I guess Adam Smith was wrong, competition is not good.
Competition is great. For the customer. For awhile. Not so good for the businesses that are competing. Perhaps you've heard of the term "dumping"? That's when a "competitor" can afford to sell below cost just to drive his competition out of business. Great for the customer, until the competition goes away and prices go back up.
We used to have a great small local magazine shop in this town. Borders moved in. They had books and magazines and a coffee shop and
Before you lecture me on how I should have shopped at the local dealer to support them, I did, and it wasn't enough to keep them alive.
Cable companies aren't like Borders. People don't buy services from more than one cable company at a time and if they aren't cable customers by now they likely won't become one just because competition moves in. At best, a new cable company can split the existing customer base. That's not enough to cover the fixed costs for plant, and certainly not enough to provide return on investment for over-building the existing system. The incumbent has a significant advantage because he's likely paid off a lot of the investment in the plant and equipment and can cut his prices to keep the new guy from making any money at all. Yes, that's good for the customer, except the customers of the new guy, and only as long as it takes for the new guy to give up and go away.
I bet Adam Smith would have understood that. I bet he'd understand when a company does a business plan and sees that there is no money to be made from competing in a limited, existing marketplace with high startup costs. I bet he'd understand why it takes a company the size of Google to do that kind of thing, and even then they're not rushing into the market.
So, the fact remains, it isn't the few percent skimmed from the cable companies in franchise fees that prevents competition. It's the ability to predict a negative return on investment for any new competitor, especially for the first few years, that keeps them from wasting their time and money.
If you disagree, you are free to dump a few million into competing with Comcast in our fair city and prove me wrong. I doubt I'd switch service to a start-up with no track record, but show me your list of services and we'll see.