There’s a great op-ed from Edward Luce at the Financial Times on the baleful influence of what might be termed the “media-telecommunications-technology complex”. If Mr. Luce is correct, the reason that highspeed Internet connectivity in the U. S. lags behind that in other developed countries can be summed up in two words: blame Comcast. Here’s the beginning:
If Dwight Eisenhower had General Motors and George W. Bush had Halliburton, Barack Obama arguably has Comcast. US presidents are often linked to one or two corporations that donate a lot of money to them and then benefit from their actions. Comcast, which is America’s largest cable television and internet provider and is a near monopoly in most of its largest cities, is no exception.
I’ll give my honest opinion here. I think that Standard Oil, General Motors, General Electric, Microsoft, and other companies that have grown to greatness have been helped enormously by rent-seeking but each of them originally had some core competence at which they excelled. I see no evidence that cable companies have ever excelled at anything other than rent-seeking. Maybe that’s the wave of the future.
Every so often I get a full court press from Comcast on subscribing to a full package of cable TV, Internet service, and phone service from them. I always give the same answer. I lose cable and Internet connectivity about once a week. Over the period of the last thirty years I have lost electrical power three or four times a year. I have lost my plain old landline telephone service, briefly, twice over the last thirty years. When Comcast provides service as reliably as the phone company, I’ll consider it.
Don’t underestimate how important a story this is. Arguably, a lot of the increase in welfare over the last several decades has been in the form of consumer surplus. Companies like Comcast whose essential business plan is to capture an increasing amount of the consumer surplus for its own make us all worse off and, significantly, reduce our competitiveness with other countries.