Reich says airlines & cable companies taking advantage of deregulation/consolidation

shira

Diamond Member
Jan 12, 2005
9,500
6
81
I was looking at my cable bill yesterday and wondering why it seems so much higher than it was a couple of years ago. Robert Reich offered his own opinion on the cause in this interview on Yahoo Finance:

If you’re like most Americans, you have wondered at some point – probably monthly – why your cable bill is so high. And for good reason. The average cable bill in the United States rose 5% in 2012, the latest year available. That’s nearly triple the rate of inflation. And that elevated expense gets you some of the slowest service in the developed world.

What about airfare? Average domestic airfare rose 2.5% last year to $391. That’s the highest level since the government began tracking the data in 1995.

Gas prices, meanwhile, are down nearly thirty percent or about a dollar a gallon since last year.

So why do prices in some industries seem to remain stubbornly high despite market forces that would seem to demand otherwise?

“People ask me [Robert Reich], ‘why is it that my airfare hasn’t gone down even though fuel prices have plummeted over the last three years,’” he said. “Fifteen years ago we had nine major airlines. Now we have four major airlines and in many hubs, there are only one or two. Voila. You don’t have competition.”

Reich says that’s the case because the companies - airlines, Internet service providers and others - have consolidated power as they have consolidated their industries.

“Some of it has to do with politics and the power of these industries over the rules of the game with regard to airlines, Internet service, anti-trust and what have you.”

Cable rates are up 56% since Congress deregulated the industry in 1996, according to Consumers Union. Over that same time period, inflation is up 21%.

Reich offers another example of where the rules have been rewritten in the last 30 years to benefit the few instead of the many, in his view: bankruptcy laws.

“It is possible, for example, for a major industrialist to declare bankruptcy four times to shield his fortune,” he said in a not-so-veiled reference to one Donald Trump. “But if you’re a homeowner and you got caught in the downdraft of a major recession to the point where you owed more on your home than the home was worth, you cannot use bankruptcy to reorganize your mortgage debt. Or if you graduate with a huge amount of student debt and you can’t manage it, you cannot use bankruptcy to reorganize that student debt. Now, is that just the way it is? No! It’s politics. It’s power.”
But that's the miracle of the free market, right?
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
Yes yes the cable industry is the bastion of free market. Ditto for the airlines industry.
 

Londo_Jowo

Lifer
Jan 31, 2010
17,303
158
106
londojowo.hypermart.net
My TV, internet, and phone bills (AT&T uVerse) are less than they were 2 years ago. I have the top tier packages for TV and internet that I didn't have back then as well.

It pays to see what bundles are being offered every 6 months or so. It just like I looked at the offerings with my cell phone provider, I was able to pick a plan that offered an additional 5GB of data for the same price.
 

PokerGuy

Lifer
Jul 2, 2005
13,650
201
101
I was looking at my cable bill yesterday and wondering why it seems so much higher than it was a couple of years ago. Robert Reich offered his own opinion on the cause in this interview on Yahoo Finance:


But that's the miracle of the free market, right?

Free market? Where is this free market you speak of? The cable companies are able to take advantage of you precisely because they are granted monopoly status by government.
 

dmcowen674

No Lifer
Oct 13, 1999
54,889
47
91
www.alienbabeltech.com
Reich says airlines & cable companies taking advantage of deregulation/consolidation

I was looking at my cable bill yesterday and wondering why it seems so much higher than it was a couple of years ago. Robert Reich offered his own opinion on the cause in this interview on Yahoo Finance:

But that's the miracle of the free market, right?

Sadly you'll find the minions on here like the Corporations taking advantage of them.
 

realibrad

Lifer
Oct 18, 2013
12,337
898
126
For the cable companies, it has not a free market without regulation. What the 1996 act did was allow for companies that were once prohibited to buy companies and enter the market. The act changed the federal regulations, but did nothing on the state or city regulations which is what is keeping out competition.

Deregulation only works if you remove the regulation that prohibits competition. If you have 3 levels of regulation that keeps out other firms, and you remove 1 level, you still have 2 left to keep out competition.

If you want to see what competition does to a market, look at any market where Google Fiber has gone in.

Charlotte, Time Warner went from 30Mbps to 200Mbps without a price increase.

Kansas City, ATT offers 1 gigabit for $70 to compete with Google.

Austin, Time Warner went from 50Mbps to 300Mbps without a price increase.

Shira, you are a smart person. Explain to me how google is doing this? It sure seems like to me that once competition was allowed to happen, everyone got faster better service without a price increase.
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
Free market? Where is this free market you speak of? The cable companies are able to take advantage of you precisely because they are granted monopoly status by government.

It gets worse when the govt grants their blessing for merging.
 

amdhunter

Lifer
May 19, 2003
23,332
249
106
I just want to know how the fuck Con Edison charges me $200+ for 4 Energy Efficient CREE LEDs and a laptop?

And I don't use gas to cook, yet I have a $90 gas charge every month.

Fuck Con Ed.
 
Nov 8, 2012
20,842
4,785
146
I was looking at my cable bill yesterday and wondering why it seems so much higher than it was a couple of years ago. Robert Reich offered his own opinion on the cause in this interview on Yahoo Finance:


But that's the miracle of the free market, right?

If you're just now looking at your cable bill then you've got bigger financial/budget issues in life. Prices for TV have LOOOOOOOOOOONG been ridiculous. We cut the cable cord 3-4 years ago.

That said, if our country is going to keep up this whole shenanigans of only having 1 provider for TV/Internet/Airlines locally (IE: 1 or 2 airlines buying out all the space at the airport to eliminate competition), then I'm in full favor of the government sticking their dick into them.

