Why isn't it profitable to compete with Verizon and Comcast? In practice, without regulation these utility-type markets tend to generate at best two or three competitors - not exactly a monopoly but not nearly enough for the profound benefits of competition to kick in. That means that to have robust competition, you would need a bunch of overlapping networks.īut while building the first electricity generation network in a city would be enormously profitable, building the fifth would be a huge money-loser. The basic issue is that before you can start providing the internet access (or cable TV or water or sewage or electricity) to houses, you have to build an enormously expensive network of physical infrastructure. Why doesn't competition work for ISPs and cable?Ĭompetition doesn't work for ISPs for roughly the same reason it doesn't work for electrical utilities, provision of urban drinking water or sewage systems, or roads and highways. That means profit-maximizing strategies don't require satisfied customers and it leaves policymakers with really tough problems. Yet ISPs and cable companies operate in industries where market competition doesn't really work.
JOE CABLE ECONOMICS DRIVER
Market competition has its problems, but it is a relentless driver of customer satisfaction. ISPs and cable companies operate in industries where market competition doesn't really workĪnd it's no coincidence. consumers" and finds that the people who own the wires are the least-liked brands in the industry. Overall, pay television and internet companies rank last in satisfaction out of forty industries.ĪSCI covers consumer satisfaction with "ISPs, subscription TV service, fixed-line and wireless telephone service, computer software and cell phones, as well as detailed findings for the top-selling smartphone brands available to U.S. And the biggest companies, like Comcast, have the least-happy customers. Americans really dislike their pay-television and broadband internet providers, according to a new report from the American Customer Satisfaction Index.
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