Slashdot Mirror
DOJ Blocks Satellite TV Merger
EyesWideOpen writes "The Justice Department filed a lawsuit to block a merger between EchoStar Communications and Hughes Electronics that would have created the nation's largest pay-television service, stating that 'This merger would give EchoStar control of the skies for the provision of video programming by satellite, leaving customers to suffer from the resulting reduction of competition'. The FCC had already voted unanimously to oppose the merger because it would create a monopoly that would have 'adverse' effects for consumers."
I work at a large electronics retailer, and I've noticed many times that customers have difficulty distinguishing between the competing products, Dish and DirectTV. Prices and products are similar. On the other hand, I also see the two constantly respond to the other's promotions and price changes. Pricing of both products have reached the point where setup, installation, and the required hardware is essentially free. I'm sure that wouldn;t have been the case for long had the merger been apprived. It's also nice to see the likes of AT&T be forced to respond to the competetive pricing of the sat. providers. They're still expensive by comparison, but imagine how much worse it would be without these competitors.
I want the fire back.
Cable companies and phone companies are often allowed to have a monopoly in a certain area of a town - it's perfectly legal when the town enters a contract with the cable/phone company.
For instance, in my town of about 200,000 people, we have one cable company and one phone company - because we let them have a monopoly here in exchange for them laying down wire for the city (city owns it once they've laid it) and also making them push price changes, policy changes, important things like that before our city government - or risk losing their monopoly.
I forget the name of the type of monopoly this is, but it's perfectly legal and (arguably) better for the population of a smaller city to have a company come in and wire the entire city just for being allowed a monopoly AND for the population to have relative control over the price and content offered.
The biggest point is that in most areas (in temrs of geography) of the country, this reduces multi-channel tv systems from two to one company, and it cities with cable, from 3 to 2.
When the merger first came out it didnt seem so bad, because both satellite companies had stagnated for a while in terms of adding content and local markets (aka local-in-local, or LiL). But in the past year, three spot-beam satellites have become operational, and one more is scheduled to come online. Both Dish network and DirecTV have (or will have soon) the capability to serve the top 100 or so television markets (there are around 220 DMA, or designated viewing areas). Dish Network actually has the capability to serve all 220 DMAs using other oribtal locations for satellites that can see half the country (at 61.5 degrees Wests and 148 degrees West, where as the current satellites that can see all of the CONtinental US are located at 101, 110, and 119 degrees west, aka the three CONUS slots).
The only thing that the merger would have helped is HDTV offerings. Right now, each provider has 4-5 HD channels. As more come online, there will be a bandwidth crunch (since each HD channel will take up the space of 4-6 regular channels). Maybe at the maximum, there will be room for about 20 HD channels for each provider, but there is not enough bandwidth to provide more than that.
Also, Charlie Ergan (the CEO of Echostar, the owner of Dish Network), has done a number of things to piss off the FCC (like challenging the law that says if a provider carries any number of local channels from a city, it must carry all of the channels for that city, regardless of how popular the station is). After he lost the appeal for this law, he tried to do an end-run around the law, and put the most popular networks (the big four plus WB and UPN and in some cases PBS) on the main satellites, and require users to put up a second dish for the smaller stations. The FCC got pissed and told Echostar to do a number of remedies to fix the situation. They have come into compliance of the recomendations, but its still very iffy.
All and all, its a good thing this merger was rejected. The downside is that now Rupert Murdoch will now be the likely owner for DirecTV. Which is better, the devil you know, or the devil you dont?
The Doormat
If you're not outraged, then you're not paying attention.
When the government allows companies to merge into huge monopolies, they are only laying the foundations for socialism -- and that's the last thing we ever want in America.
The terms "fascism" and "socialism" get thrown around here all the time. Please review their definitions.
From Marriam-Websters:
Main Entry: socialism
Pronunciation: 'sO-sh&-"li-z&m
Function: noun
Date: 1837
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a : a system of society or group living in which there is no private property b : a system or condition of society in which the means of production are owned and controlled by the state
3 : a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done
Main Entry: fascism
Pronunciation: 'fa-"shi-z&m also 'fa-"si-
Function: noun
Etymology: Italian fascismo, from fascio bundle, fasces, group, from Latin fascis bundle & fasces fasces
Date: 1921
1 often capitalized : a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition
2 : a tendency toward or actual exercise of strong autocratic or dictatorial control
In both cases, society or nation is emphasized over the individual.
Apparently, the concept of a "natural monopoly" is a myth that just won't die. Sorry, don't mean to pick on you personally, but this one just gets under my skin.
Theoretically, a "natural monopoly" was supposed to occur when a business experiences reduced marginal costs with increased production. Normally, when production increases, marginal costs increase. This, supposedly, creates a situation that would allow the company to defeat all of its competitors. For example, once the electric company has run a wire to your neighbor's house, then it's cheaper for them to run a wire to your house than it is for a competitior to do so.
Well, duh. But this doesn't lead to monopoly.
There's a lot more to electric service than a wire, and the electric company will still experience increased marginal costs in all of their other areas, whether it be power generation, transmission from generation sources, customer service, billing, etc. Yes, their average cost MIGHT decrease, but the marginal cost, the one that supposedly leads to the natural monoply, does not decrease.
Even if their marginal cost did decrease, if they tried to use that advantage to jack up prices, then they would simply make themselves more vulnerable to competitors. Despite the simplistic arguments that might fool a freshman economics student (and most Ivy League professors), there is no such thing as a natural monopoly.
But, this myth has been used to create all sorts of REAL monopolies. Wonder why there's only one electric wire coming to your house? Or only one phone line? Or only one cable line? It's because this "natural monopoly" myth has been used as an excuse to encode these monopolies into law. So now, the electric company can raise your rates, but all they have to fear is the politicans, who can be bought off much more cheaply than millions of consumers.
In some cases, I think creating public utilities has had good effects; electricity costs more than it should, but it's probably more reliable than it would be if it were delivered by market mechanisms. This shows up most after storms and other natural disasters, when repair people are dispatched far in excess of what could be justified by lost revenue. The increased costs aren't as bad as they might be in other industries, because the product is pretty simple, and it's pretty much the same thing that's deleivered to all customers.
Cable, telephone, and Internet are another story entirely, though. There's absolutely NO REASON that a second cable or local telco company couldn't be profictable in many situations, but they're prohibited from running a wire to your house in the name of protecting competition.
We've seen multiple phone companies wire the whole nation for wireless telecom over the last decade. Likewise for upcoming 3G/1XRTT services. If the "Natural Monopoly" theory were even remotely true, this wouldn't have been possible.