When Competition Doesn’t Provide Much Competition

The single biggest rationale behind fast-tracking AT&T and Verizon into offering cable TV services over the broadband lines is to provide more consumer choice and competition in television services. Sounds like a good idea on first blush, since most communities only have a single incumbent cable provider, with their only alternative being a direct broadcast satellite service.

AT&T and Verizon further capitalize on the consumer desire for choice by arguing that strong network neutrality regs will impede their ability to roll out video services.

So what happens when Verizon actually does move into a community and start offering cable?

If that community is Montgomery County, MD, apparently not much, according to an article in the Washington Post. Verizon started offering video over fiber last November, and since then has raised its new customer rates 7.6%. Customers of the incumbent cable provider, Comcast, are seeing their rates go up 4% on March 1, and the third area cable company, RCN, raised its base rate 15% last month.

That sure is some kind of competition: competition to see who can raise their rates the fastest!

It’s quite the scam really, the big telcos convince local officials to let them in to offer cable services with the promise of competition driving down prices, and ramping up services. But they’re never held to account for that actually happening. It’s all just a kiss and a promise.

Then, once Verizon or AT&T has built out its network they’ll be back at the till asking for rate increases, or tax decreases or some other sort of deregulation, claiming that without those incentives they won’t be able to offer customers the newest digital services.

Oh, but your average so-called free marketeer would argue that if Verizon does that, then Comcast will swoop in to offer those services before its competitor. Maybe. The more likely scenario is that Comcast will just follow Verizon’s lead and ask for the same incentives.

The most heated competition is for how much they can bilk local municipalities and consumers for, not who can offer the lowest price and the best service.

If the low price competition was true, then why is Comcast raising rates in Montgomery County, rather than trying undercut Verizon?

Welcome to your “deregulated” digital future.


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