by Philo Farnsworth

Created on: January 20, 2009

In economics, a monopoly exists when an entity has sufficient control over a product or service to determine significantly the terms on which other entities shall have access to it. It's a misconception that cable companies are a monopoly. Yes, it's true you probably only have one cable company in your area, but this is because cable systems are expensive to build. There are some places that have more than one cable provider, but it takes so long recoup the cost of building infrastructure, it's generally not feasible to build more than one system in a particular geographical location.

Regardless, when it's suggested that the cable company is a monopoly, it's generally in reference to services. With even slight scrutiny, it's evident that cable companies do not have a monopoly on services. Cable providers face competition for television services by satellite broadcasters, over-the-air broadcasters, telephone companies and the internet.

Cable companies are keenly aware of increased television competition and have branched out into other service. Besides television, cable companies have increasingly offered broadband internet and telephone services. Consumers have a choice of satellite, DSL, dial-up and even cellular services for internet access. Cable providers also face stiff competition from traditional phone companies, internet phone companies and wireless providers in the telecommunications industry.

Cable offers many products that are highly desirable by consumers. However, consumers have long cried foul at what they perceive to be high prices. Cable companies justify their prices by offering premium services such as broadband internet, OnDemand video services, high definition video services and feature rich phone service .

It can be argued that consumers have a choice. If they don't want t be charged a premium, then use other services. Don't want to pay for broadband? Use Dial-up. Don't want to pay for 200 channels? Limited basic cable is available for less than $20USD per month in most markets. Or get free television with an antenna. These services may not be the best or the fastest, but they are what's available at what may be considered a more reasonable cost.

Cable companies will keep charging premium rates if consumers are willing to pay them. Cable companies base their rates on what the market can bare, not on actual operating costs. When enough people switch to other services to meet their needs, cable will then be forced to be more competitive.

Cable companies do have monopolies in some limited sense. For example The largest cable company in America owns several sports teams and broadcastings rights to a fair amount of programming. They don't necessarily share those assets with the competition.

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