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To: ERM who wrote (3418)	12/16/1998 1:55:00 PM
From: ERM	Read Replies (2) \| Respond to of 29970

By the way, in case you want to pass along any of this to your franchising authority (who seems not to have gotten the message), Section 621(a)(1) of the 1996 Telecommunications Act reads: "A franchising authority may award, in accordance with the provisions of this title, one or more franchises within its jurisdiction; except that a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise. Any applicant whose application for a second franchise has been denied by a final decision of the franchising authority may appeal such final decision pursuant to the provisions of Section 635 for failure to comply with the provisions of this subsection."

To: ERM who wrote (3418)	12/16/1998 3:56:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 29970

True, they are breaking the law, but it is an unenforced law or ruling, and they can avoid even censure because there are no other applicants. There are no other applicants because you can't make money under a "capped" regime. They don't break the law because to not pursue the intent of the law doesn't mean to break it. This is hardly a free market concept: "a franchising authority would be breaking the law which caps their 'take' at 5% of revenues." Since this proves there is no free market, all the other arguments are moot. You can't have a free market with other conditions like fairness constraints. In that case you end up with the worst of all worlds as is exemplified by the cable tv industry. The industry loves their capped protection, however it inevitably puts them out of business usually via the accumulation of unservicable debt. The duopolies only prove that there is a distortion of the market mechanism which can support a certain level of misuse of enterprise. That means another operator thinks they can make money under the capped protection scheme and over the intermediate run, they do. Given enough time the new structure will have exhausted its advantages as the new entrant will go bust just like the other participant. The false economy of unrecoverable cost is occurring in many industries where you have a similar structure, an artificial constraint on the market's price adjudication process of demand and supply. Where the mechanism is interdicted, wrong choices are enabled. Those choices will undo profitability even while it appears they are supporting it. The outcome is the need to borrow to maintain the infrastructure since there isn't enough investment capital left after operating costs are paid. I suggest that duopoly is the limit, because beyond that you have loss leader strategy based start-ups that are little more than shams. It is the government that introduces the abnormal circumstance that evolves into the various unmanageable forms that make the companies inefficient. You stated above the 5% cap. Who keeps rates at $20 - $30? Government, not overbuilders. It is these little factors that seem so benign that cause all the problems including $75/mo rates. If that's what it takes to deliver cable tv, that's what price it should be. Everything else is robbing Peter to pay Paul with horrible long term consequences. No matter how you try to hide the government factor, they are the authority. The authority enjoins a market model which must inevitably destroy itself. To survive the companies will have to revert to a free-for-all market or there won't be cable tv industry. That's happening now in broadband. If people want broadband over cable tv, they will have to pay or it won't be delivered.