This is what happens when Time Warner Cable is forced to compete
Such a laughable headline when government regulations are what caused the cable/telecom monopolies in the first place.
“This report admits that in the days when cable was challenging airwave broadcasters, regulators “did not hesitate to grant exclusive franchises to cable operators”4. It speaks specifically of a long history of successful regulatory lobbying by the cable industry. This report claims that lobbying of regulators resulted in a variety of tactics to deter competition (p. 35). It claims that regulators protected and favored cable incumbents for years. Licensing policies have directly or effectively barred competition in many local markets (p. 44). Such practices are no longer official, but cable companies still succeed in enlisting the help of regulators to bar direct competition (p. 44). Incumbent cable companies have also gotten regulators to use “level playing field laws” to increase the costs of entering the cable market (p. 45). Cable companies have also saddled new competitors with disproportionate shares of subsidies for public education and government programming (p. 45). The cable industry has also succeeded in getting the FCC to quash new competitors with prices for leased access no competitor “could pay and remain commercially viable” (p. 47).”
Much like the drug law argument I talked about last week this is another example of people lauding governments for solving problems that the government itself is responsible for. We need to look beyond the double-speak and identify the underlying issues at hand. In this case government privilege granted to favored corporations.
Notes On Liberty 
In truth the franchises made some sense, when they were granted. cable has very large capital (or sunk) costs. Building all that infrastructure is expensive.
But it very soon became clear that that they were not only going to have to fight other cable companies but dbs (DirecTV, and such) and that after they talked zoning board into major restrictions on the older larger dishes. There are still major restrictions even on the smaller dishes in many markets.
But now they have a real problem, Google fiber is one. My local phone company is also doing fiber to home (FTH) on their own, and are comfortable (we’re not to start-up yet) in talking about 1 Gig up and down, and with the amount of TV over internet available for not very much. Cable companies are going to find themselves competing with a plethora of other providers.
“In truth the franchises made some sense, when they were granted. cable has very large capital (or sunk) costs. Building all that infrastructure is expensive.”
If it was not economically feasible to produce then it should not have been produced. Only in the public sector where cost is seen as a sign of success (see Keynes and his multiplyer) would projects that cost more than they are worth be seen as a benefit to society.
Despite how much we all love the internet and our cable providers (which who is to say we would not have the same or better services without the subsidies for sunk costs) these programs are always a source of waste. Or as usual I will simply let Murray Rothbard explain:
“Transfer spending or subsidies distort the market by coercively penalizing the efficient for the benefit of the inefficient. (And it does so even if the firm or individual is efficient without a subsidy, for its activities are then being encouraged beyond their most economic point.) Subsidies prolong the life of inefficient firms and prevent the flexibility of the market from fully satisfying consumer wants.”
I think anyone who has looked at their cable bill recently and compared it to their download speeds can agree that their wants as a consumer are hardly being satisfied.
In theory, I completely agree with you.
But in real world application without some sort of guaranteed return on investment, very few of these projects would be undertaken, the risk to reward ratio is just too high.
We saw exactly the same thing in the 20s and 30s in trying to extend electricity beyond the town, the projected utilization would not have paid for the construction. But (and this is the really strange part) the REA was enacted, it developed engineering that reduced cost of construction (by about 60% for the same dependability) and as the market developed manufacturers developed products that made a profitable service. Remarkably, this was a government loan program, the only one I know of that actually worked, and worked well, the loan payback rate was in excess of 99% with a reasonably sound currency.
I don’t know as much about the cable market, and agree that regulation should end. My point was that affordable, widespread, hi speed internet, would not exist if the early system had not been protected. And unlike electricity, we have developed direct competitors to the cable companies, so it is time for all regulation to cease.
A lot of this is chicken and egg stuff, if we don’t help to create the market, the market won’t exist, but if we don’t leave the market alone, we will mess up the market.
Each instance I think , has to be studied independently. My theory of operation is the same as yours, but I have seen enough real-world interactions to recognize that theory doesn’t always work well, especially short term.
I would have to say that the claim that without government electricity would not have left the “towns” is unequivocally incorrect. It was merely uneconomical and while you show that government programs increased electrical supply to sparsely populated areas you do not question whether that was necessary. Merely spreading electricity is not some sort of objective boon to society, especially in the 1920’s and 30’s.
I also point to the following list of facts about REA operations.
“The rural distribution grid operates at a higher voltage and is significantly more expensive to install than an urban grid.
“A significant amount of overhead power lines serve a minority of the electric customers, or about 90 percent of the lines cover 10 percent of the country’s population including many seasonal and vacation homes.
“Power losses in rural distribution are far greater than the urban grid and represent a major percentage of the total line losses nationally, with a negative impact on the country’s overall electric system efficiency.
“The rural grid is more susceptible to severe weather and storm damage and outages, and is thus less reliable, more difficult to maintain, and time consuming to repair.
“The rural grid’s easement and vegetation removal requirements are disproportionately expensive to maintain.
“The rural grid is a major eyesore on the landscape and far uglier than a country home with a small wind charger and/or a few solar panels.
“In some cases, the seasonal and vacation homes and businesses served by the rural grid could easily be served by a small farm or wind electric plant.
“Millions of private acres have been seized by eminent domain for privately-owned electric transmission and distribution corridors.
