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Thursday, February 29, 2024

Have cable providers created an oligopoly?

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For those who might think we sound like Sheldon, in simple words, oligopoly is a state where there is less competition in the market. In other words, and commonly witnessed instance, when a handful of big firms get all or the maximum number of sales because the competition is low. Oligopoly has been attracting customers from the market. You’ll barely notice any difference in which oligopolies are perceived. The case is unique when looking at the companies with more competitors.

You will have to figure out for yourself because there are telecommunication companies that have their services accessible to more than 44 states as well. The list of these leading cable providers includes Xfinity, Spectrum, Cox, Mediacom, WOW!, Frontier, etc. Some of the mentioned names have a massive customer base in the US while all of them are known for their exceptional services. You might want to check Spectrum Silver, in case you are considering switching. Spectrum offers some extraordinary features which include no-contract services and a contract buyout option where it can pay off up to $500 if you intend to get Triple Play Package from the spectrum.

Further, in this article, we will focus on cable providers predominantly. Small internet providers had exclusive rights from the past days that they can expand their network. There is no surprise as they got investments to spend in the communication sector. Such small companies didn’t need a tremendous amount of investments for distant homes unless they have a competitor in the market. However, they could take advantage on the flip side.

These facts and arguments were of the past, but you can see that companies still fail when expanding their business to other areas. For the business to grow, the companies need to spend a handsome amount. Small companies can’t take such risks unless they have little or no competition, they have a hard time getting noticed in saturated markets. You can’t expect other internet service providers to let you make progress because everyone wants profit. Other companies have no concern with your profit or loss and this is how businesses work.

Cable companies are monopolies from their geographical view, so they take more advantage than the other businesses. They expect more out of their origin and marketing strategies inside their industry. You might not know that even prominent companies with big budgets (Google Fiber etc.) don’t find themselves in a state of expanding their business. The government should take notice of either lowering the price or changing the medium people use for communication. With time, we see positive options are coming for the users, but they should not over expect from the companies.

In the past couple of years, cable mergers offered analog-to-digital transition with support to expanding HD channels and broadband internet. Whereas, at present, regulators can’t find the customer benefits of broadband consolidation on a large scale. The fact is acceptable in situations where there is no competition on the internet speed from 25 Mbps up to 100 Mbps.

Is this even legal to have an oligopoly?

After the enactment of the Telecommunications Act in 1996, which led to extremely intense oligopolistic markets which eventually resulted in enormous overcharges for customer and business services. The prices for broadband, wired telecommunications, cable, and wireless services got exaggerated, by around 25% on average. This is above any competitive markets would deliver. This costs an average U.S. household around $45 a month, or about $540 a year, for all the services.

Are American cable companies oligopolies or monopolies?

In most of the cities of America, the cable companies are broadband monopoly now. They managed to win the battle of competition and have fundamentally engaged customers that were previously served by DSL or telcos. Some of these cable companies have now grown into monopolies because of being better contenders and by contributing greater broadband yields.

Is there any downside to it?

Cable companies do not differ from other oligopolies or monopolies we see in the market. Most of the time they are not thinking about how their clienteles are bring treated. Customers keep return because it’s an oligopoly after all and there’s no too little choice they have.


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