A Monopolistic Triple Play

Wherein I express my disgust with the modern cable industry.  

In a free economy, there is a persistent theory that competition drives innovation, controls prices, and generally leads to a better product or service for the consumer.  Ordinarily, this is because if a company charges too much, doesn’t offer the product/service in an effective way, or limits consumer options, people will shop elsewhere.  Even better, if a company comes along with an improvement on the product or service, they have a chance to win market share.   This theory completely breaks down when there is a lack of competition, and becomes completely irrelevant in a monopoly.

..which brings me to the subject of this thinly-veiled rant, Comcast.  Having lived on both sides of the country, however, I would imagine you can simply replace “Comcast” with the name of your local cable monopoly, as these practices are widespread.

At the outset, I want to note that Comcast is a monopoly, and has no competition in the cable industry here.  While they have television competition from satellite providers, phone competition from phone service providers, and internet competition from DSL, they are not competing on a level field.  Cable is the best and fastest way to deliver all of these services, satellite-television fanboys be damned.  And in this, there is no competition.

If Comcast were operating in a competitive market, they would lose customers for a variety of reasons.  Their service is spotty, their prices are high, and they do not offer flexible options for purchasing their services.  Moreover, their pricing scheme is absurd.

When a new customer signs up for cable service with Comcast, they are given a low “introductory” rate.  This typically lasts for six months.  After that, the bill can double, no joke.  What most people “in the know” do is wait until their introductory package rate ends, then call and threaten to cancel; this prompts the overseas customer service personnel to offer a new “introductory” rate for six more months.  Rinse, wash, repeat.  This model penalizes people for losing track of their term, and most people, myself included, only make the “threatening to cancel” call after receiving at least one large bill.

The options available to customers are incredibly constricted, as illustrated by this quick anecdote from last year’s basketball season.  My alma mater, the University of Kentucky Wildcats, were playing a rivalry game, and I had a free afternoon.  Since this was not a part of my “standard” three million channels, I figured I would have to pay-per-view it.  When I called Comcast, they told me that in order to watch the game, I would need to sign up for the “all access college pass,” or some such nonsense, for a price of $149, which would give me access to every single game televised anywhere in the country, all season long.  That was the only option.  All, or none.

That example is particularly interesting when you consider how cable works.  The provider does not pay more money per viewer; all the content has already been purchased, they simply gate-keep some users from viewing certain programming.  With a willing customer ready to shell out a few bucks for a single out-of-package program, a competitive market would insist upon reasonable pricing.

I recognize that there is a major hurdle in de-monopolizing the cable industry: it relies on infrastructure that runs into most homes in American cities.  Somebody has to own and maintain the lines.  In this regard, they are like power companies.  One can imagine a cable district, a quasi-governmental unit set up to operate with high efficiency, in a non-profit manner.  More plausibly, the cable providers should be more heavily regulated to ensure that they are offering customers more choices than the six-menu-option pricing scheme they have today, and that their profit margins are kept in check.

It is my sincerest hope that wireless technology will advance to the point of rendering reliance on cable obsolete.  I relish the idea of being un-tethered from Comcast, Insight, or any other cable monopoly.

~Andrew

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Published in: on September 19, 2011 at 6:59 pm  Leave a Comment  

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