Here we go again.
We got lots of calls and e-mails about a story we ran in January on why cable television rates rise every year, with or without inflation. The key factor is that, where there is no competition for cable service, the rates are typically higher than where two or more companies battle for customers.
Now comes a warning in today's Wall Street Journal that telephone rates may be headed the same way. The story very aptly notes that the merger of Verizon Communications and MCI Inc. and SBI Communications Inc.'s deal to take over
AT&T will remove competition from many markets. And even where there is competition, the newspaper notes, companies are reluctant to cut too far and risk price wars.
The report notes further that low-income consumers who can't afford "bundles" with such services as broadband internet, will end up paying more for phone service.
Even big business may end up paying more because of fewer providers in the market. But guess who pays in the end? It comes right back to the consumer.
Comments (7)
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I have a hard time believing phone companies will be able to raise rates in the same way that cable monopolies are able to do so. For one, there is just too much competition out there, even with the merger. There may be only a few huge telecommunication companies left to compete for standard land-line business, but too many people are dropping land-lines in favor of cell phones to make it worthwhile to raise rates.
And as soon as the Voice-over-IP companies figure out how to offer reliable 911 service, that business will skyrocket, at least as quickly as broadband Internet access becomes more pervasive. I just signed up for the Vonage VoIP service and cut a ton off my monthly phone bill. I pay $14.99 for all the phone services I need. I'll have to rely on being able to give my address to the 911 people if I ever have to call.
That's just in the near-term. As soon as wireless networks become the method of choice for connecting to the Internet and celluar-over-IP (WiFioIP) gains traction, it's anyone's guess as to what will happen with the telecommunications industry.
In short, cut off your cable, cut off your phone and start getting all the entertainment and communication services you can over the Internet.
Posted on February 15, 2005 3:14 PM
You're pretty much on target, Charlie. The only thing I'd point out is that many lower-income people can't currently afford broadband. As is the case with much technology, though, maybe it will get cheaper.
Posted on February 15, 2005 3:51 PM
Congratulations on the blog launch. Two posts in and you're up to 4 comments. This should become one of the liveliest blogs at the N&R.
Best wishes for continued success.
Posted on February 15, 2005 7:14 PM
This is great! I am in the process of gathering information about Voice over IP for work, but am also fascinated by the celluar-over-IP (WiFioIP).
I for one am appalled by the cable companies and their annual price increase. Inflation aside, how about the fact that many government workers went without raises for two years, or the fact that poverty is more prevalent now and decent paying employment is harder to find. My household watches less than 10 channels, what would be wrong with paying for channels rather than the current "packages" or "tiers"?
Posted on February 15, 2005 7:35 PM
CMadden, the FCC has been looking into a la carte pricing for cable, as recently as last Summer. You can read the article in Wired.
Posted on February 16, 2005 9:33 AM
They are already creating the Cell/VOIP phone. When there is no wirelees network available it works as a cell phone. Once a Wireless network is in range it starts working as a voip phone. Cool!
Jair
Posted on November 28, 2005 5:54 PM
Three phrases should be among the most common in our daily usage. They are: Thank you, I am grateful and I appreciate.
Posted on December 15, 2005 3:49 AM