Cable-company monopolies

Hello and good day to the person hired and appointed to read email sent to the mayor:

This email is also being sent to the San Diego Reader employee who seems to know where to go to get good information on some off-the-wall questions/concerns. My concern is: why is it that Cox Cable and Time Warner Cable have set areas throughout the county in which only one or the other — and not both companies — can provide service? If it is a California Public Utility issue, then I will probably be wasting my time with bringing this issue up with you (sorry, I mean, whomever is paid to read your email). My concern is probably falling on deaf ears, so I challenge the mayor to bring this “issue” to the attention of the general public via the media. This media attention would allow various customers to know they actually do have a choice, or, maybe they once did. I believe most are just afraid to bring the “cable company issue” to the attention of anyone important. Most people or persons within the jurisdiction of a city or a mayor do not like unwelcome attention due to fear of being ridiculed, embarrassed, deported, or simply being pointed out. Yet, I am not afraid of speaking my mind and actually do look forward to the actual city municipal code/rule/policy/law that states why it is “Cox” has a stranglehold on most properties south of the 52 freeway.

— Bryan Hendrix

Are you trying to say that the cable companies divvy up territory so that they can run exclusive monopolies on cable service to millions of people?

Yup. And it’s all perfectly legal.

But, wait a minute, Matt, doesn’t the government break up monopolies?

Yes, with a “but.” No, with an “if.” Cable television, according to lots of economists, is a “natural monopoly.” What that means is that the initial cost of doing business (i.e., setting up the cable infrastructure) is enormous and the cost of expanding the business (i.e., adding cable subscribers after the first one) is minimal. Because of that, it’s more cost effective for one company to provide cable service to a large area and for competition to stay out. At least, that’s what the government has maintained in the past. Because of this, cable companies operate as “franchises” that are overseen by local authorities. In our case, that’s the County of San Diego. There are two cable franchises in San Diego: Cox and Time Warner. Cox gets the territory south of the San Diego river, Time Warner gets everything to the north. They’re legally obliged to operate huge chunks of land because it’s strictly forbidden for them to “cherry pick” neighborhoods, by which I mean they can’t just wire up the rich neighborhoods and leave the poor ones without cable. In order to acquire those territories, the companies had to submit a proposal with a $2000 fee attached and a bond demonstrating they had about half a million dollars kicking around. Most of these territories are 25+ years old and the deals are long done. The natural monopoly is established and it’s unlikely to change.