Blame Comcast

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.

12 comments… add one

  • Icepick

    “Blame Comcast”

    Does this come with a catchy song like “Blame Canada”?

  • 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.

    What kind of rent seeking did Standard get in your view? At the local level? The reason I ask is that Standard existed primarily prior to the period of a strong federal government and thus rent seeking opportunities at that level would have been fewer.

  • 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.

    Okay, nothing I disagree with…except the inclusion of Standard Oil. I’m not sure you can make this claim with regards to Standard since over time the price of kerosene actually declined as a result of Standard’s practices. To capture larger portions of consumer surplus via lowering prices is…well a strange strategy. You’d have to argue that prices should have and indeed would have been even lower absent Standard.

  • What kind of rent seeking did Standard get in your view?

    The list is practically endless. Let’s start out with the contracts John D. Rockefeller had to supply the Union Army during the Civil War. That’s how he made the money with which he got into the oil business to start off with. The oil business was a way of expediting the sales of more kerosene.

    By 1865 he (and the antecedent company to Standard Oil) were already fantastically wealthy through their military contracts.

    After that there were concessions, land rights of way, patents, federal, state, and local governments looking the other way over railway tariff price fixing schemes. The list goes on.

  • PD Shaw

    If we had a nineteenth century era federal government when the age of the internet arrived, we would likely have given Comcast the right to install the wires, set rates to receive a return on investment, take whatever property was necessary under eminent domain and claim tort immunities typically reserved for government. And it may have been alright for the first 50 years, but at some point we would be looking back and wondering how Comcast got so powerful and why does Comcast get to veto all proposed improvements to the system. That’s pretty much how I see the railroads, but at least the railroads are kept in line by competition from auto, barge and air fleets.

  • sam

    “take whatever property was necessary under eminent domain ”

    You don’t need a nineteenth century federal government for that, just look at the Keystone Pipeline.

  • Drew

    I suppose everyone’s experience is different, but Comcast has been very reliable for me.

    Speaking of unreliable…..

    Posting this comment whilst stranded in an east coast airport.

  • Icepick

    If we had a nineteenth century era federal government when the age of the internet arrived….

    PD, might it have ended up looking something like the last panel?

  • Andy

    Fortunately I’ve never had Comcast – none of the gamers I play with online with have anything good to say about it.

  • steve

    “The reason I ask is that Standard existed primarily prior to the period of a strong federal government and thus rent seeking opportunities at that level would have been fewer.”

    This has never made sense to me. I think it would be even easier to rent seek with a weak govt. Easier to buy it off.

    Steve

  • Drew

    steve

    “Strong” really means larger. More opportunity for shennanigans.

  • TastyBits

    @Dave Schuler

    It might be my part of town, but my power has gone out (non-hurricane) once in the last 10 years. The last hurricane it never went out. We have about 2 or 3 large trees on most blocks, and there are some tree covered streets in the area. Many were butchered after Katrina, but some still cause problems. Occasionally, the lights will flicker, but I think the grid is re-routing itself.

    You mentioned your monitors going out after a few years, and the condition of your power may be the problem. There are power conditioners, but an Uninterrupted Power Supply (UPS) does the same thing. It might be worth the cost.

    I am in total agreement with you about the land-line telephone service. The last telephone outage was probably 30 – 40 years ago, but it could have been longer. This includes hurricanes.

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