The essence of the objection to municipal involved in communications is that public intervention will undermine the private sector due to the cost advantages uniquely available to governmental entities, thus creating a barrier to public entry. As we have shown, however, this objection fails in two ways: First, municipalities tend not to become involved in communications in markets characterized by effective competition; and second, where municipalities do become communications providers, private entry into the market tends to be stimulated rather than suppressed.
Wall Street: Lack of Competition Allows Comcast to Raise Prices Whenever It Wants
A major difference between Main Street and Wall Street is that we view Comcast's lack of competition as a major problem. The prospect of Comcast increasing our rates year after year makes us want to scream. Prepare to scream. Or throw things.
The Lafayette Pro-Fiber Blog alerted us to a piercingly honest analysis from Wall Street. The article on SeekingAlpha.com, titled We-re Big Fans Of Comcast's Cash-Flow Generation captures one of the major policy failures of our time:
Comcast's traditional Cable Communications continues to grow and generate copious cash flow. Video revenue, Xfinity and other cable TV products, grew 2.8% to $5 billion, while High-Speed Internet revenue grew 8.9% to $2.4 billion. We're big fans of the firm's Video and High-Speed Internet businesses because both are either monopolies or duopolies in their respective markets. Further, we believe that both services have become so sticky and important to consumers that Comcast will be able to effectively raise prices year after year without seeing too much volume-related weakness.
SeekingAlpha.com, describes itself as "…the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion."
We want to empower local businesses and communities to control their own destiny. Monopolistic telecommunications companies, with their Goliath market share, Wall Street priorities, and armies of lobbyists continue to attack local control and self-reliance. They are extracting assets from Main Street and shipping it to Wall Street.
Yet we see the FCC, Congress, and many states pretending that the public interest is best served by giving more power to these massive companies. And we will continue to hear industry-funded think tanks claiming that broadband has robust competition and should be subject to less public oversight. Coming soon to an op-ed page near you.
Photo courtesy of JSquish via Wikipedia Commons