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Comment by rayiner | Hacker News Reader

How is Verizon wireless a utility? None of the usual arguments (natural monopoly) apply. And there are four major competitors in the market (more than in say search or social media).

Also, data caps are just price discrimination, which is pervasive even in highly competitive markets (and not necessarily a bad thing): http://else.econ.ucl.ac.uk/papers/uploaded/222.pdf. You walk into Home Depot and they charge you twice as much for the "Best" paint rollers versus the "Good" paint rollers. It's not because there isn't competition in the paint roller market, or because it costs twice as much to make one paint roller versus the other.

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Wireless does have some features of a natural monopoly. In order to compete with Verizon Wireless, you need access to a finite amount of wireless spectrum. The FCC auctions off exclusive access to the wireless spectrum, so you can't just start competing with Verizon on the same spectrum.

This is pretty similar to how you can't just freely add your own fiber to a utility pole, or freely build your own utility poles.

That's right - wireless isn't a natural monopoly, but it is a natural oligopoly. Oligopolies tend to be better for consumers than monopolies, but still not great, because the firms involved only have to deal with a few competitors and tend to develop cartel characteristics.

Oligopolies also appear to be the future of the American economy, with new business formation on the decline and wealth + market share concentrating under the few largest players in many industries.

So perhaps the discussion we should be having is, should we do something about oligopolies, and what? We already have antitrust laws, are they adequate? Are they being enforced?

How is it "natural" when it's a governmental allocation? The point of the expression "natural monopoly" was to distinguish them for State-granted monopolies like those.

It's natural because there's only so much bandwidth and you can't make more.

That describes any hard commodity, no matter how common. Is water a "natural monopoly"?

Yes.

It is a utility.

How about plutonium?

Plutonium is not traded on the free market.

No, that's water pipes to your home. You can buy water in many, many, many other ways.

I assumed you meant water piped to a home as broadband is cabled to a home.

I can't go out and buy a bottle of WiFi to use how I see fit.

Sure, but you can buy alternative methods of accessing the internet to keep this metaphor going. They're expensive and aren't as convenient but that's true of having to go to the store to buy bottles of water as well.

The pipes that service a city are.

Let me introduce you to the story of hurricane Sandy. Verizon doesn't want to rebuild its union encumbered wireline network so they wanted to switch people over to local wireless.

Now you can't have it both ways. Either you are a utility or you are not. Having competition doesn't mean you're no longer a utility.

This does not appear to be hypocritical on Verizon's part. They don't view themselves as a utility and are actively fighting becoming one.

Wireline telephone is without a doubt a utility. If they say wireless replaces wireline that means wireless is a utility as well.

Price discrimination doesn't work under perfect competition (see: law of one price).

Insofar as it might work for Home Depot, it may be due to local monopoly (competitor is not co-located) and asymmetric information (customers assume a bigger quality difference than is true). However in my experience, the price of premium tools/supplies often does reflect higher production cost these days.

It sounds like law of one price only refers to goods where there is an arbitrage opportunity. If the goods have different intrinsic values, then they would have different prices, which I believe is what the original comment is arguing.

Price discrimination is when a producer charges different customers different prices for the same good. So yes, price discrimination is implicitly an arbitrage opportunity - assuming there is competition.

Truly different goods don't have the same implications for consumer and producer surplus. That's not to say that price discrimination can't be disguised.

How often do people rely on wireless phones compared to landlines? Do you use the internet more than a landline phone? The landline phone system is a utility, but Verizon wireless shouldn't be?

Capping certain websites is not price discrimination, it's website discrimination; Verizon promises a certain amount of GB per month on our phones, and capping certain websites for me when I'm still under my monthly data limit has nothing to do with my data limit and everything to do with discriminating against those websites to my and their detriment.

If you're fine with corporations turning the playing field into an uphill slant against you based on their preferences regardless of yours, then please argue for them capping limiting certain completely-legal websites they don't want to treat fairly.

Even if you do accept variable pricing based on use, the data cap strategy doesn't make sense. Why not just charge more when the network is stressed? At least consumers could be incentivized to make efficient use of the network.

Surge pricing works for Uber/Lyft--both from a user experience and possible legal point of view--because the customer can see the rate before pulling the trigger. A cellular carrier has no way to provide that feedback.

>A cellular carrier has no way to provide that feedback.

There's definitely no way they could write a simple app to provide this info, and it would be crazy for them to white-list it so it didn't count against bandwidth usage :)

> And there are four major competitors in the market (more than in say search or social media).

Social media and search seem to exhibit signs of monopoly as well.

Paint rollers? Really?

Pull that paint roller out of your pocket and paint the wall next to you, then go to the restroom and pull it out again to paint over the graffiti on the stall wall. Then walk your dog and use it to paint the neighbors houses...

Never gunna happen. When do you need a paint roller? About once every 5 years on average, vs WIRELESS connectivity once every 5 minutes on average.

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