Antitrust law is about protect competition, but the ultimate goal is to serve public interest. Competition usually ensures better goods/services, cheaper prices etc. But sometimes competition alone cannot serve the public interest, in those cases, there are exceptions to antitrust law.
In the area of services provided by networks (electricity, gas, cable, phone), if left to free market, crowded areas in a county would get many service providers because the investment/return ratio is high, and rural area of a county would never get affordable service because the cost of laying cables and power lines would never be recaptured there with the same affordable fees charged to more populated area. This is what we call a market failure, that is, free market cannot address the needs of the customers.
Therefore, a bargain is struck many years ago, a government regulation in fact, that a locality would give one company local monopoly, in exchange that the company has to provide universal service, i.e. lay cables and provide service to ALL residents, not a single one left out. The cable/phone company charges same fee to everyone, essentially customer in crowded areas are subsidizing services in those of rural areas. This system works. That is why in most counties we have one electrical company, one gas company, one phone company, and one cable company. These companies are called public utilities, and they are heavily regulated monopolies.
In certain localities such as New York City, the population density is so high that no such deal is needed. IN fact for a long time NY apartment buildings can negotiate exclusive connections to multiple cable companies in NYC. A few years ago FCC banned that practice, I am not quite up on the latest development since I don't live there.
There are many monopolies allowed under antitrust law. For example, there is only one NFL, and that is okay. Should there be another XFL? The reason behind that is Football as a product need a national champion. It is less attractive if you have competing leagues but never a true national champion (just see the mess in college football). So having a national league is necessary for the public entertainment interest, and that would be okay under antitrust law.
In the area of services provided by networks (electricity, gas, cable, phone), if left to free market, crowded areas in a county would get many service providers because the investment/return ratio is high, and rural area of a county would never get affordable service because the cost of laying cables and power lines would never be recaptured there with the same affordable fees charged to more populated area. This is what we call a market failure, that is, free market cannot address the needs of the customers.
Therefore, a bargain is struck many years ago, a government regulation in fact, that a locality would give one company local monopoly, in exchange that the company has to provide universal service, i.e. lay cables and provide service to ALL residents, not a single one left out. The cable/phone company charges same fee to everyone, essentially customer in crowded areas are subsidizing services in those of rural areas. This system works. That is why in most counties we have one electrical company, one gas company, one phone company, and one cable company. These companies are called public utilities, and they are heavily regulated monopolies.
In certain localities such as New York City, the population density is so high that no such deal is needed. IN fact for a long time NY apartment buildings can negotiate exclusive connections to multiple cable companies in NYC. A few years ago FCC banned that practice, I am not quite up on the latest development since I don't live there.
There are many monopolies allowed under antitrust law. For example, there is only one NFL, and that is okay. Should there be another XFL? The reason behind that is Football as a product need a national champion. It is less attractive if you have competing leagues but never a true national champion (just see the mess in college football). So having a national league is necessary for the public entertainment interest, and that would be okay under antitrust law.
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