Telecom Consumers Benefit From Regulations

As the content and function of cable and telecommunications technologies have converged

, competition has increased in every metropolitan market, and the Bay Area is no exception. For example, in Concord internet and cable rates have been decreasing in recent years, despite increases in the price of just about everything else on the market.

While it's become en vogue to complain about the restrictiveness of government regulation this is one example of how regulation works to keep competition alive. It's a misnomer that business likes competition: business likes to win. And services like telecommunication tend to be susceptible to monopolization because the cost of the infrastructure to provide those services is so high that large companies gain a huge competitive advantage through the economies of scale.

It's also important to remember that communications companies are conduits of information. Although most of the content we see on TV or the Internet is available to everybody, the major players in the industry have begun to invest more and more heavily in the creation of proprietary content they can provide their customers to give them an additional motivation to remain loyal.

The bigger the company is, the more money it has. And if there's one thing that makes all the anti-commercial, free-spirited artists in the entertainment industry hop to their feet and start working, it's money. That gives the largest companies a huge advantage in producing the kind of content that the market is going to respond to, making them more difficult for the little guys to compete with.

Without regulation in place, monopolies would quickly develop, in much the same way that early telephone service was delivered by one of the industrial age's great monopolies. Now that everything from our social framework to our economic function has become media-dependent, monopolies in telecom would be disastrous, to say the least. We can always turn our service off, but now we would give up too much by doing so.

The regulation that exists in the telecommunications industry protects competition, but mechanism it uses to do that also protects the strength of the largest companies because those are the ones most likely to make new capital investments. These two seemingly opposing goals are both accomplished by setting fair lease rates for infrastructure, so that companies which invest in new technologies have some security in those investments while smaller companies have the technology available to them to compete.

As a result, a new company doesn't have to invest the money to run cable to every home in a city before getting into the cable business. It simply pays data charges for existing cables, which might be owned by competitors, cities, or investment groups that built infrastructure just to earn lease revenue from it. In places with high population density, that means that there is always enough competition alive to keep prices in line. If prices get too high, a new competitor can always enter the field.

The Bay Area, which is a hotbed of technological development, the home of numerous technology billionaires, and an area that is unusually predisposed to monopolistic businesses, seems like an area that should test the effectiveness of regulation. The fact that the Concord internet and telephone rates are on the decline indicates that the regulation that is in place is effective.

by: walter63319

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