Massa Meddling with the Free Market
My fellow capitalists. I am seeking your opinion about Time Warner’s plan to re-organize the business model for the delivery and sale of high speed Internet offered as roadrunner. I am also seeking your input on Eric Massa’s response.
I believe it is a core principle of capitalism that a business has the right to evaluate and modify their business model how they see fit. Time Warner has identified a need to change based on their understanding of the their industry. I’m sure some people will end up paying more and others less. I think moving to a tiered consumption based system makes sense.
As for Massa there are few if any examples that I recall of a time government involvement has been a positive influence when regulating an industries pricing. This quote is a great example of how government is disconnected from industry “They have yet to explain how increased Internet usage increases their costs.” Mr. Massa also said “Time Warner has announced an ill-conceived plan” what gives him the expertise to evaluate their plan? Why do they need to explain how increased usage increases costs? Isn’t that the concern of the share holders and customers more than the government. Besides, it is typically the case that the more you consume the more it will cost with almost anything. I guess we should add high speed Internet to the bill of rights just under health care…
It is not acceptable for government to interfere with industry at this level. I believe these are the types of things that the majority of people will read and agree that Massa is doing the right thing. Unfortunately, government meddling like this is what leads to economic and industry issues long term. If capitalism is left alone, the natural order of free markets will decide what is acceptable.
http://www.the-leader.com/news/x1098997265/Massa-to-fight-Net-data-caps
In our area there are several broadband providers to choose from, so we should businesses make their own decisions. What’s Congressman Massa going to ring in on the price? What about the color of the uniforms? I can see something that’s a monopoly, but this isn’t one of those issues. I think there’s nothing wrong with a company trying to reinvent itself to deal with the change in the technology market. And I’m sure with my internet usage I’ll pay more. But if I’m upset about it I can use my freedom to choose another company. Or I can stay, for other reasons. My choice and shouldn’t be government controlled.
Would you guys honestly protest this if Randy Kuhl had proposed it? If so, why can’t I find anything on this blog speaking out against G.W. Bush’s signing of TARP, a much greater violation of free market principles?
To say that Time Warner isn’t a monopoly is laughable.
Here is an exercise… do a Google search for the words ‘cable monopoly’. You will quickly find that the CATO Institute, the Consumer Union, the Mises Institute, the Mackinac Institute, the Future of Freedom Foundation, CNET, InformationWeek, and the NY Times, just to name the first two pages of results, all consider cable to be a monopoly.
Local governments provide cable companies with right of way and easements, often by using emminent domain. Local governments also negotiate the terms for lucrative cable franchises, and then alter those contracts to gain political favors. See Giuliani and Fox, easily found on Salon.com.
While you might be able to switch to DSL, I don’t have that luxury. I have no comparable service that I can take my money to. Time Warner is my only terrestrial broadband option and very much a monopoly.
Time Warner is telling customers that costs are increasing to justify these new policies. However, they are also telling their investors that costs are decreasing. Chief Operating Officer Landel Hobbs told the NY Times that ‘it was “absolutely not” true that Time Warner’s profits were being squeezed by the cost of heavy broadband users.’
Time Warner is lying to someone. To the investors, who have a choice? Or to their customers, who don’t? Which behavior would we expect out of a monopoly?
It is probably no accident that Time Warner is performing this trial in Rochester, the largest city in NY with no hopes of getting Verizon FIOS.
This has less to do with the cost of bandwidth as it has to do with the threat of digital distribution such as Hulu, iTunes, and Netflix eating into the the cable television market. Instead of allowing the best product to thrive on the market, Time Warner is manipulating the market. From BusinessWeek, “To put it mildly,” says Bernstein analyst Craig Moffett, “the decision to limit data consumption can be expected to have profound implications for [consumer] behavior.”
Massa should be credited for this legislation, regardless of his party.