Frenchmans Nobel research called for lower cable prices
U.S. consumers might be paying less than they are for cable and Internet access if regulators had followed the guidance of Jean Tirole in promoting industry competition. So say experts in assessing the work of Tirole, a 61-year-old Frenchmen who won the Nobel prize in economics Monday for showing how to encourage better products and competitive prices in industries dominated by a few companies.“He has given us an instruction manual for what tool to use in what market,” said Torsten Persson of the prize committee. “Politicians would be stupid not to take his policy advice.” They haven’t always listened. Joshua Gans, management professor at the University of Toronto, says U.S. regulators didn’t follow Tirole’s advice to require cable and phone companies to sell competitors access to “the last mile” of cable connecting homes to telecommunications networks. Instead, giants such as Comcast and Time Warner now control the last mile.To reach a home, a potential competitor must pay to install its own cable. That limits competition and allows existing telecom providers to charge more. As a result, Gans says, American consumers pay too much for cable TV and Internet access.