OK this will be my last response. First of all, aren't you conflating financials with economics? While on a balance sheet, you may be able to say that building out infrastructure is simply a shifting of assets, but that is simply not true economically. Economically, we cannot say that built infrastructure is worth the same as the money used to build it, as value is entirely subjective. Whether or not the infrastructure increases or decreases in value (as represented in units of dollars, although of course value and money are not the same thing) is determined by whether society (internet service consumers in this instance) prefer the resource in its former or latter state. If Comcast invested $500 million in a vast infrastructure that no one wants and thus has little or no value, then that is certainly not a $500 million asset (it may be when looking at a balance sheet, but not economically).

As for AT&T, you're completely changing the subject. Not only that, but you're just throwing random anecdotes around without anything to substantiate, such as: "They were a monopoly and they gouged us." Interestingly, then you concede the argument: that innovation overthrew the monopoly. Okay, yeah I'm being facetious. But you do get my point, right? Competition need not come strictly from another company trying to offer a very similar service or product.

I concede it may not be possible for Comcast to grow their cable business. I thought of the same constraints you mentioned before I submitted, but wasn't about to make your argument for you. :)

The last thing I take issue with is your idea of what a normal firm does vs what a monopoly[1] does. Both firms seek to optimize their prices and capacity as to obtain the greatest possible profit. A monopoly is not the only type of firm who may want to reduce output to increase prices and ultimately gain a greater return.

[1] For the record, I reject your definition of monopoly. It is arbitrary to assume that the optimum number of firms in a given market must be between x and y.

Operational income margins are the worst indicators of the big picture, as they don't include outstanding debt, etc. Like I said, to get an accurate picture we need to look over a greater length of time than just a year or quarter. What sort of return do the telcos get on their investment? That is really the question.

Your definition of monopoly is arbitrary, ultimately. My understanding of 19th century London was that it was filled with government-granted monopolies, and *that* is what made the public angry. I can't comment further until I do more reading on the issue.

As for AT&T, I'm referring to the beginning of the 20th century when many municipalities started granting AT&T monopolies, under the presumption of "natural monopoly." Of course, they ended up implementing some sort of price fixing, per the norm of regulating monopolies. My memory's fuzzy on the details, but the gist of what happened is that the prices may have been decent to start, but areas that didn't formalize a telco monopoly over time experienced much, much lower rates than AT&T. There has also been a habit of understanding the amount of competition, even with telco's; early 20th century telcos were no exception; apparently there was enough competition back then to make a noticeable difference. (Also, once again, the threat of competition is also very key. A single firm in a free market behaves differently than a single firm, as dictated by government.)

As for Comcast and other businesses that rely on leveraging very expensive infrastructure, the tendency is to invest massive amounts, then reap the benefits over time until more upgrades/investment must be done. If you look at Comcast's ROIC, you'll find that the annual reports are misleading. In essence, here's what's happening over several (let's say 5) years (arbitrary numbers):

• Year 1: Invest $500 million in infrastructure, spend $100 million on operational costs, earn $200 million in revenue
• Year 2: Invest $200 million in infrastructre, spend $100 million on operational costs, earn $205 million in revenue
• Year 3: Spend $100 million on operational costs, earn $210 million in revenue
• Year 4: Spend $100 million on operational costs, earn $215 million in revenue
• Year 5: Spend $100 million on operational costs, earn $220 million in revenue

If you look at years 3-5, it looks like Comcast is making massive returns, but once all of the years are summed up, a more accurate picture is revealed. After spending $1 billion dollars over 5 years, the net return is only $1.05 billion. Obviously these are made up figures, but it's a simplified representation of what does happen. This is an opinion piece, but it's laced with interesting statistics that verify what I've been saying (too lazy to look up the actual numbers myself): http://dailycaller.com/2013/02...

If Comcast's cable was really that much more profitable than the rest of their business, why in the world would they not dedicate more of their resources to cable? Simple: Because that's not the case and Comcast knows it. (I'm not saying their annual reports are inaccurate, only misleading by nature.)

Some other profit margins for the last quarter from various high speed providers:

• Time Warner: 8.71%
• Century Link: 4.25%
• Verizon: 11.7%

I realize Verizon's probably not the best example, as I couldn't find FiOS-specific numbers. But I can't find any numbers at all that indicate that profits are completely out of whack.

