Heavy Lifting - thoughts and web finds by an economist
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Wednesday, March 16, 2005

A tale of two monopolies.

The other evening, at around 7:30 in the pm, the doorbell rang and two young folks from SBC, our local telephone monopoly, were at the door. Their claim was they wanted to save me money. I was a bit shocked but took the hook, lightly at first.

They had a copy of my bill and the services that we get from SBC and the total was about $130 per month - local phone, long distance, and DSL. The offer was to give me back $26 per month on the DSL and the $25 in long distance, and to give me faster DSL access.

I was a bit incredulous, if only that I had doubts that a monopolist would volunteer to save me money. However, they insisted that it was all on the up and up and I went ahead and swallowed the hook a little more. Signed on the dotted line and then immediately called SBC to see if everything was legit. It turns out that it was - interesting.

Earlier that day, the missus had called SBC to insist that they reduce the DSL charge back to what it was for the first six months. SBC agreed to do this - which just goes to show that a bit of time on hold can save you about $26 per month. However, the head office of SBC did not offer to give us the DSL pro.

If SBC hadn't dropped the price on the DSL, I was ready to pull the plug totally and go with Comcast for cable, broadband, and VOIP. It probably was only a 50% credible threat, however, because I wasn't sure about replacing the VOIP for the phone. Comcast would have given us the broadband and the voip for $75 a month. End result, is that SBC matched the $75 per month and I didn't have to go figure out a new technology.

SBC is evidently not as much a monopolist as I/we think they are. They are clearly responding to the inroads of Comcast and the wireless services.

However, Comcast has not been as easy to work with. They are up to $63 for the basic digital package, which has about a zillion channels of which I can only watch one at a time. I am paying about $25 dollars more per month for about 200 channels that I don't watch. Traditional economic reasoning would suggest that there is some option value in the additional channels, and the option might be worth about $25 per month.Unfortunately, I don't even know what the channels are. I am beginning to believe that the option value for those channels is very nearly zero, especially since the kid came along and that we should go ahead and dump the digital for the regular analog cable.

Comcast is making that decision easier by not giving anything on their end. It is unfortunate that SBC isn't in direct competition with Comcast, although I think they are getting into satellite television - which does us no good at all because of our trees. Given the recent experience here in Arlington, SBC feels a lot more threatened by Comcast and not so much the other way around.

Just surfing around late night and came upon your blog...I liked it.
My site about Voip Testing is hard to have a blog for VOIP stuff and boring too
Great blog, keep up the good work. Glad to see sites like this.

Here is another good site I said I would pass along.
Free Satellite
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