Mike Godwin says:
Fiber is compact -- five or even twenty cable companies could coexist happily in New York (where I live) if the city didn't grant "franchises", which it charges exhorbitantly for. With large scale competition between cable companies, monopolies would no longer be a problem.
Which cable company has to eat the cost of digging the original groundwork? Or are you saying that every new cable entity will have to lay its own infrastructure?
Well, in NYC, the utility tunnels are municipal, so its a question of leasing a slot from the city. (Frankly I wish the tunnels were privately held, but thats another story.) In most rural and suburban areas in the US utility poles are still used and its a question of leasing slots from the owners of those (which is easy since fiber is quite lightweight, is typically strong when kevlar reinforced, and presents little or no lightning hazard.) In some areas it might mean digging new infrastructure -- modern cable laying equipment has dramatically reduced the cost of this, especially for buried fiber optics. In practice, none of this is a real problem. Many areas DO have two or more cable companies because there is no local prohibition on competition, and a few areas even have multiple electric companies because there are enlightened governments that permit such heretical violation of the "natural" (read, government granted) monopoly thesis.
The capital costs of that create an immense barrier to market entry, and ease of market entry is a pre-requisite for free-market competition.
Its not a real barrier. Capital costs for such structures are typically sunk via mortgage bonds -- its possible for most utilities to raise vast amounts of money in the debt markets. If you wish, I can direct you to people at the Cato Institute who can give you plenty of good data on why there is no legitimate reason why two or more phone, cable, electrical, or even gas and water companies couldn't operate in most areas -- I mean hard data down to the costs involved and potential profits and the way that competitive utilities have functioned in areas permitting them. The reasonable conclusion the data leads to is that the only reason such things don't happen much in the U.S. is that in most places competition is prohibited by law.
The only reason the first cable companies even invested in laying cable is that they were guaranteed a local monopoly.
Well, the fact that multiple cable companies do in fact exist in many places gives lie to this premise. The fact that multiple phone companies used to operate in the early days of the century before the government put a legal end to that also tends to discount this thesis. I've heard the argument given time and again about dozens of industries that "The X industry requires a government monopoly to operate" or "The Y industry needs subsidies or we would be left without a Y industry" and the like. I've checked up on many such claims, and have yet to see one where the numbers or the facts actually backed up the claim. The practice of granting monopolies was started in England under the Tudors as a way of earning money for the crown (which it still is in many states if you look at franchise fees and utility tax structures). There was initially no pretense about the practice being needed to preserve certain businesses -- that, of course, eventually arose as an excuse and is perpetually the monopolists argument for why competition should not be permitted. Ultimately, one must ask the hard question of the monopolists. "If competition is impossible in this industry, or if competitors could not raise money for infrastructure, why do you need legal protection from competition? If competition it would render the business unprofitable, why would people seek to compete with you?"
These are the kinds of issues that need to be addressed as we move from monopoly to free-market competition--how do we correct for the distortions caused by the initial government intervention in the market?
Eliminate the intervention by stopping the monopoly? Perry