osewalrus (osewalrus) wrote,

AT&T Raises Copper Loop Wholesale Rate

Interesting piece. Need to consider whether it is purely market power or cross-subsidy (which is market power of a different sort if you don't lose customers).

The article says the actual cost of providing DSL wholesale or retail is going down, as prior investment to condition the lines is depreciated and the cost of equipment generally drops. Could be. But I'd want a lot more info on the pricing structure and whether DSL is subsidizing U-verse build out. Or, to put another way, AT&T may be raising the price in one business line to cover loses in other business lines.

To a certain extent, the ability to get away with that is itself a form of monopoly (or monopsony) rent, since if the DSL sector were competitive they would lose customers by failing to pass on the savings (which, in a competitive market, other firms would do). But there are other mechanics at work here, including the impact of bundling, and the balance between driving out DSL retail competitors who lease copper v. losing customers (including the retail customers of the wholesale customers) to cable.

Data is good. I wish I had some.

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