[opendtv] Re: Analysis: The Real Winner in the TV Wars

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "OpenDTV (E-mail)" <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 7 Dec 2004 11:16:04 -0500

Craig Birkmaier wrote:

> > Consumers are only the losers if they're coerced to pay.
> > They are not. There's no gun to anyone's head. This is
> > just entertainment, for heaven's sake.
> I am not coerced to drive either...it is simply a
> necessity like electricity, water, telephone and cable
> (or DBS).

You are mixing apples and oranges.

Certainly, real utilities, such as power and sewage, are
heavily regulated by local governments precisely because
they are necessities, yet must be local monopolies.

Cable, especially, is a luxury that a huge percentage of
the population demand. Hence, "inelastic demand," and
these local monopolies can set their rates as they
please. Their only competition is two DBS services, which
are not exact replacements for cable service anyway.

> I do not have much control over the cost of my car
> insurance

You have lots of choice in car insurance. That's what
keeps prices competitive. Not true for cable. You also
have lots of choice in which supermarket you buy food.

> The only valid thing in your post is the reality that
> the pricing for multichannel TV is not so high as to
> cause people to reject the value proposition.

This is really very basic economics, Craig. If there
is not natural regulatory mechanism to keep prices
down, such as adequate competition, and if people are
willing to pay, then the price will and should go up.
It's supposed to work that way. Ideally, more
competitive businesses will then emerge, such as
subscription TV over IEEE 802.16.

> Or another way of saying this is that even at these
> ridiculous prices, cable and DBS are still a better
> value than OTA the OTA TV proposition.

All you said here is that the price reflects the
value of the product to you (and may others).

By definition, then, that price must be right. Just
like the outrageous salaries of pro athletes are
also right. If you are paying those prices, for
such non-essentials, then you are creating the problem
you complain about.

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