At FON we are using the tactics of democracy in business. We are, for example, planning to run city wide elections among foneros to select our city managers instead of going to headhunters to find us the right person. Also at FON, at least so far, we don´t advertise and we don´t have a PR firm. As in the world of politics, at FON we speak, or in our case, we blog.

Now, as I look further into the political process of well functioning democracies (yes, they do exist!) I am surprised by one finding. Democratic politics seem to produce more competitive behaviour than business practices. Take, for example, the case of mobile phone pricing in Europe and the obvious collusion that exists among the three to four leading operators in each country on fixed to mobile rates and on roaming rates. At the same time, compare this monopolistic behavior, so prevalent among three to four players per country, to the tremendous competition that exists on almost every issue between Labor and Conservatives in the UK or between Partido Popular and PSOE (the socialists) in Spain.

Why is it that two political parties can behave more competitively than three to four mobile phone companies? The answer, in my view, lies in the different types of monopolies that politics and business creates. Democratic politics is in a way a quasi monopoly on government…that is temporary. Therefore you either win and have almost all the power (Aznar before the last election in Spain) or lose and have practically no power (Aznar now). In this type of scenario, competition for obtaining the monopoly right to power is fierce. But when companies can do well colluding, each one making huge profits and dividing the market, the number of players is less likely to have an impact on monopolistic behavior. As a result, we have an incredibly non competitive per minute pricing in the mobile phone world in Europe. And this is but one example in which corporate behavior leads to monopolistic practices. There are many others.

Follow Martin Varsavsky on Twitter: twitter.com/martinvars

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Klaus Verno on November 19, 2005  · 

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