The cable company’s ablity to lock its customers is improved by selling phone and internet service as well as television. If take all three and you want to switch you need to coordinate the switching of all three services, which is amazingly hard. The television is the least sticky of the three, since there is always broadcast television as a fall back. The phone company plays a similar game around here where it is practically impossible to get internet via DSL without also paying for a plan old phoneline. Subscription customers who are well locked down are great revenue generators. You can entice them into your system with huge discounts. The vendor discovers that he can raise prices and they don’t bolt. Higher prices increase the size of the discounts you can offer up front.
There is another player in this game; at least around here. The town grants the monopoly to the cable companies by negotiating a lease for the right to string all those wires. The cable company pays for the right by providing a community access channel, and donating internet acess to various public enterprises around town.
We are currently negotiating the next N year lease. The cable company is being very agressive about reducing what it pays us. Clearly they see the town as being just as locked in as its customers are.
It makes me wonder what the town’s BATNA (best alternative to a negotiated agreement) is in this case. What happens if we decided not to grant the cable company a new license.
Maybe we should run our own. I assume we could not provide all the same TV channels that the current dominate provide does. I assume we couldn’t pick up the ball, or switch to another vendor without some service interuption. Which implies cutting off some residents phone service.
My town is exceptional in that it has two cable companies. The cable company guys will scold you if you complain about the mess on the telephone polls. “Utility Polls!” they will say. The polls are a mess. This extra degree of freedom doesn’t seem to change anything in a meaningful way. One effect is notable though. The community access channel isn’t on the #2 cable company and the community members who run the channel want it to be; so they are a large part of the constituency fighting for a more generous cable contract.