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This point of view always bothers me because it's not really true. Yes, one of the primary duties board members have is to increase the wealth of the shareholders, but it does not equate to purely performing greedy moves. Look at the case of Dodge v. Ford Motor Company. Here's an excerpt from the decision made (emphasis mine):

"A business corporation is organized and carried on primarily for the profit of the share-holders. The powers of the directors are to be employed for that end. We are not, however, persuaded that we should interfere with the proposed expansion of the Ford Motor Company. In view of the fact that the selling price of products may be increased at any time, the ultimate results of the larger business cannot be certainly estimated. The judges are not business experts."

Yes, they are primarily in it to make money for their shareholders. However, it's nearly impossible to tell the effects of many decisions on the company's bottom line, and moves that increase the company's image in the eyes of the general populace can certainly be argued to have effects that increase the financial well-being of the company.

There's something called the business judgment rule that's applied in cases such as this. The board members must act in good faith, act in the best interests of the corporation, act on an informed basis, not be wasteful, and not involve self-interest. This gives a great deal of wiggle room because, as the judge said in Dodge v. Ford Motor Co., "judges are not business experts."

A move like eschewing moves away from net neutrality is arguably (which is all it needs to be) a move done in good faith to increase the bottom line of the company, especially since it builds goodwill with consumers.

A move like eschewing moves away from net neutrality is arguably (which is all it needs to be) a move done in good faith to increase the bottom line of the company

It could be argued that it violates the property rights of the corporation. Almost every restaurant has a sign that says, "We reserve the right to refuse service to anyone."

The telecoms built those wires. They installed the switches. It seems wrong to me to tell them how they must allow traffic to flow over them. Existing transportation companies aren't hounded by the Department of transportation because they charge more for a 12 cubic foot container than they charge for a 1 cubic foot container.

If a railroad wants to charge one company more than another company they can do that. If they want to limit the amount of goods they transport, they can do that. They can refuse to transport certain kinds of goods as well. Grains, liquids, explosives... Or charge a different rate...

How is the internet, where the packages are full of 1's and zeros different?

In the United States, railroads are common carriers, so they're not allowed to have discriminatory pricing.

Telecoms are also given a lot of government protection, like local monopolies and no liability for the information they deliver, in return for the regulation. The government paid for a lot of the wires and switches with subsidies, which muddles the property rights argument. The government certainly has a right, as well as an obligation to the public, to ensure that its expenditures are to the public benefit.

I personally take the view that, for all intents and purposes, telcoms aren't completely private entities due to the legal and financial privelages they recieve from the government, so reasoning by analogy to other private enterprises is flawed. The crossover is enough to give them a civic obligation in addition to their fudiciary responsibility, enforcable by regulation.

You'll have to provide a reference, because this one disagrees, saying (on page 3):

  Shipping rates vary by type of commodity 
  Each cargo owner pays a different rate

http://www.cunninghamreport.com/uploads/backup_docs/585-Port...

CSX has pricing rates by commodity http://www.csx.com/?fuseaction=customers.pricing_lists

It's obvious to anyone who has shipped almost anything that costs are different by size and weight and scale.

It's obvious to anyone who has shipped almost anything that costs are different by size and weight and scale.

The discriminatory pricing refers to the client, not to the shipped goods.

Pricing for different goods by type, size and height is appropriate because of the different resources needed to ship those goods. More fuel and studier cars are needed to move iron loads vs a load of pillows. Moving coal requires open-topped coal cars while moving ice-cream requires refrigerated cars, etc.

Telecoms are in the business of moving bits. If they want to charge more to move a gigabyte of video data than they do to charge a gigabyte of text data, or if they want to offer slower speeds for a gigabyte of torrent data vs a gigabyte of FTP data, I think they should better explain how the different types of data justify the different charges.

It seems to me that acting like greedy assholes to the point that the regulators step in, would actually be failing at maximizing shareholder value.

I believe also that paying dividends would be an alternative to having a pyramidal share price.

You could say they are greedy assholes, or you could say they are trying to maximize the revenue potential of their investment.

