The business environment has become so competitive to a point where in every business, there are many providers. However, there are some unique forms of monopoly that exist in the world. These are known as a natural monopoly. Natural monopolies occur when the costs of starting a business are significantly high, and it scares away some potential competitors because they do not have enough resources. The Xfinity Cable Company is one of the natural monopolies that have existed in the US for some time. The paper will lay a detailed focus on how the Xfinity Cable Company became a natural monopoly and what the government can do top cut on costs.
The Xfinity Cable Company is a natural monopoly because it controls a significant proportion of the market in the US. It is one of the largest cable companies in the world. The amount of capital that one would require to attain the position of Xfinity Cable Company is enormous. Another important feature that has made it a natural monopoly is that the company is very aggressive when it comes to technology and upgrading. When TCI started making some upgrades, the Xfinity Cable Company is known to have injected a lot of money in upgrades. These upgrades are some of the key factors that have made the company remain at the top. It does not only lead the other companies in terms of sales, but it also leads them in technological advancements.
On the other hand, the Xfinity Cable Company became a natural monopoly because it had ventured in both the cable and the contents. The fact that the company owns the content and the customers are one of the greater advantages that have placed it as a monopoly. It has become so impossible to do away with Xfinity Cable Company since most of its products have dominated the market. The company was able to swallow the NBC Universal and a gaggle of cable companies because of its aggressiveness. It moved with haste to introduce the direct satellites that could provide the customers with good audio as well as visual content.
Another factor that makes the company a monopoly is the fact that it is the best in terms of internet services. The company is known to be the fastest provider of the cable network. To attain such a position is not easy for other companies. For example, it is said that Version would need more than 13 billion dollars for a simple upgrade of its cable network. That is a; large amount of money for such a company and even if it incurs the same costs, it will not attain the position of Xfinity cable company. The reality is that the Xfinity Company has never had direct competition from the competitors. There is no good alternative that can match the Xfinity Company and that’s why it has continued to be a natural monopoly.
The government can play a major role in controlling the prices so as to make the customers happy. One of the key strategies that it can apply is ensuring that the company is compliant with the FCC regulations that control he pricing. If the organization complies with the FCC regulations, better services, as well as low cost, will be enjoyed by the customers. The same will also help in solving the complaints from the customers. The government can also pass legislation and come up with the best process that the companies should charge to the consumers and ensure full compliance.
The main advantages of a monopoly are that it can easily attain economies of scale. With the increasing productivity, the company can enjoy lower prices of materials, and it can produce a lot of goods at a lower cost. Due to this, the company can lower the marginal cost, and it can also push the prices down than the perfect market price. On the other hand, a firm can attain a global position if it is a domestic monopoly.
However, the natural monopolies also have some disadvantages. At first, the monopolies overcharge low-income earners, and the purchasing power of the low-income earners end up being distributed as dividends to shareholders. On the other hand, these monopolies are not motivated by economic efficiency. They are less likely to cut costs even if they achieve economies of scale. The monopolies are also likely to experience diseconomy of scales due to their great expansion.
There are some laws in the US that have been applied in a bid to ensure that there is healthy competition. Among these laws is the United States antitrust law. The law aims at ensuring that there is fair competition. The law protects businesses from unfair competition, and it also protects consumers from exploitation.
Xfinity Cable Company is known as a natural monopoly in the US. It is one of the largest cable companies in the world regarding revenue. The company has been able to hold this position because the amount required for a new entry is very high. It has also invested heavily in technology. There are key advantages of operating as a monopoly; the company can achieve economies of scale. There are some disadvantages, a company that operates as a monopoly might overcharge the customers. The United States antitrust law helps in reducing unfair competition and it also prevents acquisitions that would lead to a monopoly.