Natural monopolies

Date: Fri, 2 Jan 2015 13:23:42 -0800 (PST)
> From: Neal McLain > Once again I ask my long-standing question: Does building two > wireline networks really promote lower retail prices?

deletia...

But even if the cost of the second network were the same as the > first network, it should be obvious that the total capital > investment to build two networks would be double the investment to > build one network. > Yet the number of potential subscribers would remain the same, so > each company's potential subscriber base would be reduced. If, for > example, each company got 50% of the subscribers, its total revenue > would be only half of the total. In short, each company's ROI would > be cut in half.

Does this indicate that these facilities-based companies (both telco twisted pair and coax-based CATV) are natural monopolies and should be regulated as public utilities?

Harold

Over the years there have been sporadic attempts to regulate CATV companies as utilities but CATV companies have successfully fought off these attempts. FCC decisions dating back to 1958 have ruled that CATV companies are not common carriers because they -- the CATV operators themselves -- choose the signals to be delivered to subscribers.[1,2]

Several subsequent laws and court decisions have limited this right [3], but the fundamental classification remains in place: CATVs are not common carriers.

Back in my CATV days we occasionally encountered attempts by telcos to get into the CATV business in competition with us. But they did it by applying for franchises under local franchising authority's jurisdiction, effectively recognizing that they were entering a business where they would not be considered public utilities.

+--------------------------------------------------------------+ [1] Federal Communications Commission. "Frontier Broadcasting v. Collier" (determining that CATV systems are not common carriers). 24 FCC 251, 1958. Cited in Mary Alice Mayer Phillips, "CATV: A History of Community Antenna Television." Evanston: Northwestern UP, 1972, 51-52. [2] United States Court of Appeals for the District of Columbia Circuit. "Philadelphia Television Broadcasting Co. v. FCC" (affirming "Frontier"). 359 F. 2d 282, 1966. Cited in Phillips, 56. [3] Thompson-Findlaw. Annotations to the U.S. Constitution, First Amendment, "Governmental Regulation of Communications Industries."

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(scroll down to "Regulation of Cable Television").

Neal McLain

***** Moderator's Note *****

If CATV companies are not common carriers, can they be sued for slander or libel? Given the current trend toward bankroll balloting here in the U.S., bringing a tort would seem to be a convenient way to silence any New Naderites ...

Bill Horne Moderator