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AT&T Uneasy with Clearwire Portion of Sprint-Softbank Deal

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Top message:  Good by stevelvl   Oct 18, 2012, 12:18 PM

Replying to:  Re: "We WANT at&t and verizon to be big" by newfoneguy   Oct 19, 2012, 8:49 AM

Re: "We WANT at&t and verizon to be big"

by CellStudent    Oct 19, 2012, 1:02 PM

newfoneguy said:
I am also very curious does this include services like water, electrcity, and sewage?


CellStudent said:
No firm in any industry should be permitted to control more than 20% of the market share without serious scrutiny of their operations.


I was very careful to include the highlighted part above. Serious scrutiny basically amounts to some form of regulation, whether it's imposed by a government, labor union, or trade association.

Big businesses have to be constrained by something. Ideally, they should be constrained by their competitors, as in a free market system. Quasi-monopolistic industries cannot rely on the ideal solution, market competition, and therefore have to held in check by some other means that would not be approved by Adam Smith.

Sadly, this is the reality of 21st century economics. Pure laissez faire economic policy only works in industries where:

(a) Barriers to entry are relatively low, such as opening a tavern or starting a photography studio.

and

(b) The most toxic substance you deal with on a regular basis is less dangerous than chicken manure.

In industries like cellular networks, which require billions rather than millions to get up off the ground, policy (a) is violated. In industries like nuclear waste processing or chemical manufacturing, policy (b) is violated.

Overly large or technologically dangerous industries need to be monitored, because free market principles can easily fail, resulting in higher prices (at best) or massive death and destruction (at worst). Regulation will not always be necessary, but these are the basic qualifications for consideration, in my mind.

This is why most water, sewer, electricity and natural gas suppliers have to get permission from a state-appointed public utilities commission before increasing rates. They are regulated because they don't have enough competitors.

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