3.4 Discussion of Results The evidence is clear; large cable conglomerates like TWC, now called Charter Spectrum since its latest merger, act with monopoly power to increase prices and no one is stepping in to regulate them. With only one cable provider in most areas due to prohibitive capital-intensive entry barriers, the government has allowed the cable industry to function as natural monopolies, with limited government restrictions. With free reign on price increases, TWC camouflages many increases by burying them in equipment charges and add-on service fees. In addition, they bundle their services so that the price of selecting individual services versus the bundled service is cost prohibitive for the consumer, increases revenue for
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Younger, more technologically informed TV watchers are figuring out new ways to access television and movies through the internet and services such as Netflix and Hulu. The monopolistic industry that has formed around cable television has fewer and fewer consumers to spread their high cost of capital between and therefore are finding other means to increase revenues that are often hidden in additional services and equipment rental. Who is to blame for the high price cable television subscribers are left with: is it the local governments and their captive theory of involvement, is it the FCC and DOJ for not strictly enforcing regulations and allowing too many mergers to skate through, or is it the lack of real competition caused by the monopoly of the industry? The real dilemma and question to answer is where does it go from here, and how does one of life’s simple pastimes of TV viewing be made more affordable for all …show more content…
In an effort to fight back, cord-cutters, a term popularized to describe the group unsubscribing from cable television, are increasing. The hope of a good substitute looms on the horizon as news that Google Fiber is slowly starting to enter the market, according to Wehner (2015). The few selected areas where Google has invested in infrastructure has already caused Time Warner Cable to increase internet speeds without also increasing prices. As is true with most industries including monopolies, long run profits eventually do draw competitors into the market, as is the case with Google Fiber. Future investigation into the effects this competitive entry will have on cable’s monopoly pricing power will be interesting to watch. Google is doing what no other competitor to the cable industry has done before, and that is to invest massive amounts of money into a new infrastructure that promises to be equal or faster than the existing cable structure (Wehner, 2015). Competition is a good thing, especially for the consumers that have long been taken advantage of by the cable
Younger, more technologically informed TV watchers are figuring out new ways to access television and movies through the internet and services such as Netflix and Hulu. The monopolistic industry that has formed around cable television has fewer and fewer consumers to spread their high cost of capital between and therefore are finding other means to increase revenues that are often hidden in additional services and equipment rental. Who is to blame for the high price cable television subscribers are left with: is it the local governments and their captive theory of involvement, is it the FCC and DOJ for not strictly enforcing regulations and allowing too many mergers to skate through, or is it the lack of real competition caused by the monopoly of the industry? The real dilemma and question to answer is where does it go from here, and how does one of life’s simple pastimes of TV viewing be made more affordable for all …show more content…
In an effort to fight back, cord-cutters, a term popularized to describe the group unsubscribing from cable television, are increasing. The hope of a good substitute looms on the horizon as news that Google Fiber is slowly starting to enter the market, according to Wehner (2015). The few selected areas where Google has invested in infrastructure has already caused Time Warner Cable to increase internet speeds without also increasing prices. As is true with most industries including monopolies, long run profits eventually do draw competitors into the market, as is the case with Google Fiber. Future investigation into the effects this competitive entry will have on cable’s monopoly pricing power will be interesting to watch. Google is doing what no other competitor to the cable industry has done before, and that is to invest massive amounts of money into a new infrastructure that promises to be equal or faster than the existing cable structure (Wehner, 2015). Competition is a good thing, especially for the consumers that have long been taken advantage of by the cable