Monday, June 23, 2008

Fettered competition

Let's say you provide a service that is widely used across the country. There are only a few alternatives to your product, but those alternatives present the buyer with a real choice. Since buyers have to bear some transition cost when switching to a competing service, they will only change if they perceive a clear advantage to doing so. And you realize, that you are, in fact, losing customers to your competition. What do you do?

If you are in a traditional market, you work like you-know-what to improve your product, price it more competitively, and make your current customers feel good about their decision to stay with you. If you do it right, everybody wins... The customers get better pricing and service and, because of your improvements, you gain (or regain) a competitive advantage.

Last week, the FCC ruled that the Cable oligopoly has another alternative. They have barred Verizon from trying to retain their customer base. According to the Reuters article, Verizon is now not permitted to market their products to a customer who has informed them of their intent to switch to a cable phone service.

So let me get this straight. I decide, at some point, that Comcast's phone service is better than Verizon's, and decide to switch. Comcast notifies Verizon, who then makes me a competitive offer. Whoops. Scratch that last part. Now Verizon cannot make a better offer. The potential bidding war, that could benefit me and millions of other small businesses and consumers, has been called off. Someone might get hurt.

The unelected regulatory agencies continue to increase their influence over the marketplace. And we've seen where this leads. We really don't want to be like France, do we?

Reuters article as published on C-Net: FCC sides with cable in dispute with Verizon

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