Cable company monopolies?

Question

Why is there so little competition when it comes to providing cable television and cable internet? Does the cost of setting up the cable infrastructure so high that it doesn't allow for much competition?

Answer 1

One reason is that it would be expensive for another company to setup parallel cable lines to hopefully steal maybe half of the existing monopolies customers.

Also, I believe the sections are zoned off due to the same reason there is only one power company and one water company.  The fact that it'd be silly for there to be two sets of water and electrical lines running all over the place.  Not to mention who to blame if a problem arises.

Answer 2

If you're in the States, it is extremely burdensome & expensive to set up a competing cable company.  Right now, my company was formerly in the telecommunications business exclusively.  But is now branching out into cable TV operations > we began to see the cable operators start to siphon off many of our customers with an internet phone option.  

Here are just some of the operational concerns>>

• State governments have to be convinced to grant a state wide franchise license.  The alternative to negotiate with every community you want to service would be very time consuming, as there are hundreds & hundreds of cities, towns & villages.

• Next, you have to employ a platoon of people to engineer, install, & sell the product.  With fringe benefits, the cost of this averages $100 an hour or more.  

• You then have to maintain a high quality product, & your margins are small due to the competitive nature.  It was estimated it cost one company $2,500 to bring fiber optic cable to each house when it first started setting up their operations.  .  If the average bill is $100 month, with a 10% profit margin, it would take over 20 years to recoup the investment.    

• Most cable companies are publicly traded.  Shareholders expect a decent return on their investments.  So if you're going to get into competing with any current cable operator, you have to consider what this will do to the bottom line. The risks are high, the rewards have yet to be determined.