a 'free market,' I have exactly zero choice in broadband ISPs.
    - exelius 13y ago
      DSL was a colossal failure of regulation. With the line-sharing rules, it was no longer financially viable for the telecoms to invest in infrastructure for common carrier services that they could no longer sell at a premium. Instead, they started investing in wireless. The telcos COULD have invested in FttN and FttH solutions, but wireless became a more attractive investment since it didn't carry the line sharing rules. Thus the telcos abandoned high-speed internet access and the cable companies (which were not under the same rules and could thus justify the investment) became the monopoly they are today. What seems good for the consumer is not always good for the consumer. See how Verizon halted their national rollout of FiOS and instead plowed $130 billion into purchasing the 50% of Verizon Wireless they didn't already own if you want a very recent example of this.
      - quadrangle 13y ago
        Thanks for the informative insightful comment (and this is from someone who is no knee-jerk anti-government libertarian).
      - mullingitover 13y ago
        > With the line-sharing rules, it was no longer financially viable for the telecoms to invest in infrastructure for common carrier services that they could no longer sell at a premium. I completely agree, it's no surprise that a business that naturally tends toward a natural monopoly has a hard time with long term investments if the investors are chomping at the bit for immediate ROI. Hence the need to treat infrastructure as a local utility, regulate it as one, and fund the infrastructure improvements with bonds.
- kar2014 13y ago
  Government do and can regulate the mergers. They do it all the time and for last couple of big mergers with Comcast this has been on table but they seem to see Comcast with favorable eyes.
awda 13y ago
> If someone else comes in and is able to radically undercut their costs at $600 million while simultaneously winning 50% of the market, both companies would still only make $500 million and lose money. Emphasis added. This is not what "able to undercut" means to me. Furthermore, the situation described is great for consumers. And yeah, it looks like Comcast has low-ish margins, for a monopoly: http://ycharts.com/companies/CMCSA/profit_margin http://ycharts.com/companies/CMCSA/profit_margin But they also have nation-wide monopoly and revenue, so 10% of that is "a lot."
nextw33k 13y ago
> Infrastructure businesses are very expensive. There is no easy solution short of the government seizing the cable infrastructure, which would set such a dangerous precedent that it would probably destroy our economy. This is scaremongering, in the UK we have BT the almost national monopoly and Ofcom the regulator. BT is required to grant competitors access to its infrastructure for cost price, which Ofcom sets. The UK has faster and cheaper broadband than the USA. The American internet service provider market in no way sounds like capitalism but it does sound like protectionism. Just because you live is a country that is capitalist doesn't mean everything is.

by exelius 13y ago

mullingitover 13y ago

> There is no easy solution short of the government seizing the cable infrastructure, which would set such a dangerous precedent that it would probably destroy our economy. Sure, I mean, there's no way that the government could simply recognize the monopoly and regulate it as such.

exelius 13y ago
What does that regulation look like to you? It's easy to say "regulation is the solution" but regulation can mean a lot of things. What's the easy regulatory solution?
- mullingitover 13y ago
  Exactly like it did before the cable companies were allowed to kick out all their competition. In 1998, when I leased a DSL line I had a full page listing all the ISP options I had. Now that we're 'deregulated' and have a 'free market,' I have exactly zero choice in broadband ISPs.
  - exelius 13y ago
    DSL was a colossal failure of regulation. With the line-sharing rules, it was no longer financially viable for the telecoms to invest in infrastructure for common carrier services that they could no longer sell at a premium. Instead, they started investing in wireless. The telcos COULD have invested in FttN and FttH solutions, but wireless became a more attractive investment since it didn't carry the line sharing rules. Thus the telcos abandoned high-speed internet access and the cable companies (which were not under the same rules and could thus justify the investment) became the monopoly they are today. What seems good for the consumer is not always good for the consumer. See how Verizon halted their national rollout of FiOS and instead plowed $130 billion into purchasing the 50% of Verizon Wireless they didn't already own if you want a very recent example of this.
    - quadrangle 13y ago
      Thanks for the informative insightful comment (and this is from someone who is no knee-jerk anti-government libertarian).
    - mullingitover 13y ago
      > With the line-sharing rules, it was no longer financially viable for the telecoms to invest in infrastructure for common carrier services that they could no longer sell at a premium. I completely agree, it's no surprise that a business that naturally tends toward a natural monopoly has a hard time with long term investments if the investors are chomping at the bit for immediate ROI. Hence the need to treat infrastructure as a local utility, regulate it as one, and fund the infrastructure improvements with bonds.
kar2014 13y ago
Government do and can regulate the mergers. They do it all the time and for last couple of big mergers with Comcast this has been on table but they seem to see Comcast with favorable eyes.

awda 13y ago

> If someone else comes in and is able to radically undercut their costs at $600 million while simultaneously winning 50% of the market, both companies would still only make $500 million and lose money. Emphasis added. This is not what "able to undercut" means to me. Furthermore, the situation described is great for consumers. And yeah, it looks like Comcast has low-ish margins, for a monopoly: http://ycharts.com/companies/CMCSA/profit_margin http://ycharts.com/companies/CMCSA/profit_margin But they also have nation-wide monopoly and revenue, so 10% of that is "a lot."

nextw33k 13y ago

> Infrastructure businesses are very expensive. There is no easy solution short of the government seizing the cable infrastructure, which would set such a dangerous precedent that it would probably destroy our economy. This is scaremongering, in the UK we have BT the almost national monopoly and Ofcom the regulator. BT is required to grant competitors access to its infrastructure for cost price, which Ofcom sets. The UK has faster and cheaper broadband than the USA. The American internet service provider market in no way sounds like capitalism but it does sound like protectionism. Just because you live is a country that is capitalist doesn't mean everything is.