[opendtv] Re: Collusion
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 30 May 2011 10:41:13 -0400
At 6:17 PM -0400 5/29/11, Albert Manfredi wrote:
Fair enough. I contend that when GM provides the hardware for
satellite radio by default, but does not even offer HD Radio as an
extra-cost option, it is in effect preventing free market capitalism
from working. Only because GM is not the only car people can buy is
this not such a big issue. But note that only a handful of car
companies behave any differently.
I understand where you are coming from, however, I do not understand
why you think HD radio is any different than XM radio or the many
integrated electronics/computer packages offered by the various car
manufacturers.
Just because a broadcast standard exists, does not mean the
marketplace wants it. If you try to make the case that all vehicles
that have a factory radio must have HD radio, why not make a
requirement that any vehicle with an information display must have
ATSC MHP capability?
Or try this on for size...
Ford and Microsoft have a deal to provide vehicle information systems
based on the Windows Embedded Automotive platform - the product is
called SYNC.
Is there any difference in requiring all vehicles with radios to
support HD radio, versus requiring all vehicles with information
systems to support SYNC?
And I would point out that anyone can replace a factory sound system
with a third party sound system.
Capitalism is not based on universal fairness and egalitarian
treatment of every other company and technology. It is based on
gaining competitive advantage. When you mandate something you are
forcing people to buy something they may not want or use, and you are
eliminating any potential competitive advantage that might accompany
this product/feature.
Now look at the parallel with other walled gardens that do have more
of a monopolistic nature, like utlilities, like broadband providers
(at least for the time being), or like cable TV systems (also for
the time being anyway).
Agree that these are protected walled gardens. Protected from real
competition by legislation and regulation.
At virtually the same time that the politicians broke up the Oil industry
trust, they were seduced into creating the "Utility Trusts." This
happened at the behest of the BIG Electricity generation companies, who
realized that "Natural Monopolies" propped up by the government were in
the best interests of both the companies and the politicians.
That's way too yahoo-out-there to be credible, Craig. The utilities,
like power, water, and sewage, are physically limited from being
able to offer meaningful competition, very much the same way as
cable TV is. There are just so many power companies that can set up
distribution networks in your neighborhood. Nicla Tesla didn't
succeed in his attempts to provide large amounts of power over
wireless, Craig. Water and sewage are similar. Libertarian rhetoric
cannot overcome these obvious constraints.
https://www.mises.org/journals/rae/pdf/RAE9_2_3.PDF
How "Natural"Were the Early Natural Monopolies?
There is no evidence at all that at the outset of public utility
regulation there existed any such phenomenon as a "natural monopoly."
As Harold Demsetz has pointed out:
Six electric light companies were organized in the one year of 1887
in New York City. Forty-five electric light enterprises had the legal
right to operate in Chicago in 1907. Prior to 1895, Duluth,
Minnesota, was served by five electric lighting companies, and
Scranton, Pennsylvania, had four in 1906....During the latter part of
the nineteenth
century, competition was the usual situation in the gas industry in
this country. Before 1884, six competing companies were operating in
New York City . . . competition was common and especially persistent
in the telephone industry . . . Baltimore, Chicago, Cleveland,
Columbus, Detroit, Kansas City, Minneapolis, Philadelphia,
Pittsburgh, and St. Louis, among the larger cities, had at least two
telephone services in 1905.14
http://steveblizard.wordpress.com/2011/05/14/the-myth-of-natural-monopoly/
In 1880 there were three competing gas companies in Baltimore who
fiercely competed with one another. They tried to merge and operate
as a monopolist in 1888, but a new competitor foiled their plans:
"Thomas Aha Edison introduced the electric light which threatened the
existence of all gas companies."[21] From that point on there was
competition between both gas and electric companies, all of which
incurred heavy fixed costs which led to economies of scale.
Nevertheless, no free-market or "natural" monopoly ever materialized.
When monopoly did appear, it was solely because of government
intervention. For example, in 1890 a bill was introduced into the
Maryland legislature that "called for an annual payment to the city
from the Consolidated [Gas Company] of $10,000 a year and 3 percent
of all dividends declared in return for the privilege of enjoying a
25-year monopoly.[22] This is the now-familiar approach of government
officials colluding with industry executives to establish a monopoly
that will gouge the consumers, and then sharing the loot with the
politicians in the form of franchise fees and taxes on monopoly
revenues. This approach is especially pervasive today in the cable TV
industry.
There is no Libertarian slant here. This is a simple case of collusion.
Yes there are issues with overbuilding and duplication of expensive
infrastructure. If you look at the history of railroads in America
you will find that there was a period of competition when the
companies often built duplicative infrastructures. They soon realized
that some of this infrastructure could be shared.
The same is true for any utility. California is now deregulating the
electric industry. Everyone is allowed to sell power through a common
grid. The cellular industry works this way today; cell towers are
leased to holding/maintenance companies who in turn offer co-location
services on these towers. And I might add that infrastructure costs
for wireless are a small fraction of building a wired infrastructure.
The marketplace can and does deal with the economics issues related
to duplicatiopn of scarce resources...
WHEN IT IS ALLOWED TO.
But the myth of natural monopolies has been used by politicians at
all levels - local, state and national, to avoid the benefits of
competition, allowing franchisees to generate monopoly rents; and in
some cases the utilities are municipally owned, as is GRU here in
Gainesville. But more important, as the Baltimore Gas case study
illustrates, the politicians get a nice cut of the action in return
for granting the monopoly franchise.
Bottom line, the real problem with the natural monopoly myth is that
when collusion between franchisees and the politicians who grant
these franchises is allowed, competition does not exist. And even
more insidious, the power vested in the regulators and the regulated
is used to protect both from competition as we see today with the
media conglomerates and their MVPD partners.
Which is WHY these utilties have to be so heavily regulated. It has
little to do with politicians and bla bla bla. It has to do with the
fact that if competition doesn't exist, or if competition CANNOT
exist, then capitalism does not work.
Which is why DEREGULATION is now beginning to emerge so that the
benefits of competition can be restored. That being said, when
politicians say they are deregulating an industry, this is usually
nothing more than a way to shake down the entrenched players so they
can get more money from another special interest group.
The deregulation of savings and loans is a perfect example. In
reality this was the destruction of an industry that did a good job
of helping people buy homes, to be replaced by Freddie and Fannie and
the melt down of the mortgage and real estate industries in the U.S...
Again!
Yes, this is not the first time the politicians robbed the bank. Much
the same thing happened in the 1920's, leading to a disastrous
economic depression. We're not out of the current mess yet. The
unfunded obligations of government around the globe is a far bigger
problem that the ones we faced in the '1930s.
So, when you insist on championing walled garden schemes,
effectively duplicating the utility model, even when such schemes
are unnecessary, it just makes me wonder.
It makes me wonder when you lump things that ARE NOT walled gardens
with those that are.
Competitive leverage can also be used to BRING competition to markets
that have been characterized as natural monopolies for a century or
more.
NOBODY is mandating that you buy ANYTHING from Apple or Google or
Amazon. They are successful because of good products AND competition.
For exampple, when you complain about retrans consent fees. Forgive
me but I have to say this. The cost of rising retrans consent fees
couldn't happen to a more deserving person. Know what I mean?
Sorry Bert, I don't understand.
Are you saying that we deserve to pay higher than free market rates
for electricity, water, and telephony?
The only reason you have any credibility in all of this is that you
CHOOSE not to subscribe to an MVPD service, foregoing access to much
of the content that is locked up within those walls. As a result you
get what you deserve too - limited access to mostly inferior crap.
Regards
Craig
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