Captive Audience: The Telecom Industry & Monopoly Power in the New Gilded Age

[infinitee00]

Given the debate over net neutrality in the last few years, I found this lecture by Susan Crawford of the Michigan Law School relevant and very interesting.  As someone who does not have a very holistic understanding of the monopolistic power of the cable companies ( other than from personal experience - I am a card carrying member of the the 'TWC hate club' ! ;) ), this video was quite eye-opening to me.

 

 

[1h 05mins]

 

A few things I learned from this video that I did not know before

 

 

- 19M people in US cannot get high-speed internet due to lack of infrastructure and 1/3 of the population cannot subscribe due to what appears to be too high a cost.

- Subscribers in the US pay 4-8X for same service compared to what subscribers pay in Europe ( @ 39 mins..interesting chart @ 38:45)

- It's illegal in almost 20 states for cities to build fiber networks for themselves.

- Many cities get a sort of kickback ( not taxes, as far as I understand) from the video fees (not sure what that is..probably some sort of franchise fee) that is charged by cable companies. e.g. NY city gets $150M/year that they can spend wherever they wish. This seems like a conflict of interest and makes it harder for cities to push cable companies.

- TW, AT&T, Verizon and comcast have huge influence over the congressional committees that set the budget for the FCC

- other interesting charts and facts.

 

I am not very well-informed in this area so would like to hear what others have to say. Is she off-base here and if so, where? I am definitely interested in reading her book now and following the cable/wireless discussion threads more closely.

[yadayada]

seems like the problem is not really with those cable companies, that is only a sympton. But your system where corporations can basicly legally bribe politicians seems completly absurd. The US is also the only country where you see so many pharma commercials on tv. Which seems like a bad thing. 

[infinitee00]

seems like the problem is not really with those cable companies, that is only a sympton. But your system where corporations can basicly legally bribe politicians seems completly absurd. The US is also the only country where you see so many pharma commercials on tv. Which seems like a bad thing.

 

I agree. I think the not-so-healthy nexus between politicians and moneyed interest groups is common to almost all capitalistic/democratic countries and I don't think it will ever go away. Politicians will always need money to fight elections and corporations/rich individuals will continue to bankroll them in exchange for "favors".

What democratic govts can do however is pass legislation and reduce their influence ( unless of course you have a case like Citizens United and a Supreme court that is highly polarized and rules on cases based on political inclinations). However, as Susan Crawford pointed out in her talk, there is absolutely no upside for any politician or the FCC to grab the bull by its horns unless there is a huge public outcry.

 

I think, it is great for investors in these companies as it is a moat that is very difficult to breach ( in addition to the cost of building infrastructure that is already a big hurdle) , but I would prefer the govt. encourage more competition in this area for the long term benefit of its citizens and the advancement of society. I think it will take longer for the US to get there than others, but I am hopeful that the govt. will eventually "do the right thing".

[txlaw]

I am not very well-informed in this area so would like to hear what others have to say. Is she off-base here and if so, where? I am definitely interested in reading her book now and following the cable/wireless discussion threads more closely.

 

I am on record expressing my awe of John Malone (Liberty Media) and Brian Roberts (Comcast).  I have even owned both CMCSA and LMCA in the past. 

 

As someone who practiced (edit: made it past tense) technology and telecom law at a very big law firm in DC, and who saw how lawmaking/regulation goes down in that city, I have to say that there is very little that I disagree with in Professor Crawford's presentation.

 

The MSOs and telcos have huge influence in DC, and they run circles around the regulators, as they are always much further ahead in thought and vision than the old school people (who don't get paid very well) in regulatory agencies.  The FCC is highly politicized and is terrible at fulfilling its antitrust function.  It's also a revolving door.  Regulatory capture is real, though not necessarily in the insidious conspiracy theory way that a lot of libertarians and anarcho-capitalists like to spew.  Indeed, it is the lack of forceful regulation -- necessary because this industry tends to natural monopoly -- that is the terrible result of this regulatory capture. 

 

If I were given antitrust czar power tomorrow, where I could consolidate all antitrust-related functions that are spread across the federal government into that position, I would be running things way differently in DC.  I would never have allowed Comcast/NBCU.  I would do everything in my power to stop John Malone from making his genius end runs around antitrust laws.  I would put in onerous regulations that would be far more consumer friendly, and much less protective of existing industries.  I might even go back to a situation where the Internet infrastructure providers are limited to a specified rate of return on investment, similar to the railroads. 

[txlaw]

This is actually a decent explanation of the net neutrality debate with respect to last mile providers and edge providers.  There are definitely some inaccuracies and strong opinions that I don't necessarily agree with it.  But, nevertheless, it's a good video.

 

[Kiltacular]

"Last Week Tonight with John Oliver" is a new(ish) show on HBO.

 

As many of you know, this guy is very funny.  The new show is terrific.

 

Here he is on net neutrality this past weekend.  The bit runs a little long but actually has some investment usefulness.    ;)

 

 

EDIT:  I see hellsten beat me to the punch!  Good taste!  (http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/shorting-european-banks/?prev_next=prev#new )