Hacker News Reader

Comment by Wowfunhappy | Hacker News Reader

The cable companies are a natural monopoly, just like electricity providers et al. It doesn't make sense for two companies to lay two separate sets of cable in the ground.

ISP competition isn't going to happen, at least not in the wired/cable space. They need to be regulated with that reality in mind.

View on HN

Natural monopolies are supposed to be more regulated than telcos currently are. There's a word for it, it's called a utility

This argument can be extended to any market with barrier-to-entry level high fixed cost and low variable cost. That's basically every large tech platform (search, social, ecommerce, cloud).

I agree with you but the Cable company/ISP is only a natural monopoly as it applies to infrastructure. All the other bundled services on top can still be offered through a competitive marketplace.

Regulate internet infrastructure like any other utility and our problems are solved.

>The cable companies are a natural monopoly, just like electricity providers et al. It doesn't make sense for two companies to lay two separate sets of cable in the ground.

With all due-respect, electricity companies haven't had to lay separate lines in the states since FERC Order Number 888[0,1] in 1996 I think it was and the EPA 2005[2]. The entire premise has been defunct for over a decade now.

From what I understand, if a line falls under the common carrier utility definition, the owner of the line cannot refuse access to other providers and can only charge a non-discriminatory tax/leasing-fee for use of the line.

I think that this is precisely why we see the back and forth about the common carrier definition with the different regimes of the FTC regarding ISPs and cable providers.

The issue - in the case of the cable companies/ISP providers - isn't regulation of the monopoly but the classification of their business and how the law then affects them. If they do not fall under common carrier utility rules, then the monopoly will always remain because even breaking them up - such as in the case of Ma-Bell - still ensure monopolies in those more localised coverage areas.

Back to the electricity providers: If the argument of utility providers having to lay lines had any merit, you'd still see telephone poles with hundreds of lines on them - originating from both operating and now-defunct providers (the worst be from the defunct providers because there's no maintenance on them) but we don't see this in the states (as far as I'm aware) today, yeah?

[0] - https://www.ferc.gov/legal/maj-ord-reg/land-docs/rm95-8-00w....

[1] - https://www.ferc.gov/legal/maj-ord-reg/land-docs/order888.as...

[2] - https://www.ferc.gov/whats-new/comm-meet/042006/M-1.pdf

The degree of saturation on that infrastructure, as well as the quality of its maintenance, are the important things that competition could improve. Allowing resellers on the same ancient, overloaded infra does not make the user experience better.

I disagree, I am a customer of a unique not quite municipal network called Utopia. I pay Utopia a monthly fee for my dedicated fiber connection, and I have about 10 ISPs to choose from offering speeds of up to 10Gb/s. It feels like this model is spreading like wildfire here in Utah. I hope it catches on elsewhere.

That's fake competition. The fiber is still a natural monopoly and needs to be regulated to prevent the owner from imposing evil upon all the "competing" ISPs.

Discussions about monopolies aside, why do it this way? What service do the ISPs actually provide?

Wouldn't it make more sense for Utopia to just provide internet, given that they run and are directly charging you for the infrastructure?

Natural monopolies have high fixed costs and low marginal costs. Software has high fixed costs since you have to pay expensive developers to write the code first, and then low marginal costs to run it on relatively cheap servers. That fits the definition perfectly.

It's just that the market for cloud computing, mobile, search... Are so large they can support multiple companies so they tend to actually be natural oligopolies.

While natural monopolies may often (or even always?) have high fixed costs and low marginal costs, it does not at all follow that any industry with high fixed and low marginal costs lend themselves to natural monopolies. And there's no reason why they need to be oligopolies, either.

That's just a function of many founders' desire to flip their company for personal profit rather than building a sustainable long-term business. And a function of big-company executives wanting to further enrich themselves at the expense of their employees during big-co mergers.

Reply on news.ycombinator.com