It's dubious because it isn't winner takes all. Even with classic utilities, the term is misleading. For starters, the term was, to my knowledge, not introduced by economists, but rather by politicians. The claim was that the monopoly was "natural", so we ought to formalize the monopoly (provide protections for it) in exchange for control over how it operates. The classic examples you mentioned very much fit with this. Every large city that I'm aware of (and by large, I don't mean very large at all) grants firm A a monopoly on the services for exchange for some control. It's not very "natural" if the government forces it.

Furthermore, it is quite a large assumption that, say a water company, must span an entire city. I am not particularly fond of the practices used with my city's water. If the market was free, even if infrastructure were not to be overlapped (I don't know if that would ever be economically viable), there's nothing from stopping the city from being divvy'ed up into different quadrants run by different companies. Whether or not this would happen or not depends entirely on the consuming public, just like any normal market. When purchasing a house in a city, one would want to consider the utility providers for that quadrant of the city. People generally take home buying very seriously; I doubt that such a factor would be ignored to the point as to not provide an adequate profit/loss test for the various companies.

If you haven't all ready, I strongly suggest you read up on what happened with AT&T and the so-called "natural" monopoly that it had, what the government did, and what the practical implications were for those actions.

As for Comcast's financials, where are you getting your numbers? I looked at http://ycharts.com/companies/C..., which indicates 15.44% profit for the last quarter (high, but not unreasonable) but almost all other quarters for the past 5 years in the 10% (or under) range. Granted that is for the company as a whole.

What is your point exactly? That cable companies should be coerced to service anyone and everyone? There are inherent consequences to housing choices.

"Natural monopoly" is a somewhat dubious term. Classically speaking, a single provider isn't enough to designate a company a monopoly (for instance, in a small town, one would hardly consider the only market that the town can justify a monopoly). Ultimately, the term assumes that in such a scenario, there is no competition and thus, the state should intervene to compensate. But there is *at least* the threat of competition, which seems to be forgotten all too often. There is also the possibility to (not always) substitute goods.

In the case of internet, there are plenty of suboptimal but, for most people, workable alternative providers. The cable providers are still constrained by the same profit restrictions as other markets. I realize this isn't a popular idea, as most people like to hate on ISP's (and I am generally not that happy with them most of the time myself), but they can't simply do as they please with complete disregard for their clients. The high barrier to entry only goes so far. Time and time again, economics has shown us that if a product is wanted enough, the capital can be raised. Also, a peek at Comcast's profit margin shows nothing obviously out of order, as would be expected if they were really doing something nefarious. I suppose you could argue that's because governments have saved us. But if the government increases costs for a "natural monopoly" and demand is truly inelastic, as many people seem to think, the cable provider simply has to charge the consumer more. What's possibly worse is that by interfering in the markets like this, what generally happens is that the overhead to enter, which was all ready high, is made even higher, as any competitor (or potential competitor) must also pay off the government.

To be clear, I'm not saying that the ISP situation is great (it isn't), but rather that government can't help in these ways. A better alternative would likely be for cities to start building out easily reusable infrastructure (that doesn't require tearing up roads) that would greatly reduce the capital needed for a new competitor to enter the market. (I mean infrastructure that allows running cable and whatnot, not the network infrastructure itself.)

Disclaimer: I have not read Piketty's book. But I have heard that he does not even consider capital depreciation, which in itself, is enough to discredit his findings. Taxing capital goods is the worst kind of tax you can have, as it makes a lot of assumptions about those capital goods (not to mention "capital" is a rather arbitrary thing to define). A consumption tax would be far better.

Yeah and insurance company will likely not pay out if you exposed your Ferrari to grossly unnecessary risk. This, like many things, isn't black and white.

Hmm... I've never noticed any slow down. And I've done all sorts of terrible things to my system, package-management wise.

Airlines are hardly an uncontrolled market in the United States. To make the comparison between the EU (where you even point out that certain market interferences are forbidden) to US as an example of regulated vs unregulated is mind numbing.

Wow I had never seen that rebuttal. I've stopped reading because it's mostly really bad--specifically, when I got to the "PHP error handling is fine" bit. I program all day long in PHP because that's what the shop I work for uses. It is simply not as productive as other languages. The writer of "PHP is a fractal of bad design" gives mostly-accurate, concrete reasons why developing in PHP is more time consuming than in another, sane language (I realize that his point is that its design is bad, which I think is true, but pragmatically speaking, most of us care about time spent than how "perfect" something is). Good luck proving otherwise.. argh, this "rebuttal" is just so bad, drawing on obvious straw mans, etc. Okay, /rant. I'm done. Thank you for linking it, though. :)

Far too few people know what "liberal" actually means.

+1. wish I had mod points.

Cycling money through the economy faster does not stimulate economic growth.