businees spectator on sensis, page-13

elyom_sf,

Being an organisation or a company that has no competitors for its product or service is not enough to make it a monopoly. And here I am not talking about the board game monopoly. For examples: in Victoria SP Ausnet owns all three energy networks: electricity transmission, electricity distribution and gas distribution, and Metro is the only train service provider for Melbourne metropolitan. Yet they are not considered individually to be monopoly. Why? Because they are regulated by the Victorian government.

For a company to become a monopoly, it needs to have 5 characteristics:
1/ Profit Maximiser: Maximizes profits
2/ Price Maker: Decides the price of the good or product to be sold
3/ High Barriers to Entry: Other sellers are unable to enter the market of the monopoly
4/ Single seller: In a monopoly there is one seller of the good which produces all the output. Therefore, the whole market is being served by a single company, and for practical purposes, the company is the same as the industry
5/ Price Discrimination: A monopolist can change the price and quality of the product. He sells more quantities charging less price for the product in a very elastic market and sells less quantities charging high price in a less elastic market

(http://en.wikipedia.org/wiki/Monopoly)

The ACCC and the government not only will continue to act to curtail NBN's power to monopolize, they have!

In December 2011, the ACCC killed the clause that restrict Telstra from promoting its wireless internet services as a substitute for the NBN.

The NBN Companies Act 2011 that was passed in 28 March 2011 includes clauses on transparency, freedom of information and competition concerns that contain the adoption of uniform national wholesale prices for NBN. On top of that, the government has directed the NBN Co to achieve an annual rate of return at no more than 7%.

Now what private company wants to risk investing in a business that promises a reward of only 7%? If I remember correctly Telstra under Sol proposed to build the national fibre network with an annual rate of return at 18%. And what happened? Howard government said NO. And some people here still dream of having Telstra to get its monopoly back under the Coalition. Sweet dream!