We hate to break the apparently shocking news to the majority of the state House Energy & Transportation Committee who voted this week to quash legislation bringing competition and better value to cable consumers, but here it goes: Commercial progress in this country often begins with companies "cherry-picking" attractive customers.
Yes, believe it or not, hundreds of products that eventually become household fixtures or common personal possessions were initially marketed mainly to a select group of customers.
Originally elite products include the early automobile and virtually every major appliance, from refrigerators to air conditioners. They include now ubiquitous devices such as portable phones, as well as dozens of breakthrough, discretionary medical treatments, such as Lasik surgery.
Those on the Energy & Transportation Committee concerned about possible cherry-picking by Qwest seem blissfully unaware of basic economics. So permit us to quote David R. Henderson, professor of economics at the Naval Postgraduate School in Monterey, Calif., and editor of The Fortune Encyclopedia of Economics.
"The most famous law in economics," Henderson writes, "and the one that economists are most sure of, is the law of demand . . . The law of demand states that when the price of a good rises, the amount demanded falls, and when the price falls, the amount demanded rises."
Easy to understand, no?
That's why lawmakers' hand-wringing about the possibility that Qwest or other new competitors that take on cable franchise monopolists might choose to first target upscale neighborhoods is so misplaced.
First, it's probably not true, for reasons the bill's supporters fully explained. But even if it were true, the end result of competition is almost certain: lower prices for innovative pay TV packages that quickly migrate across the entire population.
Alas, it's too late this year to break the franchise monopolists' stifling grip. House Bill 1222, which would have allowed companies to seek a statewide franchise through the Public Utilities Commission, with no buildout requirement, was killed in an 8 to 4 vote. Seven Democrats and one Republican couldn't bear the thought of competition that isn't micromanaged by local bureaucrats in the name of fairness. But here's our idea of fairness: Generate competition that lowers consumer cable bills.
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