Cable Companies Can Afford Lousy Service

Our cable TV service wasn’t working; with one week’s notice, I was able to get a service person, but my wife or I had to be available at the house the entire day of the scheduled visit, fouling up our schedules and making work difficult for us. (Sadly, we cannot afford a butler!) The cable company is a monopoly, and its price is outrageously high.

Simple economics tells us that the economic cost of monopoly is the underproduction generated by the high monopoly price.

Another cost is the lousy service that monopolists provide — including the time the monopolist makes you spend waiting so that he can keep costs low and earn higher profits. With competing providers, service would be better — and time wouldn’t be wasted — since lousy service would cause people to switch to competitors, forcing all to offer better service.

Monopolists, however — including my cable company — have a lot of latitude, as it will take even worse service than this to get me to switch to satellite TV. Over time, as services like cable form an increasing share of people’s spending, and as the opportunity cost of people’s time keeps rising while their spending power grows, this cost of monopoly — its deadweight loss — will be ever more harmful to the economy.

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  1. frankenduf says:

    an extension of this argument is that privitization of telecommunications harms society- this is why Japan has streaming video and we have verizon’s shoddy internet connections

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  2. bev says:

    Part of the “deadweight loss,” it seems to me, is the requirement that we buy a lot of channels we don’t want, in order to get the few that we do. Cable companies are not alone in this. With much of the modern technology, we are told of all the things we can do with the new gizmo, like programming your VCR for the next year, when, in fact, we don’t have time to do that. So we end up paying for a lot of stuff that we’ll never use, but we’re held hostage because the technology only comes in bundles.

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  3. Cliff says:

    The odd thing about the Cable companies is that the telephone companies offer so much better service. I’ve waited for weeks to get my cable internet resolved, but dsl gets fixed the next day. I don’t get it.

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  4. nickels flatbag says:

    simple solution: get rid of cable. believe me, your not missing much.

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  5. Gerald M. Taylor says:

    Let’s look at the flip side: unlimited competition. Flown in an airline lately? The more flights there are, the worse the service. Someone is missing something here.

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  6. Karen Ann says:

    Cliff, when I was waiting to get my DSL fixed it was 4 weeks of hell on dial up…. where as if I hadn’t signed up for the year ‘contract’ with my telephone company ~saving maybe 2$ per month~ I could have changed to and hooked up Cable internet in 2 days.

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  7. Mitch says:

    Why won’t you switch to satellite? It’s cheaper, more flexible and only marginally less reliable.

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  8. John says:

    Cable companies a monopoly? In North America? I think not — the direct broadcast satellite companies likely agree with me. As do some of the larger telcos in admittedly limited markets. The real problem is weak or presumed to be weak franchising authorities at the local level where such still exist and the state-wide franchising bodies in the states that have created them. If the franchising bodies require the cable companies within their jurisdiction to provide shorter repair windows and penalized the providers if they miss specific mean-time to repair metrics (as is done in both NYC and LA) then the problem you wrote of would have been lessened.

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