Corporate Doublespeak: By Forcing Competition On The Market, We Will Need To Raise Prices

from the these-guys-are-slick dept

Earlier this week we wrote about plans by the FCC to ban deals that gave a single service provider exclusivity to an apartment building or housing development. Service providers (particularly the cable companies who locked many of them up) loved these deals as they were granted a guaranteed monopoly. Of course, most of us realize that monopolies are bad for consumers and lead to higher prices (monopoly rents and all). Yet, now that they're gone, Comcast is responding to the deal by saying that it's actually competition that will cause them to raise prices. Reader slide23 writes in to point out Comcast's corporate doublespeak:
The following statement may be attributed to Sena Fitzmaurice, Senior Director of Corporate Communications and Government Relations: "Consumers in apartment buildings and condos across the nation received a blow today from the action taken by the FCC. The result of this decision is likely to be higher prices for services and years of litigation and uncertainty for consumers. The significant concessions building owners have been able to bargain for on behalf of their residents will be lost."
Yes, Comcast is going to use the fact that they now have to compete within apartment buildings to raise prices. Or, so they say. Somehow, you get the feeling that once the local DSL providers starts offering faster/cheaper service, Comcast will have a change of heart on the matter. More seriously, perhaps what Comcast really means is that it believes these kinds of services are natural monopolies, which may actually be a defensible position. Of course, Comcast probably doesn't want to go down that path at all. Once you admit you're in a space where a natural monopoly makes sense, then you open yourself up to forced line sharing and (more importantly for Comcast...) regulations barring any kind of traffic discrimination. Given last week's Comcast kerfuffle over traffic jamming, the last thing the company should be doing is suggesting that competition hurts the space, because that just gives politicians all the ammunition needed to put network neutrality laws in place.

The company can't really have it both ways. It can't go around saying it can run its network like a private company in a competitive market that doesn't need any regulation out one side of its mouth, while at the same time claiming that it's facing a natural monopoly where competition hurts the market out of the other side.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    tweak, Nov 2nd, 2007 @ 5:21am

    Not surprising at all...

    Comcast seems to be generally clueless when it comes to having competition. When I moved to northern Indiana a few years ago, Comcast had a total lock on digital entertainment and high-speed internet. Finally sometime last year, Verizon rolled out their fiber network (FIOS), and consumers switched over in droves. What was Comcast's answer to new-found competition? Raise their prices! Offer fewer channels! Screw the customers harder!
    They offered a package deal at what appeared to be a reasonable price for about 3 months, but after that time the price sky-rocketed to their new rates.
    Personally, we switched over and ended up with faster internet, more tv channels and more HD, and the bill is about $30/month lower than it was with Comcast... I honestly wonder how they can survive with these sorts of business decisions...

     

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  2.  
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    comboman, Nov 2nd, 2007 @ 6:16am

    Competition doesn't alway mean choice

    If you look at it from the point of view of a single apartment dweller then yes, there is no choice of service provider. But no choice doesn't always mean no competition. The apartment owner negotiates with various provider to get the best package for his tenants. By 'collectively' bargaining with a block of subscribers rather than just one, he can get a better deal for everyone, just like a company or union can get better health insurance rates than a single family (that sure sounds like competition to me). Wiring an apartment building to a single service provider is simpler and more cost effective than wiring for multiple service providers. The service provider benefits from reduced cost to provide the service; the tenants benefit from reduced rates. Win-win.

     

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  3.  
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    James (profile), Nov 2nd, 2007 @ 6:24am

    Ah...Comcast is at it again

    Comcast raised my rates from 69.00 a month to 115.00 a month to help pay for the infrastructure upgrade going through my neighborhood. To bad U-vers is available now. AT&T will be at my house monday morning. Comcast... your fired.

     

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  4.  
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    Wes, Nov 2nd, 2007 @ 6:26am

    Re: Competition doesn't alway mean choice

    Except while under contract they get no service, no upgrades and in general the shaft from the company.

    How is that good for consumers? I agree in the perfect world you are right but what are you supposed to do if you live in the real world where not all installs are equal?

     

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  5.  
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    Anonymous Coward, Nov 2nd, 2007 @ 6:29am

    Re: Competition doesn't alway mean choice

    "Wiring an apartment building to a single service provider is simpler and more cost effective than wiring for multiple service providers"

    This is 100% false. Currently there are 2 major means to connect to a broadband ISP. DSL, and Cable. We can assume that most people living in apartments will have a landline phone, and a fair amount of them will have Cable TV services. The "wiring" for an internet connection makes use of standard POTS telephone lines and standard coaxial "Cable". There's no additional wiring necessary. Almost all apartment complexs have Cable in place and if you can find one that DOESN'T have telephone lines in place, then you probably won't find many people living there. Wiring in an apartment is hardly that much different, if at all, from any standard dwelling.

     

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  6.  
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    Anonymous Coward, Nov 2nd, 2007 @ 6:29am

    Re: Competition doesn't alway mean choice

    You are assuming, though, that people are honest; which in reality is a disastrous assumption. Owning an apartment building is a business, just like everything else. Yes, the owner can do his best to get the best deal for his tenants... or he can approach the different providers and get the best deal for himself (read: kickback). Whoever is willing to meet that price will be the sole provider for the building, whether it is in the best interest of the tenants or not.

