Frankly Speaking: Monopoly 101

FRAMINGHAM (05/08/2000) - You can learn a lot about monopolies just by reading the news. Example: Last week, the U.S. government uncrippled the Global Positioning System for civilian use. As of Tuesday, business users with GPS devices won't get their locations just to within 100 meters; now the GPS can pinpoint it to within 10 meters. And sometimes less - Computerworld reporter Bob Brewin found some users who now get locations accurate to within 2 meters.

That accuracy used to be available only to the military. Now, we can get it too - for tracking deliveries, locating vehicles and finding our way. And, of course, the better-than-ever GPS signals are still free.

The move isn't all altruism. The satellite-based GPS system is completely controlled by the Department of Defense - it's a de facto monopoly. The European Union proposed its own competing GPS-like system, called Galileo, because the nonmilitary GPS signals were so inaccurate. But now that sounds unnecessarily and expensively redundant, doesn't it?

Of course, the U.S. still has the exclusive ability to jam the accurate GPS signals in times of war or, well, whenever that seems like the right thing to do.

Call it an object lesson in monopoly. The monopolist is willing to deliver this service for free, and even to enhance it, in order to maintain its monopoly - just in case that monopoly control someday comes in handy.

Also last Tuesday, Time Warner Cable ended (or at least suspended) its own exercise in monopoly power. Time Warner had stopped carrying ABC channels in New York, Los Angeles and several other cities - right in the middle of the spring ratings sweeps period, when ad rates are set.

Time Warner claimed that Disney, which owns ABC, was pushing Time Warner to carry new channels and pay higher rates. Negotiations deadlocked, Time Warner pulled the plug on ABC, Disney cried foul to the FCC, both sides compromised (got all that?) and now New Yorkers and Angelinos can watch Who Wants to Be a Millionaire again. But for a day, the unthinkable happened: ABC was effectively gone.

Monopoly lesson No. 2: Monopolies swing their weight around - and there's no telling what they'll do when that happens.

And a week before that, instant-messaging vendor Tribal Voice Inc. filed its own complaint asking the FCC to block the merger of America Online with Time Warner until AOL opens its Instant Messenger monopoly - which Tribal Voice claims is 90% of the market.

AOL says other vendors can connect - but they have to sign a license, as Apple Computer Inc., Lotus, Novell Inc. and some Internet service providers have done. And AOL blocks other Instant Messenger vendors from linking up with its systems without paying those license fees - even when that causes problems for its own Instant Messenger customers.

Monopoly lesson No. 3: Monopolies don't like the idea that just because they're so big, the rules are different - or that they can't fight dirty just because they're monopolies.

Maybe these monopoly lessons sound like they don't matter much for corporate IT shops. But they do.

A monopoly could pull the plug on a critical product or service we need - and we'd better be ready.

When monopolies decide to fight, they'll use tactics that are unexpected or even unthinkable - and we'd better be ready.

And when someone tries to get around a monopoly's lock on a product or service, they can expect hardball - and we'd better be ready for the fallout.

Because if we don't have contingency plans, fallback systems and work-arounds, we'll have to run our technology - and our businesses - their way. Not for our customers and shareholders, but for some monopoly's benefit.

And that's not what we're getting paid to do.

Hayes, Computerworld's staff columnist, could swear some other monopoly was in the news too, but he can't think who the heck it was. His e-mail address is frank_hayes@computerworld.com.

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