I was under the impression that if the FCC is going to start treating internet service as a utility, then the prices and speed for it will become more tightly regulated.
 

realibrad

Lifer
Oct 18, 2013
12,337
898
126
If you're just now looking at your cable bill then you've got bigger financial/budget issues in life. Prices for TV have LOOOOOOOOOOONG been ridiculous. We cut the cable cord 3-4 years ago.

That said, if our country is going to keep up this whole shenanigans of only having 1 provider for TV/Internet/Airlines locally (IE: 1 or 2 airlines buying out all the space at the airport to eliminate competition), then I'm in full favor of the government sticking their dick into them.

I was under the impression that if the FCC is going to start treating internet service as a utility, then the prices and speed for it will become more tightly regulated.

The reason we only have 1 or 2 is because the government has been sticking their dick into them. Check post #6. If the Federal government regulations are removed, and all the anti-competition regulations are left at the state and local level, then you will get the same issue.
 

fskimospy

Elite Member
Mar 10, 2006
86,701
52,515
136
I just want to know how the fuck Con Edison charges me $200+ for 4 Energy Efficient CREE LEDs and a laptop?

And I don't use gas to cook, yet I have a $90 gas charge every month.

Fuck Con Ed.

You mean National Grid?

If you aren't using your gas to cook there's no way your gas charge should be anywhere close to that. Hell, I do use my gas to cook and my monthly bill is somewhere around $20-$25 usually.

No joke, it sounds like there's something wrong with your billing or (god forbid) you have a gas leak. Don't blow up!
 
Feb 4, 2009
35,671
17,175
136
Could someone explain why the cable industry cannot be forced to sell access to 3rd parties like the long distance companies were forced to do?
 
Nov 8, 2012
20,842
4,785
146
The reason we only have 1 or 2 is because the government has been sticking their dick into them. Check post #6. If the Federal government regulations are removed, and all the anti-competition regulations are left at the state and local level, then you will get the same issue.

Not seeing anything in your post that refers to airlines?

Also, considering airports are built on Federal land (AFAIK) - the State/Local governments have little or no say on regulating airlines. Feel free to correct me there, preferably with some facts? Not trying to be offensive, I just don't understand what your argument is.
 

Genx87

Lifer
Apr 8, 2002
41,091
513
126
Not seeing anything in your post that refers to airlines?

Also, considering airports are built on Federal land (AFAIK) - the State/Local governments have little or no say on regulating airlines. Feel free to correct me there, preferably with some facts? Not trying to be offensive, I just don't understand what your argument is.

afaik most airports are run by a local commission. They use federal dollars but I think the land is state owned and run by the local state. In MN MSP is run by the Metropolitan Airports Commission. Which was created in 1943 by state law. In NYC the Port Authority runs JFK and La Guardia. Again enacted at the state level.
 

Art&Science

Senior member
Nov 28, 2014
339
4
46
I don't pay for cable TV and rarely fly (besides for work).

Fuck them. Don't use the services.

People need to be smart with their money instead of bitching that some corporation is charging them too much.

Straight Talk unlimited plan with 5GB of 4G data is $42/month with autopay. I've had this since 2010 and the price has not increased.

My 15/2 DSL Internet from the phone company is $40/month. I've had this since 2011 and the price has not increased.

Netflix and Hulu+ are $16/month (for both). I've had these since 2011 and pretty sure the price has not increased (I could be wrong).

I pay less for ALL my communications services than some people are paying JUST for television.
 
Feb 4, 2009
35,671
17,175
136
Honestly I'd be happy if the FCC made cable companies sell their boxes for a reasonable cost. Renting them is a total scam over time I've probably paid $1100 for my FiOS box.
 

realibrad

Lifer
Oct 18, 2013
12,337
898
126
Not seeing anything in your post that refers to airlines?

Also, considering airports are built on Federal land (AFAIK) - the State/Local governments have little or no say on regulating airlines. Feel free to correct me there, preferably with some facts? Not trying to be offensive, I just don't understand what your argument is.

Looks like Genx answered your question before I could get to it.

My point is that deregulation is a misnomer for what goes on. Usually when that term is used, its because of politics and nothing to do with removing actual regulation. If you allow for more competition, prices will almost always fall relative to service provided. You can easily see this with cable. Airlines are something I have not looked into as much, but there is lots of anti competition regulation around.

I think what Reich was saying has to do with there only being a few firms in the market. I don't think he believes its because of the free market deregulation, but the deregulation that allowed the few firms in the market to merge. Nothing has really been done to allow new firms to enter.
 

realibrad

Lifer
Oct 18, 2013
12,337
898
126
Agreed however it accesses public land and its well within the FCCs mandate. Unfortunately the FCC is completely inept.

We would be better off letting in more companies into the market. Why force companies to sell their network to others, when the reason the others are not in the market is because of government intervention.

Companies do not enter the market because the upfront costs are usually not worth the return. For a firm to enter a market, they cannot simply service a small section of a city typically. This makes the cost to enter much higher and its prohibitive. Then, for the companies already there, its very expensive to expand their network because of regulation.

If you make the companies lease their networks, you are going to kill expansion as they try to protect their profits. Cities will not let competition in because lower prices mean less tax revenue.

Look at my examples in post 6 where competition improved things. It only happened because cities allowed competition.
 
Feb 4, 2009
35,671
17,175
136
Why should the FCC do this? Because it would be more convenient for you?

This is where we disagree. They have been granted a limited monopoly or sometimes a duopoly. Which pretty much means guaranteed profit. I don't think its crazy to enforce some cost controls in this situation.