from Hacker News

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

by r0h1n on 5/27/16, 10:18 AM with 117 comments

• by Afforess on 5/28/16, 11:30 PM

  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_...

• by Animats on 5/28/16, 11:23 PM

  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.

• by riskable on 5/28/16, 11:24 PM

  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.

• by yk on 5/29/16, 1:49 AM

  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.

• by en4bz on 5/29/16, 12:19 AM

  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.

• by ryao on 5/29/16, 12:01 AM

  This also takes a stab at explaining why cable companies do not compete with one another:

  http://www.youtube.com/watch?v=0ilMx7k7mso

• by solotronics on 5/29/16, 9:06 PM

  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.

• by shmerl on 5/29/16, 6:24 AM

  > 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.

• by Gaelan on 5/29/16, 7:57 AM

  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.

• by andrewclunn on 5/29/16, 12:04 AM

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

• by LordKano on 5/29/16, 8:22 AM

  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.

• by gumby on 5/29/16, 1:48 AM

  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.

• by luckydata on 5/29/16, 1:48 AM

  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.

• by dredmorbius on 5/30/16, 8:34 AM

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

• by transfire on 5/29/16, 2:49 AM

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

• by gruez on 5/29/16, 3:03 AM

  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.

• by niels_olson on 5/28/16, 11:59 PM

  > 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.