Quote:
Originally Posted by Beestie
They both can't be monopolies in the same coverage area when there are no restrictions on what I can purchase from either one. And neither one requires a contract - I can switch back and forth at any time without penalty.
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Tell that to the many other soft drink manufacturers who competed against the 'not monopoly' Coke and Pepsi.
A Coke salesman and friend described their 'not monopoly'. Coke would walk into a grocery store with a 26 week contract that put major restrictions on all other soft drink sales AND required major shelf space reserved only for Coke products. Grocery stores had little choice but to sign. 26 weeks later, when the Coke contract expired, then the Pepsi salesman walked in right on schedule to provide the same 26 week contract. Not a monopoly - correct. But even the Coke salesman who was signing up those grocery stores said otherwise.
Why did a container cost more than the Cola inside? Massive profits because the 'not monopolies' could set excessively high profit margins.
Back in the early phone days, AT&T was using almost monopolistic powers to subvert all other phone companies. The government stepped in to break up AT&T. But AT&T management saw it coming. So AT&T quickly proposed massive changes to their operating standards and agreed to comply with something new - what we now called Public Utility Commissions. AT&T changed its corporate philosophy to 'we will service customers, not harm any competitors and expect the PUCs to keep us honest'.
This market model for a monopoly worked as long as the market did not change - as long as disruptive innovations did not occur. By the 1960s, modems were all but virtually banned because only AT&T's gold plated modem was permitted. How much was a modem line even within the same exchange? Somewhere between $200 and $400 per month. Even renting a computer terminal and printer from AT&T cost less per month. But they were a benevolent monopoly. And their predecessors kept another 1981 technology called DSL out of America until all but required by a 1996 Federal Communication Act. But the baby Bells really were no longer a monopoly? If they were not a monopoly, then why could no one get DSL?
Eventually, the courts broke up AT&T’s monopoly because even the kindest and most benevolent monopoly eventually becomes too corrupt.
When it comes to phone and cable service, most everyone now has only two choices. Sure, you can get Cavalier phones. But whose line get used and who sets the rate for those lines? Verizon. Its still Verizon hardware, wires, and buildings. Cavalier is permited just enough 'space' to reap a tiny profit - so that many will believe Comcast and Verizon do not 'share' the monopoly.