Cable Television An Unnatural Monopoly

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In the face of rising cable bills and falling levels of service, it is tempting to seek out a culprit and point to the cable company that has a seeming monopoly on the delivery of television viewing and broadband delivery. It is reasonable to believe that since we have one cable coming into the house and only have the choice of one content provider that a monopoly exists and we are left without any consumer selection. However, that anecdotal information alone would not necessarily qualify the cable company as a monopoly. There is a bidding process that takes place that determines the provider to consider. There are also suitable substitutes available that may limit the use of the word ‘monopoly’ when applied to television and broadband. The cable television companies no longer have a monopolistic hold on television delivery, as they have been subjected to competition from new technologies and deregulation.
When we speak of a monopoly, the classic vision is the company that has a total market share and there are no competitors and no substitute products. The word is often used in a negative context as monopolies have historically had the ability to raise prices above the point that a competitive market would allow. As an example, private railroads in the past were able to act with monopolistic characteristics, as there was no competition from other transportation means. However, monopolies may also be the result of the economics of scale. If the fixed costs or startup costs are of a value that prevents others from entering, it may form a natural monopoly, where one company is able to produce and sell the service at a lower cost than having two or more companies competing for the same market share. A monopoly may also exist if there are simply no competitors that wish to enter the market, but the company does not act as a monopoly in the distribution of its services or the pricing of its goods. In addition, there is a difference between a regulated industry and a monopoly. According to Bollick (1984), "because of structural conditions that exist in certain industries, competition between firms cannot endure. and whenever these conditions exist, it is inevitable that only one firm will survive. Thus, regulation is necessary to dilute the ill-effects of the monopoly". For the purposes of this paper, a company will be considered to be a monopoly when it willfully acts to eliminate competition through its business practices and practices monopolistic pricing policies.