Do part 2
This video naturally overlooks a lot of history in order to keep the video relatively short. For example, people often claim that landline phone service was a natural monopoly, because how efficient would it have been to run multiple, competing phone lines? While that certainly pointed to a difficulty early phone companies had, it doesn't really make it a natural monopoly, Instead, the companies were working out... Show more
Do part 2
This video naturally overlooks a lot of history in order to keep the video relatively short. For example, people often claim that landline phone service was a natural monopoly, because how efficient would it have been to run multiple, competing phone lines? While that certainly pointed to a difficulty early phone companies had, it doesn't really make it a natural monopoly, Instead, the companies were working out agreements to share the phone lines, so that multiple lines weren't necessary. Bell Telephone, however, successfully argued the natural monopoly argument to local legislators, and got them to grant local monopolies to phone companies, and Bell, being the biggest phone company at the time, was well-positioned to receive most of those government-granted monopolies.\n\nAnd, in fact, national telecommunications in the U.S. was nationalized, if only briefly:\n\nIn 1918 the federal government nationalized the entire telecommunications industry, with national security as the stated intent. Rates were regulated so that customers in large cities would pay higher rates to subsidize those in more remote areas. Vail was appointed to manage the telephone system with AT&T being paid a percentage of the telephone revenues. AT&T profited well from the nationalization arrangement which ended a year later. States then began regulating rates so that those in rural areas would not have to pay high prices, and competition was highly regulated or prohibited in local markets. Also, potential competitors were forbidden from installing new lines to compete, with state governments wishing to avoid duplication. The claim was that telephone service was a natural monopoly, meaning that one firm could better serve the public than two or more. Eventually, AT&T's market share amounted to what most would regard as a monopolistic share.\n\nhttps://en.wikipedia.org/wiki/History_of_AT%26T\n\nThe history of phone service in the U.S. would have been very different if government intervention hadn't occurred.
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