Software companies do it all the time. Oracle charges Salesforce more for its database than it charges a university and it gives it way for free to some organizations.

Essentially, net neutrality is saying that the telecoms don't have the right to choose how to charge for their product.

If the FCC is saying the internet is a right everyone should enjoy at the same rate, why don't they create a public wireless grid? People argue against that saying the government will control our traffic, but essentially that's what they are arguing for here as well. They want the FCC to control the internet, but keep it private in such a way that limits the corporation's ability to profit.

I'd be angry if the FCC came in and told me what I could charge for my SaaS or my consulting hours. Why is it different for the telecoms?

> Why is it different for the telecoms?

Because the telecoms have gotten tons of help from the public, via the government, over the years. At the Federal level, the cable and satellite companies got the original anti-circumvention laws that led to the DMCA. They also get to be exempt from a lot of state level regulation that they might not like, in exchange for the far friendlier FCC. And at the local level, telcos get to use public rights of way and often have monopoly grants.

They're in no way comparable to a small entrepreneur. They're like a company that's been given (or bought) permission to operate a toll road. In exchange for being allowed to make money, they need to charge everyone the same tolls and the amount of the tolls that they charge is going to be subject to regulation.

As for why the government doesn't just build and operate the infrastructure itself ... if the telcos keep it up, that may just be what happens. Critical infrastructure has been a frequent target, historically, for nationalization when the owners of that infrastructure are perceived to be rent-seeking to excess. The public tolerance for toll roads evaporated in the 1880s [1] and they were almost entirely stamped out by the Progressives; the telecommunication operators of today would do well to keep that in mind.

[1] http://eh.net/encyclopedia/article/Klein.Majewski.Turnpikes

Personally, I think it'd be great to have a public wireless grid, but think of the privacy issues. The government could have much easier access to our emails.

But back to your point, the toll roads I travel on charge more for semi-trucks than they charge for passenger vehicles.

I understand the thought that the public is investing in these wires, so they own them, but the public invests in all sorts of industries, including pharmaceuticals (via the NIH), vehicles (buying GM), mortgages (fannie may, aig), but yet they don't regulate what gm charges for cars or Pfizer charges for their drugs.

I wonder why we believe it is okay for the govt to meddle in some areas and not others? Where and how do we draw the line?

But back to your point, the toll roads I travel on charge more for semi-trucks than they charge for passenger vehicles.

Yes, because the semis cause more than their share of road-maintenance costs. This is akin to charging me 2x as much if I want to upgrade to a pipe that's 2x as fast. Nobody has a problem with that.

The problem happens when the government sells the tollway to a private corporation, who then starts up its own trucking line. The road's new owner charges its own trucks $0.25 and everybody else's trucks $5.00. How could you defend that?

I wonder why we believe it is okay for the govt to meddle in some areas and not others? Where and how do we draw the line?

This isn't even a new question. There are some interesting parallels with the early telephone switching system. About a hundred years ago, an undertaker named Strowger noticed that his competitor was getting all the calls whenever someone kicked the bucket. It didn't take much investigation before he discovered that Betty the Switchboard Operator was the sister-in-law of Bob the Undertaker at the competing funeral home.

Nowadays we're faced with the exact same scenario, but due to the logistics of the last-wire monopoly, we can't solve it by inventing a new switching system like Strowger did. That's where the government has a legitimate role to play.

The most obvious reason that I can think of is that most of these companies have near-monopolies in many local markets.

The overarching point is that it's a clear good for society. It doesn't have to be fair - we're not required to be nice, or fair, to corporations - they're not people. We're required to maximise the benefit of the citizens in the country. Sure, being 'unfair' to corporations can have negative long term outcomes, which is why you only do it in cases like these: where the outcome is so clearly a positive for the system as a whole.

I don't know if it is clearly positive for the system as a whole, because if telecoms can charge more, and generate more revenue from existing infrastructure, then they can get on to newer, fatter, and longer pipes.

Right now, they are basically stuck paying for all the copper they bought. They can't buy new fiber. They can't install new towers, etc...

