Greensboro, NC – When you first read the title, I’m sure you assumed that I was referring to the New York Yankees since a majority of the blogs have focused on baseball. However, I would like to shine the spotlight on this greedy, monopolistic, cash cow that’s sitting in your own home; Comcast. Aside from DirecTV, in the suburban Maryland area, customers only have one choice for their cable needs: Comcast. The chief officers of Comcast are smart enough to milk their clients on a monthly basis by charging a flat $15 “basic” service fee. However, if you want to upgrade to “digital” service, which includes all of your standard cable channels, ESPN, CNN, MSNBC, TBS, etc… $49.95! Yes, 50 bucks tacked on! Plus, don’t forget to add your Montgomery County Screw You Fees as well. Not counting the internet, my monthly cable bill when I lived in Rockville was $85. All I want to do is watch ESPN! Meanwhile, when I moved to North Carolina, I had a plethora of options: Time Warner, Cox Communications, Road Runner, and DirecTV. Not counting internet, my monthly cable bill is $32 – yes, I do get ESPN.
If you’ve ever had issues with your cable service, go ahead and give Comcast a call. It’s only a 45 minute wait on your telephone. There’s no immediate rush to send one of their underpaid technicians in a fancy truck to your place. What are you going to do – switch to the dish? While handling files of clients at my previous job, we brokered several mortgages for Comcast employees. I have seen firsthand that rookie school teachers are paid more than a 10 year veteran of Comcast. Teachers are very much underpaid to begin with. While serving as a statistician of the Frederick Keys baseball team for the past two years, I directly saw how much cash that Comcast poured in to their “minor” investment. It was a treat to the employees to receive a Frederick Keys polo shirt arrive in July. Harry Grove Stadium wasn’t exactly Camden Yards. When marginal profits began to fall, Comcast cut their losses and sold. The first item on the agenda of the new Keys’ owners was to completely renovate HGS. I’ve heard it looks great.
If I knew anything about running a TV network or had any experience in media, I would create a new cable company in suburban DC. It is outrageous for someone like me to own one TV, watch one channel, and be forced to pay $85 a month. When service goes down, you’re forced to talk to an underpaid customer service rep who couldn’t give a hoot about the snow on your TV screen. When I moved to NC, the first company that I called to shut down service in Rockville was Comcast. It was a joy to inform them that I won’t need their services anymore. In turn, they deleted my Comcast e-mail address! Isn’t a monopoly in America illegal? What if my apartment complex banned dishes on balconies? I wouldn’t have a choice for TV. I’d like to commend Brendan’s parents for spotting how absurd this Evil Empire really is. To those 2 to 3 people running this monopoly, who are sitting on hundreds of millions of dollars from the pockets of all Washingtonians, watch wear you walk, because one of your underpaid technicians may just loosen a cable wire above your sidewalk.
3 comments:
A monopoly is only illegal if you engage in anticompetitive behavior to obtain or maintain it. Otherwise, it's quite legal to have a monopoly. With regard to cable companies - they have long been considered to be something called a "natural monopoly." Natural monopolies are so termed because they have massive economies of scale, and thus require a huge investment to start up. But, after that point, the marginal cost of serving additional customers is miniscule. In an environment like that, introducing competition believed to actually increase prices for consumers since the firms will be forced to operate less efficiently and will not be able to take advantage of their economies of scale. The idea is that if another cable company came in they would have to wire the entire city, and then compete with Comcast - each company having massive fixed costs and only half the customers it would have if the other company was not present. They will subsequently be forced to raise prices to individual consumers in order to cover their expenses. It's inefficient to have two systems like that operating when you are dealing with a natural monopoly. Now, whether or not the cable industry is truly a natural monopoly is debatable, but most municipalities consider that to be the case, and regulate them accordingly. (All natural monopolies are regulated by the government). As a result, it's probably not possible for a cable provider to compete with comcast in DC or maryland since the governments are regulating the industry and most likely preventing competition from being introduced. States and municipalities can sponsor a monopoly (and provide immunity to antitrust laws) if they set it up properly - and that's probably what they've done here.
Wow, putting that future law degree to work there, Faris?
I'm not sure where Comcast began its operations; however, it could be argued that they have a monopoly on the entire East Coast sans a few pockets. Philly, Baltimore, DC, and Atlanta are all cities that are encapsuled by the Evil Empire. There's no other choice than to pay their outrageous fees and endure their crappy customer service.
I don't see how the government is monitoring this company in regards to monthly billing, employee labor conditions, and overall service. The only item where I saw the government's fingerprint was on my monthly bill in the form of a Montgomery County service tax.
As you mentioned with economies of scale, somewhere Comcast had to endure some sunk costs to start its operation. One of those costs was the purchase of Montgomery TV and all of its infrastructure. Once that was in place, it was only a matter of time before their investment became a quick profit.
They are getting the deal from the city. The initial costs are huge, but they know they will essentially be reaping monopoly-like profits once they get under way since the cities will insulate them from competition. As for whether or not the cities are doing a good job of regulating the cable companies, that's certainly a valid point.
Now, in DC, I know RCN exists as a competitor to comcast in at least some areas, which may be why I'm paying less in DC than you were in Maryland. RCN can't service my neighborhood but its presence may be having an effect on price across the board in the city. Comcast has individually worked out exclsuive deals in many the cities that it operates, and while it may dominate the entire east coast, it's doing it on a local basis.
As far as competition, despite the fact that things like dish network, direct tv, etc. are not cable, it doesn't mean that they are precluded from competing with comcast. One important thing in determining whether or not someone has a monopoly is figuring out what the product market is. If the product market is cable TV, or something exclusive to cable TV (like maybe "on-demand"), then it would appear as if comcast actually has a monopoly in many areas. But, if it's just expanded programming packages, or things like ESPN, CNN, HBO, etc. There are other ways of getting them. Comcast is not the only way of getting those channels, although it may be the easiest/most reliable.
When it comes down to it though, Comcast is doing what is in its best business interest. If it's not facing competition it's from one of 2 potential reasons: 1) municipal protection (in which case you must take up the issue with local lawmakers), or 2) providing the "best product" at the "lowest price" (not much you can do about that except hope that someone steps in to compete - assuming they are allowed to)
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