[opendtv] Re: Electric power as a natural monopoly

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 7 Feb 2014 08:32:23 -0500

On Feb 6, 2014, at 7:30 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx> 
> Craig Birkmaier wrote:
>> All I am saying is that the notion that utilities are natural
>> monopolies has its roots in the electric power industry during
>> the first decade of the 20th Century.
> No matter how you keep harping on this, natural monopolies are still a fact 
> of life.

Sadly this is true.

> Even your example of locally-competing electric utilities is only a partial 
> solution. Even if you can have two dozen different electric power generation 
> plants in one city, competing to sell you power, you're still going to have 
> that same local shared grid. So in fact, the company that installs and 
> maintains that grid is a natural monopoly.

Thankfully this IS NOT true. 

Yes, the local grid will continue to be a natural monopoly. This is not the 
case for inter-city  transmission lines and generation facilities. By the way, 
the cable companies and telcos share the same rights of way, and often the same 
poles. This is a major source of revenue for every city in the U.S.

It does not matter where the generation facilities are located. Our local 
government owned utility buys power from multiple facilities, some hundreds of 
mile away, and sells power to cities both distant and nearby. 

They built an expensive biomass plant that will cost us a fortune for the next 
30 years, thus we now have the highest electric rates in Florida. They thought 
they would be able to sell this power as energy prices would climb with "cap 
and trade."  Didn't happen. Can't sell it. too expensive.

So now we have to buy all of the expensive power and burn every tree in the 
region; as a customer we cannot buy the cheaper power that the utility can buy.

Cox Cable owns the wires that deliver our MVPD and ISP services (actually the 
same wire).
They sell the TV content that fills most of the bandwidth of these wires, but 
deliver bits from every corner of the world...even Netflix bits.

Fortunately, the electric power industry has had enough with the regulators. 
Over time the campaign donations were not enough to counter the high costs of 
being regulated. So now they want the ability to compete, at least on the 
generation side of the business.

>> The next likely move is for the FCC to require the content congloms
>> to sell their programs to OTT services as they did when they opened
>> up the market to the DBS services. And the likely result will be
>> yet another MVPD service that charges the same (or slightly higher)
>> oligopoly rents as the existing MVPD services.
> Actually, no. The difference is that your location will not force you to use 
> that one source of TV content any longer. If you don't like Hulu, you can 
> look elsewhere. That's a huge difference. The different OTT sites will be 
> able to compete on what tiers they will offer, what content to pass up 
> entirely, how much a la carte, what have you. The different content owners 
> can equally decide to bypass aggregation sites completely (as they already 
> do), for any or all of their content.

Hulu is not a MVPD service. They are a catchup service.

The congloms will demand the same bundles with an Internet based MVPD service. 
Why do you think Intel gave up. Even Apple with their huge cash hoard cannot 
tear down the walls of the MVPD gardens.

The congloms will not allow ala carte. Congress could change this, but McCain's 
ala carte bill went nowhere.

> A completely different landscape.

Same landscape...

Same wires and fibers...

Updated technology.

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