Is this not just competition working the way it's supposed to?
ie, another player shows up in the market, offers a more attractive price and forces the other players to reduce their prices or shed customers.
It's not like Bell, in this case, were offering 1Gbps for something absurdly below cost, like $1/mo or something just to drive the new comer out of business.
Matching and lowering prices is good for everyone. The new player running out of money and going out of business is really just a lack of foresight and planning on their part. It's pretty absurd to not expect the incumbents to reduce pricing when they are directly completed against.
I think the current answers to your questions are fairly inadequate - so I'm going to give you a more nuanced answer.
> Is this not just competition working the way it's supposed to?
Yes. This is competition working exactly as you would expect it to in a free market: One company is a dominant supplier, and they are able to match rates for a new entrant. They are able to out compete this new company, and they will do so - more marketing, lobbying, cost matching (or undercutting), etc. They have the ability to beat the competition, and they will.
So everything is going exactly as you'd expect - except the points from the parents comment still apply: the consumers in this market are actually getting fucked - the price drop will be temporary, the competitor will be forced out of business and leave, and the total infrastructure investment in the area will go down.
This is what's termed "Market failure". The free market here operates in a way that doesn't increase the well being of all (or even most) participants.
So yes - this is just competition playing out as we'd expect in a free market, but instead of doing what it normally does in an area (force infrastructure updates, service improvements, cost reductions, and higher efficiency as companies compete - all good things) it's doing bad things. Why?
Well - this case is the literal textbook definition of a "Natural monopoly". It turns out that when competition appears, Bell is able to outcompete them not by actually improving, but by leveraging existing infrastructure and scale in a way that the startup company cannot.
The free market isn't making Bell better - they're not having to work any harder or improve. That's great for Bell, but pretty bad for everybody else.
So (at least in theory) we regulate this case of the free market, because we've seen that "normal competition" doesn't actually work here.
> forces the other players to reduce their prices or shed customers.
Excpet they revert back to old prices once the competition is dead. This is textbook predatory pricing.
> It's not like Bell, in this case, were offering 1Gbps for something absurdly below cost, like $1/mo or something just to drive the new comer out of business.
What's the significance of "absurdly below cost" here? They are doing exactly what you describe except the exact number here is not 1 but 50.
When you price good below your production costs and have most of the market, then that is considered anticompetitive, monopolist behavior and is illegal in many places.
This is because if a large enough company does this, they can lower their prices locally to below cost whenever a new company enters a local market and subsidize this with their other markets. This creates a stranglehold on the market that can allow a company to charge artificially high prices for sub-par services.
This isn't just theory there is a well established pattern here and that is why laws prohibit it in many places.
> Is this not just competition working the way it's supposed to?
>
> ie, another player shows up in the market, offers a more attractive price and forces the other players to reduce their prices or shed customers.
No, because any time a company shows up that could pose an actual challenge to their stranglehold, all 3 companies gang up and lobby against them.
ie, another player shows up in the market, offers a more attractive price and forces the other players to reduce their prices or shed customers.
It's not like Bell, in this case, were offering 1Gbps for something absurdly below cost, like $1/mo or something just to drive the new comer out of business.
Matching and lowering prices is good for everyone. The new player running out of money and going out of business is really just a lack of foresight and planning on their part. It's pretty absurd to not expect the incumbents to reduce pricing when they are directly completed against.