John L wrote:
> This must be a new neocon definition of "free market". Selling
> something below cost to drive out competitors in a competitive market
> and making up the losses from your profits in a non-competitive market
> is the very definition of a predatory monopoly. It's what led to the
> original anti-trust laws being passed over a century ago.
The philosophy behind the passage of anti-trust laws a century ago is
very different today. We have mega mergers in all sorts of industries
that wouldn't have been tolerated years ago. We do not regulate
business as we did 100 years ago. Back then "rebates" on railroad
shipments were considered wrong, today it's everyday business on
airlines. "Sweetheart deals" are perfectly acceptable.
Again, the philosophy today products may be priced at whatever the
traffic will bear. I don't like some of the business practices that
has resulted from that principle, but that's the way it is.
As to "predatory", there are numerous examples of big companies using
their better economies of scale and logistics to squeeze out
competitors. If a big drugstore chain squeezes out a mom 'n pop
pharmacy, so it goes. If a huge retailer forces its suppliers to take
a very tiny profit supplying it (as opposed to no profit at all and
idle factories), so it goes. This happens everyday now.
We've had discount airlines kill old companies because they offered
seats at a loss. Companies use "loss leaders" all the time to attract
customers. All legal.
If a company feels it has been slighted, it may take legal action. I
object to pre-conditions, which I feel some "net neutrality" efforts
are.
In other words, if the old line phone companies use their existing
economies of scale and existing customer base to build up subscribers
to new businesses, that's perfectly fine. That's what everyone else
does.
> I think you need to read up on natural monopolies. There's a reason
> that nobody does cable system overbuilds, even though they're legal
> throughout the country.
No, not anymore. Public policy today is that a newcomer can come in,
if not, too bad. We've been told for years the big evil Bell Companies
have a "natural monopoly" and nobody could cut into their guarnateed
business. That's a lie. Cable companies laid their own fibre and now
often full service; many people no longer have any connection to the
classic Bell Companies (the NYT reported on this). So now the old
Bell System companies has a ton of obsolete plant and losing business.
Why do we need protection from that? Why did Verizon's stock decline
to half?
Having a "natural monopoly" didn't stop MCI from coming in and
skimming off the cream of the Bell System. Where it was too expensive
it demanded -- and received -- cheap interconnection.
The old "Ma Bell" died in 1983. The myth -- perpetuated to this day
in TV ads -- of the big powerful telcos is nonsense. Whoever is
running those false TV ads (they keep their name in too fine print to
read) is the ones we consumers need to be protected against.
[public replies please]
hancock4@bbs.cpcn.com