Re: Monopolies

["Keith Rowley" <Rowley@mc.edu>]

Oh, I didn't mean to defend Microsoft, AT&T, cable companies, or other
such varmints.  I was responding to the first statement Joel Shea made:
"Charles, wouldn't it be more accurate to say that monopoly is by grant,
i.e., of the government?"  I was simply suggesting that not all
monopolies arise because of government action.

Keith

>>> "Lewis A. Mettler" <lmettler@lamlaw.com> 08/02 7:31 PM >>>
Keith,

Personally, I just do not buy this "natural" monopoly pitch.

It is true that many monopolies are created by the governments.  And,
it
is also true that governments sometimes create them based upon false
information regarding the necessity for one.

Clearly there is no necessity for creating additional monopolies on
cable systems.  The ones we now have should be eliminated as soon as
technology permits.

Operating systems and computer software are clearly not a natural one.

Microsoft's monopoly is largely the result of illegal acts going back
many years.  The very fact that OS/2, BeOS, Linux and Apple can exist
in
small percentages of the market without any adverse consequences to
their users is proof of that.  Indeed applications such as Word for
the
Mac permit a diversity offering real benefits to consumers.

It is the illegal acts of Microsoft that make one system so dominant. 
It is the per-processor licenses that clearly block out any ability of
a
competitor to serve consumers that is most harmful.  It is the
bundling
of applications with the OS such that competition in applications is
eliminated that is so harmful to consumers.

I have written several articles estimating the financial damage to
consumers by Microsoft to exceed billions of dollars.  And, most of
that
harm is being levied on consumers right now.  Why? Because Microsoft
thinks that otherwise it would loose its monopoly grip.  

It is the illegal acts that the antitrust laws are designed to focus
upon that make many monopolies "un-natural" in the sense that they
would
not exist were it not for the illegal acts.

As for broadband services they right now are being bundled with cables
to limit competition and force consumers to accept services without
any
benefit of competition.  Tieing the use of a cable with a service such
as broadband clearly is not a "natural" one.  The cost of the cable
can
be recovered on a wholesale basis from companies wishing to offer the
content on a competitive basis.  There is no reason to grant a
monopoly
on content simply because a single cable costs less than 3 or 4
cables.

Personally, I think the whole idea of a natural monopoly is a bit
silly.  First you have to find one that developed completely devoid of
illegal activity or activity which makes competition very hard to
surface.

Witness the networking business of Lantastic (and others) when
Microsoft
bundled Networking with Windows. Millions of consumers were forced to
buy Microsoft networking software when they only had one system anyway.

The result was that networking software had its market all but rubbed
out.  Today, Lantastic still exists but it can only afford to offer
networking for Windows systems.  Cross platform networking is almost
nonexistence but that is the networking that would most benefit
consumers.

Microsoft's power is clearly not natural at all.  It is fabricated by
the bundling of applications.  The Caldera case also brings this into
focus.  The market for DR-Dos was all be rubbed out by the bundling of
the Windows GUI with MS-Dos.  This was not done because all consumers
wanted Windows.  It was done to remove a market for a stand-alone DOS.

It was done to wipe out a competitor un-naturally and prematurely.

As for broadband the companies who hold the local monopolies on the
cable do not want to compete at all for content.  They simply want the
monopoly on the high markup content and services.

Monopolies almost always harm consumers.  Characterizing them as
"natural" does not reduce the harm.  Allowing governments to create
them
does not reduce the harm either.  The governments may be able to
regulate them with sufficient attention to minimize the harm but it
will
not eliminate it.  It simply can not.

Lewis

Keith Rowley wrote:
> 
> That presumes that the monopoly is "franchised" and not "natural."
> While, admittedly, most monopolies -- at least the ones we're
familiar
> with (e.g., public utilities, the maker of Prilosec) -- hold their
> monopoloy power, at least in part, due to a governmental grant
(e.g.,
> exclusive franchise, patent), many monopolies historically arose due
to
> superior technology or other efficiencies combined with the nature
of
> the market for their goods or services.
> 
> Keith A. Rowley
> Visiting Assistant Professor of Law
> Mississippi College School of Law
> 151 E. Griffith St.
> Jackson, MS 39201
> Tel: (601) 925-7157
> Fax: (601) 925-7113
> E-mail: rowley@mc.edu 
> 

-- 
Lewis A. Mettler, Esq.(Attorney and Software Developer)
lmettler@LAMLaw.com 
http://www.lamlaw.com/ ( detailed review of Microsoft antitrust trial
transcripts )
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