Why is cable TV a natural monopoly?

Answer 1

A natural monopoly is characterized by an average total cost curve that is always decreasing. This is usually the result of very large fixed costs combined with relatively small marginal and variable costs. These conditions make a single producer more efficient than multiple smaller producers because the larger producer can spread out the large fixed costs over a larger number of outputs. Cable TV is generally considered to be a natural monopoly because a cable TV company requires a large amount of infrastructure, a fixed cost, to provide service to a single customer. Once this initial cost has been payed for, however, it is relatively inexpensive to extend service to an additional customer by simpling laying down a small amount of wiring.