Although I know cable companies have very little competition, I didn't realize how much power they have. Consumer groups claim that cable companies treat consumers unfairly because of the lack of competition in this industry. In fact, the Telecommunications Act of 1996, which was intended to prevent such monopolistic power, has possibly been an underlying factor in the increase in cable rates. The article states that since the Act was put in place, cable rates have increased 45%. I believe that the act along with other underlying factors has made it more difficult for competitors to enter the cable industry.
In St. George, I think that Baja is the only cable provider and their rates are definitely not cheap. Recently, Baja added the Mtn. television channel, which has resulted in many consumers leaving satellite providers that don't provide the Mtn. channel in St. George. This is because of loyalty to BYU and U of U sports even if the price is more. Therefore, Baja could probably take advantage of those consumers who switch over to their services because of brand loyalty/sports team loyalty, and it will increase Baja's market power. Cable companies are making a lot of money since they are increasing prices a lot and costs are not increasing very much. I believe that cable services are pretty inelastic since the prices have increased drastically, yet the demand doesn't seem to decrease much. As a matter of fact, I would not be surprised if the demand has increased in the past several years. What do you think? It seems like the prices of cable will continue to increase and their monopolistic power will not diminish soon unless more competition can find a way to enter the market; however, it won't be easy to enter this industry and doesn't seem likely.