Paradise Papers: Dear Tim Cook

Re:Paradise Papers: Dear Tim Cook by tooltalk on Thursday November 16, 2017 @01:17PM (#15715052)

wasn't AT&T a regulated monopoly -- at least since 1913? FCC effectively barred competition and AT&T's pricing and policies required approval from gov't. It wasn't until late 50's and 60's when a relentless third party device maker, Thomas Carter, challenged AT&T's (and gov't sanctioned) monopoly that subsequently weakened AT&T's grip on all things communication. The rest is history.

So, in your mind what caused AT&T to become a monopoly for so long?

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Re:Paradise Papers: Dear Tim Cook by adamlett on Thursday November 16, 2017 @02:14PM (#15715571)

wasn't AT&T a regulated monopoly -- at least since 1913? FCC effectively barred competition and AT&T's pricing and policies required approval from gov'

I’m pretty sure you’ve got it wrong.

Firstly, AT&T was already a monopoly by 1913. The Kingsbury Commitment[1], which is what I’m guessing you’re referring to, was in essence an agreement between AT&T and the government by which the government would tolerate the monopolistic status of the company in exchange for some minor concessions. While this didn’t hinder AT&T much, it also didn’t help them.

The way AT&T became a monopoly to begin with is quite simple, and basically a textbook example of how a natural monopoly arises: Early and continued investment in a business which has large fixed cost requirements (that is the cost to build out infrastructure), but tiny marginal cost (the cost of serving one more customer). Unchecked, this eventually builds up to an insurmountable barrier of entry for new players. At the same time incumbent players are highly incentivized to merge or acquire each other, because the value of their combined networks is greater than the sum of them.

Without government intervention, AT&T would have stayed a monopoly for as long as its infrastructure remained relevant. Which it still largely is.

[1] https://en.m.wikipedia.org/wiki/Kingsbury_Commitment

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Re:Paradise Papers: Dear Tim Cook by tooltalk on Monday November 20, 2017 @05:26PM (#15743901)

AT&T initially had a monopoly, but when their patents expired in early 1890's, they quickly began to lose their dominance to competitors. Between 1890's and 1913, AT&T lost telephone market share by about 40%, from 95% to 55%. After the Kingsbury Commitment and, more importantly, the nationalization of the entire telecommunication industry during WW1, however, their competitors were effectively eliminated.

[1] UNNATURAL MONOPOLY: CRITICAL MOMENTS IN THE DEVELOPMENT OF THE BELL SYSTEM MONOPOLY https://object.cato.org/sites/cato.org/files/serials/files/c...

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