Local phone companies have monopolies on phone service within their areas. Cable television can be transmitted via the wires that are already in place and owned by the phone companies. Cable television companies argue that if the telephone companies were to offer cable service, these telephone companies would have an unfair advantage, because their cable transmissions could be subsidized by the profits of their monopolies on phone service. Which of the following, if true, would ease the cable companies’ fear of unfair competition?

Question

Examsnet · Accepted Answer

Correct Answer is : In order to use existing telephone wire, telephone companies would need to modernize their operations, a process so expensive it would virtually wipe out all profit from their monopoly for the foreseeable future.

GMAT Verbal Reasoning Practice Test 3