Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

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> Every cable company in every city I've lived in the USA has been a locally granted monopoly with the city extracting massive amounts of money from the monthly cable bill in "Franchise" fees.

In no city is the cable company actually a "locally granted monopoly." Every franchise agreement I've seen points out that it's non-exclusive.

Technologists have a fundamental misconception that leads to a lot of cognitive dissonance and confused reasoning: that building wireline infrastructure is a lucrative business that companies can't wait to get into, and would were it not for "regulatory capture" and legal roadblocks. But it's not. It's a business with large up-front costs, expensive maintenance costs, expensive unionized workforces, etc.

> Every wireless carrier is a monopoly-- because they all have monopoly powers over bands of spectrum the federal government sold to them

You're punning on the word "monopoly." Anyone who owns property has a "monopoly" over it. But that does not make them a monopoly. In most cities, you have 3-4 options for wireless service.

> Another utility that is highly regulated, engages in rent seeking and is, a monopoly over its area.

Most electric utilities are monopolies, because it's illegal to deploy competing electrical service.

In urban areas running cables and getting customers is indeed lucrative, because by running a cable into a building you reach all its numerous tenants, and there are more on the same block. Unfortunately, USA have a lot of semi-country low-density areas where there are few takers, or even would be none if it were not for regulations requiring a cable company to cover their entire area.

Compare to other similarly low density countries with faster internet ... like Estonia

The cable franchise agreements are exclusive. That's why you don't see two companies offering cable service. If they weren't you other companies would compete.

Regarding wireless, you don't seem to understand how the industry is structured. While it's true there are many brand names on the shelf in walmart, there are only 3 actual providers in a given metro region. Virgin, for instance, uses Sprints network, which is a combination of deals done with the owners of spectrum across the country.

> The cable franchise agreements are exclusive. That's why you don't see two companies offering cable service. If they weren't you other companies would compete.

Nope.[1] Exclusive franchise agreements are illegal under federal law since 1996. There is no competition because the business proposition sucks. The only sensible play in most places is to try and target a niche market of wealthy neighborhoods that'll pay for the triple play. That is prohibited under most franchise agreements.

Four nationwide competitors isn't a monopoly any more than Pepsi and Coke are, who own almost all soft drink brands.

[1] e.g. http://www.wilmingtonde.gov/docs/1320/3716Rev1.pdf (Second whereas paragraph).

Some municipalities limit the structure of the entity offering the service however (eg. cannot be substantially and exclusively owned by the ratepayers, or their agent(s)), however the FCC seems to be working on getting those restrictions thrown out.

"... cannot be substantially and exclusively owned by the ratepayers ..."

Does that sentence mean that it's illegal for a municipality to form co-ops, and then for example lay their own fiber and then share the costs equally?

Yes

OK, it was legal prior to 1996 (was it the Cable Television Consumer Protection and Competition Act of 1992?), and majority of cable systems were established in the 20-30 years prior to 1996. So if a cable company was granted a monopoly by the government, and if it is able to keep competitors out because they enjoy monopolistic market share, isn't the critique fair?

If I want build a network in Comcast territory, there are very "new" customers. I have to go through an extremely expensive build out, and convince customers to switch. Meanwhile, Comcast can undercut me on price because they have already have infrastructure paid for. They can offer $1 internet to people trying to leave until I run out of money.

So yes, you are right that providers aren't currently monopolies, but they exist in markets distorted by being monopolies in the past.

edit: note that the Comcast/Time Warner mega providers grew themselves by buying up all the small ex-monopolies across the country - they didn't build out against them.

Instead of arguing about what the franchise agreements must or must not say based on what you imagine must or must not happen in each case, why not read the franchise agreements? Would appear to be the simpler, more accurate approach.

> The cable franchise agreements are exclusive. That's why you don't see two companies offering cable service.

You and others keep writing that when it is demonstrably false. Witnesseth:

Wide Open West - A cable overbuilder that serves Detroit, Columbus, Cleveland, and portions of Chicago right alongside the "incumbent" cable company.

Wave Broadband - Its coverage area overlaps with Comcast in some (high net worth) areas of Seattle.

RCN - An overbuilder--the first one, actually--that serves New York City, Boston, Washington D.C., and Philadelphia.

You don't see many overbuilders because building a physical plant network is VERY EXPENSIVE. Verizon's former CEO lost his job to a board that saw how expensive the FiOS buildout was--even though it will return its costs 10 times through not having to maintain the old fiber--and how it dragged on quarterly earnings reports. Instead of spending all of this money, companies retreat to where they don't have to compete so they can soak as much cash as possible out of their existing assets.

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