Friday, November 18 2005

¿Can Politics be more Competitive than Business?

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 seems to produce more competitive behaviour than business practices. Take the case of mobile phone pricing in Europe for example 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 practicies. There are many others.

Posted on FON, New Ideas   |   4:20 pm   |   Comments Comments(1)   |   Trackbacks Trackbacks(0)  

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  1. Following your rational, mobile subscribers should organized themselves as “Parties or Unions”. Then, they will be capable to negociate tariffs with mobile operators.

    ..or even better: how about politicians -provided they really paid for their mobile bills- start protecting the interest of consumers? You never now!

    Klaus Verno

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