Your example of the all-you-can-eat places is slightly faulty. First off -
what you're describing is a pricing war. Which isn't necessary unless you have
someone trying to push someone else out of the market.
For example, a
really small town with only one restaurant that doesn't want a second restaurant
in the market.
But when you're talking a large city - there's way too
much variety. And way too much competition. I don't know of any significantly
sized community that has a single Corporation that owns the bulk of the
restaurants in that community. It just doesn't happen.
So yea... prices
lower. But the smart restaraunt owners don't dip below a certain minimum profit
generating model which will not only keep them in business, but will ensure
funds for a rainy day.
As a result, the market stabalizes.
Are the
ISPs running a broken model? I don't think you have presented any evidence to
actually back that. Is it - in some areas - a stabalized market with
appropriate competition to keep the prices from being inflated? I think
so!
In those environments where the telecoms have taken over the market
so the competition has been removed: well - they're certainly generating profit.
This is - in my humble opinion - just another way a regulated
cartel/monopoly-type market is trying to arrange to boost their
profits.
In my humble opinion: If they don't want to be regulated - then
allow other competition to move in! Stop buying up every competitor that enters
the market just to continue to control said market.
In my area, one of
the two primary telecoms that control the market (including the ISP connections)
claimed a 2011 profit of $1.2 Billion. I would hardly call that a "failing
model". Granted, that's accross all their products/services. But there's
certainly been no claims of a "failure to generate profit" in any of their
official filings when it comes to internet connections.
The profits
certainly speak to the fact that the "problem" the telecoms are currently
speaking of doesn't actually exist.
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