     

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  7.  
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    Instructor (profile), Nov 2nd, 2007 @ 6:30am

    Comcast & competitition...

    Nothing wrong with Comcast that a large, healthy dose of competition wouldn't cure in a heartbeat. I saw that they belatedly started cleaning up their act here in Dallas when Verizon FiOS started kicking their asses. What they are actually saying is *their* costs will go up, and their profits will go down if they actually have to compete with anybody. Or, even better yet, they could go out of business. Well, maybe they could stick around just to give Verizon, et. al., somebody to compete with (i.e., give them something to make them look good by comparison).
    --
    Texas Concealed Handgun License Classes

     

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  8.  
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    Danny, Nov 2nd, 2007 @ 6:41am

    Re: Competition doesn't alway mean choice

    With thinking like that if you owned an apartment complex I would move into it with the quickness. Problem is complex owners don't care if the tenants benefit from whichever provider gets the lock on that complex. When providers start offering deals to the complex owner you know those deals are going to be in favor of the providers and owner with counter offer just enough to sweeten the deal for him. Notice that the tenants have no representative at that discussion which means the people that are going to be locked down by whatever deal the owner chooses are being left with bad or poor service, few options, and prices that make you want to call the cops to report a robbery.

    That's a win-win-lose if I ever saw one.

     

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  9.  
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    tek'a, Nov 2nd, 2007 @ 6:50am

    saw this issue second-hand while talking with an ex room-mate. he had moved to a new apartment without asking about this issue. Ended up stuck with some no-name and no-service company that had a private deal with the Complex managers.

    The result? Paying prices as high (higher, at first) then comcast for shoddy internet and cable, with no customer support and constant outages. When asking about it at the apartment office, he was point-blank told (by some junior working there) that the Complex used such-and-such provider because they were being paid.

    with some competition, perhaps even the much hated Comcast will push them out with better service and pricing.

     

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  10.  
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    mpremo, Nov 2nd, 2007 @ 7:20am

    Re: Re: Competition doesn't alway mean choice

    AN--you are right on the money (and, yes, it's about money).

    99.999% of apartment/condo developers want the Comcast cash while doing as little work (read: spending money on infeastructure) as possible. They don't give a rip about what they're saddling the residents with.

    It's a shame as I've tried telling these guys that digital services (Internet, voice, content) could be a HUGE differentiator in marketing their units to today's tech-savvy buyers (in only certain urban markets, of course), but they're stuck in yesterday's mass market mentality foisted upon us by Comcast, Verizon, et al.

     

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  11.  
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    evilned, Nov 2nd, 2007 @ 7:21am

    Dishes everywhere

    I own my home. I have Comcast for internet connectivity. I have a satellite service for TV. I was forced to get basic TV with my internet connection. The only reason I haven't gone with DSL is FIOS hasn't reached my area yet. When it does...

    Also, there are a lot of small apartment buildings in my city. Fully half of them have a dish hooked up. Not all apartments in the building have a dish, so it's obvious they split between Comcast and whoever.

    I think Comcast is starting to see the writing on the wall and is moving into full panic/bribe the congressman mode.

     

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  12.  
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    Mark, Nov 2nd, 2007 @ 8:35am

    Comcast's prices go only one way

    Of course that's how Comcast responded. Comcast's response to every input is to raise prices. When they bought out ATT's cable modem service, their first announcement was to the effect that high-speed internet is a premium service, and that customers needed to get used to paying extra for it. Their second action was to raise prices. It's gotten so bad that even their own marketing department realizes that customers would be alienated by the company's pricing scheme, so now they inundate us with advertising promoting "introductory" rates, and won't say what the rate is afterwards.

    I was a Comcast customer for years and hated them for that entire period. I have yet to speak with a single Comcast customer who doesn't hate them. Month after month they regularly raised prices on basic cable until I found myself paying nearly $50/month for no premium stations, no digital cable, no set-top box, nothing but the basics. The outcome is I left the market entirely; I'm living without cable, getting my TV by way of Netflix, and loving the fact that I never have to give Comcast another dime.

     

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  13.  
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    Haywood, Nov 2nd, 2007 @ 8:38am

    Why do apartment dwellers have internet installed?

    I would first get a wireless lan antenna and see what comes up. I'll bet over 50% could get leeched internet. If that is too seedy, the residents could coop getting 2-6 people to share a connection.

     

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  14.  
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    solak vaslovic, Nov 2nd, 2007 @ 1:02pm

    caveat emptor

    The company can't really have it both ways. It can't go around saying it can run its network like a private company in a competitive market that doesn't need any regulation out one side of its mouth, while at the same time claiming that it's facing a natural monopoly where competition hurts the market out of the other side.

    Oh, but they can! It is up to the consumers to press lawmakers and other decision-makers (such as apartment landlords) to keep competition open. If we accept this B.S. we will get more of it.

     

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  15.  

    Consumers have the power

    I agree that if consumers want to fight back, they can't just sit back and watch what happens. They have the power if only they could get organized and put pressure with their numbers on unfair business practices.

    Quit waiting for the Government to save you. If you want change regarding Comcast or any other issue, consumers could accomplish amazing things with organization.

    Look at what effect the Christian coalition has had on Washington.

     

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