mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Thursday, July 14, 2005

Why the Brand X decision isn't the Anti-Kelo...

Michelle Malkin thinks that the decision in National Cable vs Brand X is a victory for "upholding the property rights of cable companies". She cites increased price competition between cable and DSL providers as evidence that requiring cable companies to open their networks to competitors is not necessary. I would argue that just because there is competition now, that doesn't mean that there wouldn't be even more competition and even lower prices if the networks were opened.

And now you are probably wondering why someone who is all about private property rights, and who despises the decision in Kelo v New London that extends eminent domain to anything that the government feels can produce additional revenue, can be against a company's right to it's own network infrastructure.

The reason that I feel this way is that cable infrastructre isn't traditional private property like the houses in Kelo. Cable networks grew up out of grants of monopoly power. The way I see it, there are two kinds of monopolies. The first is the "good" kind - where a company becomes dominant in their market share because they offer a good product and make good business decisions- like Microsoft. The other kind is the "bad" kind - where a company or other entity gains market share not by offering a good product, better prices, or efficiencies, but rather by a government law that gives the company monopoly status - like the post office or the old Bell System prior to deregulation.

Cable companies fall into the latter catagory. While the Bell System was a federal monopoly, most cable companies built their networks through local monopolies - getting a city to rule that they would be the only cable company in the area. This gave them monopoly status, and in many cases was because they were good at playing the politics that got them picked as the city's sole provider.

In that way, cable companies made a ton of money by monopoly status. They didn't have any competitors because cities had laws saying that other companies couldn't compete against them.

So I'm not convinced that cable networks are totally private property - they are in a way quasi-public, because they were paid for by the consumers subject to a government-backed monopoly.

Now, I'm not a constitutional expert, and Michelle's post was actually the first I'd heard of this decision. And there is a certain amount of competition in broadband between cable and DSL (at this time, I don't see dial-up, wireless/evdo, or satellite to be viable substitutes). But I think the issue is more complicated than a simple "they are the cable company's lines, don't mess with them" stand because of the monpoly status that most cable companies hold or held. One could probably have made the same argument about ATT/Bell in the early 80's, but long-distance prices have gone down by a huge amount since the deregulation of that goverment-granted monopoly and opening of infrastructure. And AFAIK, DSL providers are required to open their lines, so this is yet another handout to cable companies - and it's the deregulation of DSL/phone networks that is at least partly responsible for the competition and lower prices of today in broadband.


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