The Value of Competition

As I’ve talked about previously here, I’ve had some trouble with my cable company. One of the reasons I think that Cablevision is able to treat its customers in the way that it does is that it has a monopoly in cable service.

While you might argue that satellite TV and DSL are viable alternative, the most important service that the cable company provides to me is fast Internet service and on those terms there is no real competition. Today even more evidence of the problem with this situation presents itself.

Cablevision is offering Docsis 3, a new system using existing cable lines to put move data more quickly up and down the system, to its customers. The interesting thing about this change over is that they are planning to put this offering on a more expensive tier of service. The New York Times puts the cost of implementing this plan at $97 a customer, less than the cost of one month of the actual service, which is $99.

The United States is behind many countries in the world in terms of broadband integration, and I would argue that the cable monopolies are a major factor behind this. Since there aren’t readily available and affordable broadband plans, people simply go without and miss out on how technology at the highest speeds can improve their life and their ability to produce and communicate their ideas.

In a previous Times article, the paper breaks down this idea of competition further with a comparison to the Japanese broadband marketplace. It is quite surprising to see how much lower costs could be in an environment where competition is allowed to flourish.

The one beacon of hope in favor of competition is the fact that Verizon’s FIOS service is starting to enter sections of New York, which may bring competition to the broadband landscape. Until this happens though, we may continue to live in a relative wasteland of broadband usage.

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