“Millions of acres are subject to electric utility easements and control on a percentage of everyone’s property, including citizens like the Amish who do not even use electricity”
and
“Electrifying rural America by subsidizing the cost of running long and uneconomic transmission lines to rural farms, ranches, hermits, and owners of vacation homes – subsidies that continue to be lobbied for six decades later – was not a boon to America. There were a number of private firms doing research into economical on-site generation of electricity after WWI using wind, gas, and solar power because, seeing the rapidly growing demand for electricity and understanding that reaching remote areas with transmission lines would never be economical, they foresaw a vast market for on-site generators. Once the Roosevelt Administration announced that ‘every American had a right to access to electricity,’ this private research stopped entirely. The irony is that in the 1970′s, during the alleged ‘energy crisis’, many ignorant people sought to argue that ‘the free market let us down’ by failing to do research in alternative, renewable energy. That all the gigantic wind turbines in the world are subsidized by governments is a consequence of this misguided consensus; namely, that free markets would never research renewable energy so it’s up to the State to do it.”
It seems to me that the REA, like all other government subsidy programs, wasn’t really necessary to society and like all public work projects were simply a way to distribute tax dollars to favored industries.
http://www.lewrockwell.com/lrc-blog/rural-electrification-negatives-and-boondoggles/
To play devil’s advocate: The government “solving” yesterday’s problem isn’t necessarily the same group of individuals that caused the problem. And even without going into methodological individualism, if a child learns something, we praise and reward him (and laugh knowingly about it over beers later); let’s acknowledge that government still believes in Santa Clause but be happy for the improvements we do see.
That said, my devil’s advocate point is pretty lame. I agree with you.
“Merely spreading electricity is not some sort of objective boon to society, especially in the 1920′s and 30′s.”
Nope, just to the people in the dark.
I am sure all of the people in the Virginia mountains in the 1930’s were real tore up about not being able to plug in their electronic devices.
I know my Grampa and Gramma were happy to see lightbulbs [those fancy electronic devices]. You have any family in the Appalachians?
“I know my Grampa and Gramma were happy to see lightbulbs [those fancy electronic devices].”
Happy enough to pay what it would cost to run the lies to their house? Or only happy enough to let other people pay that cost for them?
Just happy to switch from their kerosene lanterns. Let me ask again, you have any family in the Appalachians?
My personal life isn’t really relevant to the economics of electricity generation.
I thought perhaps it was relevant to your contemptuous dismissal of people in Appalachia and their ‘electronic devices’. Familiarity breeds contempt they say. My family comes from there and I lived and worked there before coming to Canada. I’m contemptuous about a number of aspects of briarhoppers.
The economics of electricity generation isn’t really relevant to your arrogant and contemptible attitudes towards inhabitants of Appalachia.
So instead of addressing the issue you accuse me of being condescending and arrogant. Well I am not going to justify the ad hominem with a response since it doesn’t address the larger issue of whether the people of Appalachia were willing to pay for the long transmission lines to their homes. Or if I have a small town located in the middle of the Atlantic ocean should tax payers be forced to subsidize running wires to my home regardless of cost? If not then where do you draw the line? If I build a home in the middle of the Arizona desert should you be forced to pay for the cost of supplying me with power? If you say yes then where do you draw the line? Or like all government projects is it completely arbitrary based on the whims of whichever politician currently holds the power to take wealth from one group and give it to another?
Lets be clear. In response to your comment:
“Merely spreading electricity is not some sort of objective boon to society, especially in the 1920′s and 30′s.”
I said:
“Nope, just to the people in the dark.”
You COULD have said something like “Yes but they got their electricity at the expense of the rest of society” but you didn’t. What you DID say was:
“I am sure all of the people in the Virginia mountains in the 1930′s were real tore up about not being able to plug in their electronic devices.”
What does that have to do with one portion of society subsidizing another? Nothing. That’s just you being a jackass sniggering at the po’ white trash.
You wouldn’t be accusing me of being anti-poor if you saw my tax returns from the last decade but I suppose it is easier to pull the “he hates poor people card” than to make an argument.
The nice thing about blogs is that what you write is there for everyone to see. I don’t have to pull a card, your arrogant comment about people in the Appalachians are above for anyone to see. One difference between you and those you so easily denigrate is that they don’t see being poor as an adequate excuse for being a jerk.
*sigh* feigning offense instead of making an argument is quite the tactic but alas, I apologize that my snide comment offended you so. Apparently you can make sarcastic remarks but do not have the mettle to receive them in kind.
If we are to go back to the original comment I stated that supplying electricity does not provide an OBJECTIVE boon to society. So while your comment that rural folks were excited to see electricity may have been correct (and mine that they didn’t have much use for electricity may be correct as well) your point was largely irrelevant since I was referring to objective value as opposed to any subjective value your family may have gained.
Not to mention your dodging of the question of whether stealing from one group to benefit another is morally correct and if so when and how. \
Finally you continue to focus on the one point (the strawman you assembled over my hatred of the rural folk of Appalachia) and say: ” You COULD have said something like “Yes but they got their electricity at the expense of the rest of society” but you didn’t. ”
When I did say almost exactly that above: “Happy enough to pay what it would cost to run the lies to their house? Or only happy enough to let other people pay that cost for them?”
Thanks for the apology.
“Not to mention your dodging of the question of whether stealing from one group to benefit another is morally correct and if so when and how.”
I don’t want to dodge any questions. Transferring money from one group to another is morally correct. The when and how: when it’s done in accordance with previously agreed upon [by the majority of the larger group or society in question] procedures.
That should provide some red meat.
Please note that what I have in mind is the conventional use of the term
http://en.wikipedia.org/wiki/Mores
Thanks for sharing this, I really got a kick out of it. The TWC office in South Austin looks like it was built in 1984 and has an unmistakable vibe of government bureaucracy. Their freakin’ logo is a hypnotic eye for crying out loud. It is astounding that company stays in business.