Considering the current prices of US broadband, they ought to be making an absolute killing - particularly in urban areas. Compared to countries with different regulatory schemes, you guys pay a lot of money for not a whole lot.

Even so - I'm not sure they're being prevented from charging more, necessarily - although the FEC would gain the power to do so if necessary. The main thing is, they're being prevented from charging in a discriminatory manner.

I heartily agree. The problem is the same which besets comparisons of weather and climate: short-term profits and/or share values are measurable, whereas longevity and stability are abstractions which can only be assessed retrospectively, and the relationship between the two is not always clear.

I'm not sure how tractable this problem is. If you'll forgive some hand-waving, it reminds me of the oligopoly problem turned inside out - rather than a few large companies in a market, you have a few powerful directors in a market where shareholder votes are exchanged for management services. Even if directors have independent ideas about the right policy for the corporation, as they should, the nature of the (internal) market itself may result in unanimity to the detriment of shareholders. Shareholder demand for value (qua consumer demand for management services) is rather inelastic, which limits the appetite for risky things like firing the entire board, and by proxy firing the management team - the more so when fund managers of institutional investors (administering important things like pensions) have a clear fiduciary and ethical duty to maximize returns to the fundholders.

> acting like greedy assholes to the point that the regulators step in

Yes, simple risk/return analysis? And they were warned too.

"Don't harass the chicken that lays golden eggs too much."

Corporate leaders have a fiduciary responsibility to act like greedy assholes. We have to understand that. It's required by the SEC and the law.

Well, specifically it's directors who have that duty, and (naturally) they select managers whose views further their own. Of course, in recent years there have been examples of tension between managers and shareholders in the US (unrelated to the financial crisis), where shareholders' powers to change policy 'from the floor' are relatively limited. Some argue, too, that directors' fiduciary responsibilities need to be rethought in terms of long-term sustainability and stability rather than in purely expansionary terms.

There's an interesting discussion of these issues here: http://blogs.law.harvard.edu/corpgov/2009/11/17/shareholders...

And on a slightly tangential note, a cautionary tale about a company that went bust within weeks of its IPO, and how the arguments of the firm's attorney and directors found short shrift in court: http://ssrn.com/abstract=1567657

Corporations must grow. They must increase their share price. They must continue to do more and more and more to get more money or they die. If you aren't growing you are dead.

True, although do they have to do that by trying to decrease service at every opportunity, and by trying to enter markets outside their core competencies?

There's nothing wrong with being a big dumb pipe. For a cable carrier or telco, trying to do anything else will either divide the company against itself, or pit the company against its own customers. It could be argued that by trying to grow into inappropriate areas, the carriers are contravening their fiduciary duty.

Telecom is a red ocean. Too many providers and too few customers. To grow, they have to extract more out of their customers, provide less costly services (increasing margins) or venture into areas outside that red ocean.

But blue oceans are uncharted territory. They are scary and risky and require a level of creativity that exists in few telecom companies.

Most telecoms are so big that to grow at a rate above 1% would require massive opportunity. It's much easier to charge 1% more to all their customers or include a hidden fee or provide 1% less bandwidth. They've done that to an equilibrium now and breaking the deadlock with their competitors is destructive to their own organization. They can't cut costs because they don't have the margins. They can't raise rates because customers will go to a cheaper alternative. They can't reduce services because the FCC comes down on them.

Remember what happened to comcast when they tried to treat bit torrent differently? It seemed reasonable to me. If the FCC wants to turn the internet into a transportation system, then they will need the equivalent of a weigh station, because the heavy trucks cause more damage to the roads.

Ah, but the trucks are the same size and weight. There are just different numbers of trucks delivering different things. UPS, Fedex, and DHL all offer commercial delivery services. DHL is much smaller than the others (and so they have fewer trucks), but all pay the same prices per truck at weigh stations and for vehicle licensing.

If they were data companies, UPS and Fedex would have more and larger servers (sorting and storage facilities) than DHL, but their packets (trucks) are treated the same way on the open road.