Monopolies

**Historic trust busting political cartoon

Industry after industry America's power players have consolidated capital, market share, and power to a near-criminal extent. Industries like the internet, cable, entertainment and even our nation's once-prized automotive industry have been moved into the hands of an elite and exclusive circle of companies. The country's economy has moved from the backs of small businesses and local consumers to ridiculous monopolies that rely on mass markets and predatory anti-competitive practices. While the economy was once headlined by mom and pop stores, now it's headlined by the likes of Facebook, Google, Verizon, and Ford. Small businesses find themselves failing to compete, disappearing, and paving the way for bigger more powerful competitors. Monopolization has struck our nation’s markets, consumers, and economies like a plague. Nowhere is this better seen than the modern Internet Service Providers (ISP’s) abuse of our nation's consumers and antitrust laws.

In order to fully understand the damage that not only ISP’s but all monopolies have on our economy, they must first have a basic understanding of a trust. The definition of a trust or monopoly in the modern sense is “the exclusive possession or control of the supply of or trade in a commodity or service”. Even though monopolies seem harmless at first glance they are one of the biggest determinants to the economy of our nation. They allow companies to lower quality and customer service while also jacking up the price for inferior goods to put it broadly. Said companies are only able to get away with this because they know there is little to no competition. Because no one is there to undercut them these companies have little to no reason to innovate or maintain a high quality of service. Trusts also have the ability to skyrocket prices and buy any company that would serve as a competitor. For example, if you are the only baker in town you are more likely to make lower quality and cheaper to produce cakes because consumers still have no other choice if they want baked goods. Two real-world examples of this are Microsoft and AT&T jacking up their prices in the 80s when they had little to no competition.

At one point our government served to chip away and even prevent said monopolies. In fact from the passage of the Sherman Antitrust Act and the presidency of Theodore Roosevelt up to about the 1970s, America kept a relatively iron fist when it came to the subject. Harmful monopolies like Standard Oil, American Tobacco, and even AT&T, at one point were broken up and redistributed into smaller companies that were unable to smother out competitors or abuse consumers. Traditionally the Federal Trade Commission used the Sherman and Clayton antitrust acts to break up monopolies, however, other government institutions have been known to indulge. For example, AT&T was broken up by a lawsuit from the United States Department of Justice using the previously mentioned antitrust acts. Lawsuits over antitrust laws also often go all the way up to the Supreme Court. However, since the Reagan Revolution, the rise of Laisze Faire thought, government distrust, and belief in a hands-off economy that followed it would lead to a new era of American monopolies. Now that voting citizens were more in favor of a more hands-off approach corporations could run rough shot. Now company mergers and monopolies are a common sight in America. Anheuser-Busch, Sirius XM, and Google are just a couple of popular examples.

Ever since the adoption of broadband (and even dial-up to some extent) the distribution of our nation's wifi and its infrastructure has been slowly consolidated. In fact in our country the top five ISP’s control somewhere around 70% of the market. Non-coincidentally the companies at the top of this list are also the most heavily engaging in anti-competitive practices. These ISP’s have such a stronghold on both a local and national level that many Americans find themselves with only one or two options. In fact, a reported 129 million Americans (a bewildering 40%) have access to only one broadband provider. While another 50 million are forced to choose between only two companies. With these statistics, it looks like no coincidence that 42% of Americans are dissatisfied with their wifi speeds and access. Several areas (more specifically rural areas or western states) in the nation are “blackouts” limited to just one or two providers. This lack of competition allows ISP to get away with worse service and higher prices. Consumers are simply unable to look for lower prices or look for better alternatives because there is little to no competition. Instead, they must overpay for subpar service or simply not have wifi.

Compared to other developed nations across the globe America consistently ranks low when it comes to internet price and speed. These inequalities are highlighted in Thomas Philippon’s “The Great Reversal: How America Gave Up on Free Markets” where Philippon truly focuses on and brings to light the gap between our nation and foreign markets. To put it into perspective, in America the average monthly price for wifi is $66.17, while in South Korea it is $29.90, in Germany, it's $35.71, and in France, it's $38.10. Compared to other OECD (developed) countries we rank 2nd in most expensive average wifi, behind only Mexico. The average wifi price for other developed nations is $37.78 a month, nearly half of what Americans pay. Meanwhile paying the most for wifi our nation is only ranked 13th in internet speed and 27th in global internet connectivity, being blown out of the water by countries like South Korea, Qatar, and Singapore. Europeans are even happier on average with their wifi, with 81% being satisfied compared to 77% of Americans. This is due to foreign governments that aren't afraid to regulate ISP’s and even break them apart if necessary.

Reduced wifi speeds and qualities affect Americans in everyday life. With slower speeds, our nation’s citizens consume content they pay for at lower quality while also having to deal with annoying buffering and download speeds. While things that are also digitizing at increasing rates like education or even grocery shopping are also heavily hampered. Even American industry suffers from these ISP monopolies. Small Businesses often find themselves more excluded from the internet market than everyday consumers do, with 72% of small businesses only having access to one or two broadband providers. And even when they can find providers, wifi is usually very expensive and or slow, levying a heavy disadvantage on our economy's most vulnerable and indispensable producers. This limited accessibility, poor quality, and price gouging close off small businesses from the 120 million American households with wifi access and the 10% of the economy that is now solely digital. Leaving an already weakened section of our economy unable to adapt to modern times. They are now outgunned by bigger and more connected businesses like Walmart or Target.

Before we take a look at the aforementioned anti-competitive practices we must first look at our Internet's biggest players. In declining order of market share, these are America's hardest hitters, Comcast 21.6, AT&T 17.2% (yes the same one that was previously broken up for being a monopoly), Time Warner 12.1%, USA Other 9.7%, and Verizon 9.4%. These five companies amount to 70% of our country's wifi distribution and infrastructure. Monopolies exist on both an urban and municipal level, with certain cities and even counties only having access to one or two of the major five ISP’s. ISP’s even seem to reach their hands into many other of our nation's markets, with Time Warner, Comcast, and Verizon also owning a substantial part of either the cellular or entertainment media markets. Now that we have a look at our lineup we can tackle their anti-competitive practices.

To begin with, internet distribution and infrastructure is inherently monopolistic. Just like oil pipelines and railroads (two industries also known for their anti-competitive and monopolistic practices) these distribution networks are usually built by the ISP’s that use them. This leads to almost all of our nation’s internet infrastructure being owned and operated by the aforementioned monopolies. Companies like Comcast and Verizon aren’t just going to rent out the expensive networks they paid out of pocket to build to competitors, especially upstart ones. However, this is just the beginning of these companies’ monopolistic practices. This leads to a lack of new competitors because they simply can’t afford to finance to build an expensive network for markets where they would already have to cut prices and thus profits to compete. ISP also makes it extremely hard to switch providers, including complicated processes and expensive fees that stop consumers from switching. Lastly, ISP’s seem to have a handshake agreement to stay away from competing markets. While every once in a while they might compete in a metropolitan or municipal market, the big five rarely compete. They usually tend to limit themselves from certain areas allowing them to hike up prices and not have to improve quality to compete.

Monopolies have brought nothing to the table