from: Wet Machine [1]

Comcast to Illinois: I loves Me The Market Power!
Harold Feld

As reported on BroadbandReports.com, Comcast has greeted former Insight customers transferred to Comcast as part of unwinding a partnership with a 6% rate hike [2]. Thanks to all the delightful cover given to Comcast by Congressional Republicans, who declare that all is “A OTAY” in Cableland, the Comcast guys are no longer even pretending that the rise in rates has anything to do with cost. Rather, as Comcast rep Libbie Steh told the Springfield Journal Register in a rare attack of honesty: “increased costs are not a factor this year.” Rather:

“Comcast periodically reviews prices and adjusts them to reflect what’s in the marketplace,” Stehn said.

Comcast's defense that it is only raising prices because everyone elsein the market has is rather disingenuous, because what is in the marketplace is Comcast. But lets pretend this were the wildly competitive video market place that Republican members of Congress and Republican FCC Commissioners McDowell and Tate keep claiming it is.

Doesn't neo-classical economic theory tell us that in a competitive market, firms will lower prices as much as possible to attract customers? And yet, in this “wildly competitive market,” where Comcast has reported a 24% increase in profits overall and a 7% increase in video subscriber profits, Comcast is raising its video services prices. Not just on its basic video package, but on all aspects of its video services: dvr service, premium channels, you name it — if it is covered in your cable bill, it's going up in Springfield, Illinois.

Once again, I will point out that the definition of market power, as blessed by those conservative activists on the D.C. Cir., is the ability to raise prices above the competitive level. And if you can still raise prices despite the fact that you (a) have surging profits; and (b) have not had a cost increase, then You...Have...Market...Power! Or so said the unanimous en banc D.C. Circuit in United states v. Microsoft, and who am I to argue?

So tell me again, Oh Congressional Republicans, how all is well in cable land. Tell me again, Oh pundits in the blogosphere, how Martin is only imposing ownership limits because he hates cable and there is no evidence of market power. Tell me again, Commissioners McDowell and Tate, how Democratic Commissioners Copps and Adelstein are fretting about nothing when it comes to cable operators choking off diverse programming because cable operators live in fear of the wildly competitive market and will lose viewers if they don't offer the best programming. Go ahead. I haven't had such a bitter belly laugh since the Bush Administration opted for a policy of begging lending institutions to renegotiate with defaulting mortgagees while killing the Democratic bill to allow bankruptcy judges to reset interest rates.

And all you folks that keep electing Republicans to Congress — enjoy your new cable rates! You earned 'em. It's just a shame the rest of us get the results you deserve.

Stay tuned . . .