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To: Robert Scott who wrote (2428)	7/11/1998 1:03:00 PM
From: ahhaha	Read Replies (4) \| Respond to of 29970

Your observations on competition in telecommunications are entirely correct. It's elementary. Our society through its government doesn't believe in free markets. They believe that freedom leads to monopoly because one company grows so large that it can offer economies of scale the others can't. A monopoly can be beneficent like ATT was during the "Ma Bell" days, but economies of scale evolved into economies of non-innovation and the ensuing perception by the public that non-innovation should be controlled. Control always means fixing the expected return and that leads to economies of degeneration. In the end government had to break up ATT against Chairman Brown's wishes. He claimed doing so would cause telephone rates to explode and service to decline. He was completely wrong on both accounts. The ATT experience taught people that you needed several service providers to enable a competitive market. The universities and the officials both in government and managers of companies believe competition must be fair. Fair means you get the same output regardless of input. So under fair there is no incentive to increase input. No one believes that anyone can or will provide more input because they assert that very little output is realized, so better to fix potential output so the game appears to be fair. An example of fixing output is seen in the restriction or denial of local and long distance to any RBOC. The thinking is that a geographical restriction prevents any one company from developing too good a product and thereby competing its rivals into the Stone Age. You can see by these arguments how intellect achieves an apparently sound argument which is out-of-hand incorrect. However the result has great populist appeal in that it presumably slams the capitalist pigs. Americans have always believed that when you restrict the amount of money corporations make, the people are beneficiaries because they get the money instead. Isn't that logical? If the RBOCs aren't allowed to compete for long and local, they will be shut out of cable. The reason is too complicated to go into here. They must be allowed long. Congress believes that is anti-competitive, so the only recourse is to prevent the advent of local telephony through cable by delaying its deployment. They will do this by suing to block the merger of T and TCI. They're thinking is that if we can't make money, we will try to make sure you can't. Sounds like the public, doesn't it. The RBOCs will eventually lose, but the delay will enable inferior technologies to fill in the holes so that in the end you'll have a mess of incompatible, non-scaling, expensive, inefficient distribution and the public will blame T and TCI. The true source of all the problems is found in the universities where they still stress the importance of the oxymoronic "fair competition". Competition is inherently unfair, but by allowing unfair, fair is achieved. It is this seeming contradiction that has the professors compromised and why everyone rejects Adam Smith's "invisible hand".