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.


Sebastien

I agree completely: monopolies are evil. I got so frustrated with Comcast, that I cancelled my service (basic TV + internet) the moment DSL was available in my area.

Years ago, I heard the FCC was going to force cable companies to offer "a la carte" service, where consumers would be able to pick which channels they wanted. What happened to that?

bob

I can't believe you don't just complain more and to more important people until they

i. pro-rate your bill

ii. give you a shorter window when they'll show up.

I simply don't put up with having to be home for half my day. I refuse. And I complain to the first person to suggest it. Then I complain to that person's manager. Then the manager gives in and I get a 2 hour window. Much better.

gcruse

If you can get satellite, the cable company is no monopoly. Either get smart and go satellite or quit kvetching.

Doug

Dump the cable TV completely and get rabbit ears. The cheapest route available, and you won't waste your life away on the couch.

Douglas W

Considering that the people who care enough about television to pay the huge monthly fees generally aren't particularly productive in the first place, this is nothing to get too excited about.

Since television's customer base isn't known for its intelligence, it is only to be expected that the market does not behave efficiently. But considering that after sleeping, eating and defecating, the main passtime of Americans today seems to be watching television, cable companies can afford to treat its customers with such disregard.

So, if one doesn't like one's cable company, one should cancel one's subscription. Case closed. They'll learn.

Matt

"...as it will take even worse service than this to get me to switch to satellite TV"

Why such powerful and unexplained bias against satellite TV?

Paul

I'm another unfortunate dweller in a large apartment complex that has a "sweetheart" deal with Time-Warner cable, so satellite is not an option. And Verizon hasn't started FIOS installation here either (too many low-income residents, perhaps). So if I want cable TV and broadband internet, I'm stuck.

What drives me crazy is the flood of insulting TW ads that claim "we think like you do."

Oh, really? Glad to hear it. So when can I get a-la-carte service and ditch about 100 useless channels and the cost thereof?

Eli Bildirici

FiOS for the win!

Yasha

"The odd thing about the Cable companies is that the telephone companies offer so much better service."

Because (land-line) telephone service is "essential," and state laws predate families of 4 having 7 phone numbers, the service requirements for telephone companies are more stringent than those for cable companies. YMMV, depending on your state.

November

Cable really isn't the necessity people seem to think it is. I'm living cable & internet (gasp!) free. I watch free over the air tele or sometimes even read a book, go outside, engage myself in a hobby, etc.

If I really need internet for something, I take my crazy inexpensive (but super-cute) surf notebook up to the public library, do my business & grab a book for the next time the swivel sweeper infomercial is on - lol

Erin

I have DirecTV, which is only okay, but I still get every channel AND every movie channel, plus HD - something like 70 HD channels, for $110 a month. I pay $30 a month for cable internet from Time Warner as they have a monopoly in my building (although I understand such practices are now illegal.) I don't have a landline as I never used the last one I had. That's $140 a month.

Time Warner wants $130 a month for their "triple play" with fewer HD channels and no premium channels (and a landline I won't use). Add on every premium movie channel for $45 more, and you're paying more money for crappy service and shoddy picture quality. I also find that the cable HD channels seem significantly lower in picture quality than the satellite HD channels. Additionally, we can get the football package on DirecTV that allows us to see every game, most in HD - nothing like it on cable. Some people don't have a choice, but if you can choose, why on earth would you choose cable over satellite?

My family switched to satellite when I was a child and the cable company delayed installing in our neighborhood for 5 years. After a year of no television but rabbit ears, we switched to Dish Network and it was amazing. Never go back. Now I realize I sound like a shill for a satellite company, but everything I've said is true.

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Shaun G

So if I understand it right, the point of this post is to convince us that monopolies are bad.

Um ... I'm pretty sure our great-great-grandfathers already blogged about that.

By the way, the great G.K. Chesterton argued about 100 years ago that both capitalism and socialism consolidate the ownership of productive property in the hands of a few: With capitalism, corporate monoliths, and with socialism, the government. He recommended a "third way" called distributism. More about that here:

http://en.wikipedia.org/wiki/Distributism

Nate

I thought that the deadweight loss here was the value that would be brought to the potential customers who would buy cable-like tv services if they were priced at a competitive rate. (And any corresponding incremental profit to the competitive supplier.)

What you are referring to is simply a transfer from consumer to producer surplus, nothing more.

Further coming from comment #18, how can they be called a monopoly if you can get essentially the same service by switching to satellite?

Mike

Extending on #7. There are also two main satellite players (DISH and DirecTV) so you get better service. I _only_ had to wait inside of a 4 hour window to get the install done. Plus when you look at the technical things like bandwidth allocated per channel, satellite is much higher and the picture is much better. I didn't know how bad cable was until I went to a friend's house.

DK in Austin

Daniel, I do wish that it were so, but it just isn't.

Where I live I have a choice of two major cable companies, plus a regional one (plus satellite, plus several additional internet choices). In my experience the two giants are practically indistinguishable in their high prices and lousy customer service, and the little regional firm seems to try a tad harder, but is only marginally better in price or performance.

Most tellingly, the regional carrier doesn't seem to be doing well lately, and just put itself up for sale.

I don't know the answer, but eliminating statutory monopolies isn't a panacea.

Martin

Are you sure that cable is making up an increasing share of people's spending? That seems like a debatable premise to me.

Bobo

I could understand you being upset with the monopoly of say sewage removal (a must have) as apposed to cable t.v. if you don't like paying for cable don't buy cable. Buy a book maybe walk in the woods. It may be a monopoly but it is pure luxury. I personally can not fathom buying cable for the reasons you listed as well as the leaching of my personal time as well as "soul" all just to sell me stuff. If I can refuse to buy something that tries to sell me more things and at the same time gives me non-factual news so can you. If we all followed my lead the "monopoly" would fall. But you won't ..maybe if you complain a little more it still won't change.

jfx

There may be cable competition, but if the cost to switch to another provider is high enough (time, $, problems), then from an existing customer's perspective it is a monopoly once you signed on the dotted line. I feel this problem even more strongly with cell phones, where the continually rolling service plan extensions feel like the phone version of indentured servitude...

(my mother-in-law who helps look after my children told me she wanted cable TV; "monopoly" power can be felt in different ways)

AB

Haven't had cable in more than six months - I live in a major city and can pull most of the big networks out of the air, and really, there's not much to watch these days, anyway.

Plus, of course, I can also download some shows off the 'net...

Otter

What gets me is that cable companies insist you still pay your full monthly bill, even if your cable is out for a week.