Comcast Gets A Tutorial in Capitalism

Comcast is the largest cable company in the US. Their meteoric rise was something to watch as they gobbled up other companies in a frenzy. The were cutting edge in offering Internet, phone and TV all in one package then adding instant and recordable viewing. They had the government on their side as well as competitors were not allowed to edge in on the monopoly.

As so happens with companies who have a monopoly, Comcast got a little too full of themselves and their pricing structure went through the roof. It didn't matter to them, if you didn't like them, the only option you had was satellite, yet that left other issues such s Internet service, etc.

In an example that should give big government liberals pause (but will not), the government relented and allowed Verizon to start running fiber optics through the state and offer all the services that Comcast does. Comcast was cocky though, the people will pay us and stay with us because they were Comcast and the best.

A funny thing happened, Verizon dug up neighborhoods and started running those lines and offered better services including a higher quality picture and people started listening to their aggressive sales pitch. I, personally was a huge advocate of Comcast, they are a local company who keeps a lot of people employed and I've been with them since I returned to the East Coast. I paid their exhorbitant fees because I'd heard horror stories about satellite TV.

But then I switched to Verizon. They offered comparable Internet, better TV channel selection and my phone service was already with them. They changed the cable lines in my house at no or little cost and every single TV I have (enough to give Al Gore the cold sweats) has a picture that looks brand new. All this for less money than it cost for inferior service with Comcast.

The cable behemoth is feeling the pinch:

Comcast Corp.'s shares were slammed on the stock market yesterday after the company acknowledged that the housing slump and new competitors - mainly AT&T Inc. and Verizon Communications Inc. - were slowing its growth even as its costs climbed.

The shares of the nation's largest provider of cable TV and high-speed Internet plunged more than 12 percent yesterday.

"This is not a robust economy," Comcast chief financial officer Michael Angelakis said yesterday, speaking at the UBS Global Media conference in New York. The company, based in Philadelphia, had predicted this year that it would add 6.5 million subscribers in 2007, but Angelakis said yesterday that growth would amount to 6 million.

"We will fight in the streets and do everything we can for retention" of customers, Angelakis added. "But when you have a company like that throwing those kinds of resources - not just Verizon but other competitors - we will lose some basic subscribers."

As happens with so many companies on top, they let service slide, charged more and expected you to pay regardless. I saw a definite decrease in Comcast's quality of service and their near ambivalence towards customers. Evidently, I wasn't the only one. Think back through America's long history and the names that fell before the mighty will of capitalism are legion--Sears, K-Mart, the entire American automotive industry, etc.

Comcast is in first aid mode right now, trying to stop the bleeding. They told my wife, you should have called us before and we'd have made a deal--they of course disregard the fact that if they provided a better service at a better price I wouldn't have even contemplated switching. They're in a pitched battled and they are going to suffer pretty dramatically before it's over.

For those who are anti-capitalist, this lesson is probably falling on deaf ears, yet it's proven time and again that when the government tries to regulate business as they did by allowing Comcast to maintain a monopoly, the public suffers. If they allow competition to flourish, everyone wins. This is just the latest example but one that occurs repeatedly. The simple formula is to keep the grubby fingers of the government beast out of industry and the citizens win. Let's hope they heed this advice when it comes to the mortgage and petroleum industries.