Hacker News Reader

Comment by exabrial | Hacker News Reader

The problem is the proposed solutions really just entrench existing providers, specifically net neutrality policies: They legalize monopolies as long as they're "following the rules!"

_You_ _cannot_ _legislate_ _good_ _behavior_ _into_ _monopolies_. So while I appreciate the spirit of Net Neutrality rules, the solution is fundamentally flawed.

Let's say you want to open an ISP in your neighborhood. Based on their history (When Google Fiber moved into my area), Comcast will call their existing customer base and offer them services below cost but at the price of a 3year contract. This delays profitability for you as a new player into the space. Comcast can take money from one market (another state) and move the profits into subsidizing a loss to prevent players from entering the space in another market. By breaking this cash flow, you end the stagnation of consumer choice, driving innovation forward.

View on HN

My water company is pretty well behaved. Sewer too. Trash pickup is without headaches although I don't know the cost. Even my power company is ok now. They had a bad part in the early 2000s when they were trying to semi-privatize and Enron was trying to horn in on the management, but once they went back to being an ordinary utility the bad behavior stopped.

I have had horrendous experienced with Waste Management on three occasions. Moving out of the neighborhood they had a city-enforced monopoly on was the only solution (granted, i moved for other reasons, but getting someone else was a delight all its own).

Similarly my previous trash company raised rates several times the year before last nearly doubling the cost, then a competitor came in at the original price and virtually everyone switched. They offered to lower us back down when we canceled the service but they were a day late and a dollar short. They still send us letters begging us to come back.

But in this case the remedy is head to your local town hall and start complaining. The "monopoly" is usually a 5ish year contract that the city sends out for bids.

I'd love the ability to head to city hall and convince local leaders to switch from Comcast to X.

This was back when I was living in a large suburb. The whole place was divided among a half-dozen or so trash companies. I might have complained, but moving was a whole lot easier than waiting 5 years to maybe get a change.

Before the monopolies were granted, people could pick their own haulers. The monopolies were granted to cut down on truck traffic- the fact that WM took iver my street was evidence enough that one complaint would not dislodge them.

You might actually have more luck with complaining about your internet service. The rural area I moved to only had DSL, and the quality was so bad the town threatened to kick the carrier out if they didnt improve. Instead, they agreed to lay fiber to the entire service area, and it was only about a year after I moved in that we got it. (Way overpriced for full gigabit, of course, but thats rural internet).

I extremely do not want the situation where the state owns and operates the communications infrastructure of the general population.

That's turnkey tyranny, censorship both ways (what you can send, what you can read). Right now it's just expensive, but you can still use a few different (overpriced and anti-competitive) providers.

If the state decides you're a threat and unplugs you, it could be months or years before you can invoke your legal rights to get reinstated.

ISPs give the US government absolutely anything they want. You have no real protection from the government because of private ownership, the only difference is now both private organizations AND the government make decisions about your internet access. You also pay more for less vs most countries with more regulated infrastructure or state owned infrastructure.

I'm happy to look at any evidence you have, but everything I have seen indicates US internet is vastly worse than more public-oriented systems, unless you own internet infrastructure.

Yes, but if the state is the only game in town, you can't pop down to the next shop and buy a new SIM card, or order an install from a different provider.

Owning the infrastructure (the cell towers, fiber lines) is not the same as operating a network, the infrastructure could be public owned, while the service provider operating in data centers that connects to those public owned infrascture for a cost.

Municipal broadband where the county PUD owns the fiber and multiple private companies provide service over them works great. Which is why you can get gigabit internet for like $50 some places and struggle to get decent internet in the suburbs.

Also Comcast is not going to tell the federal government "no" to a data request if it doesn't benifit them.

The State owns USPS and it's not so bad. Before phones were introduced, it was the main channel of communication.

Some would take USPS as a demonstration of the state delivering a communication service with fair performance and competitive prices.

Others would take the USPS as proof that a strongman president can switch such services on and off at a whim, for political reasons.

> Others would take the USPS as proof that a strongman president can switch such services on and off at a whim, for political reasons.

When was it done?

This is why in most countries, phone systems were developed and run by the post office. I don’t think it worked out well.

I am supportive of municipal telecom infrastructure but this example always gives me pause.

The state currently performs suspicionless surveillance on the entire traffic graph of the USPS. Every piece of mail is weighed and imaged and sender anf recipient are placed into a database, so it is impossible to send a letter without creating a permanent record of source and destination.

You can, of course, leave off the return address, and this works fine for letter mail.

Packages, however, require ID to be dropped off. You cannot use the USPS to send packages anonymously.

The analogous version for a state-run ISP would be a blanket filter/ban on Tor/VPN usage.

I don’t think the USPS is a good example of a state-run organization for that reason. The state has already demonstrated their desire to eradicate personal privacy and anonymity.

*If the state decides you're a threat and unplugs you, it could be months or years before you can invoke your legal rights to get reinstated."

You've heard of no-fly lists, right? At least there are some protections with governments, in general. With private companies, not only do you get the risk from the government, but whatever censorship the ISP decides to subject you to as well, and you might not have a choice.

Luckily, there are some ways around some of the controls - in no small part, by doing regulation or allowing a hybrid system (government owns/maintains infrastructure, leases it to companies, for example)

There was a period of years between when the no-fly list was instituted and when there was a system of relief for people who were placed on it erroneously.

This is really just supporting my point that you do NOT want the government involved in the system at all.

You still can’t get off of the no-fly list (even if you haven’t been convicted of a crime!) if the government wants you on it and you weren’t listed by accident, “redress number” program or no.

Let’s not fuck up ISPs this badly.

Are you sure that having privately owned and operated communications infrastructure will actually prevent any of the things you're concerned about?

For example, AT&T rolled right over when the government wanted more access to their infrastructure after 9/11, even though it was pretty clearly illegal.

Water, sewer, trash pickup, and power have very easy to understand quality metrics, and can be easily regulated.

An internet connection is not so easy to measure. You could have a very well provisioned and maintained local loop, and poor connectivity from there. I strongly support local loop unbundling --- you can regulate the local loop in simple terms, and let competition manage the messy network interconnection bit.

Btw, the same argument you make about an internet connection also applies to money. And money is not even a natural monopoly.

For what it's worth, your suggestion is very similar to the way that electricity is sold where I live - I pay separate prices for electricity generation (where I can choose) and electricity delivery (where I cannot choose).

I'm not going to pretend to know all the pros/cons, but it is reliable and cheaper than average.

I don't think this is a monopoly problem as much as a collusion problem: multiple providers exist but many regions each have a single provider. If this is a deliberate agreement then it's extremely illegal.

Where I live there are multiple high-quality ISPs at my building, the US should find a way to encourage multiple ISPs to be present in every single neighborhood.

People who complain about "too many ugly wires" should be ignored: it's much better to have ugly cables on poles than slow internet.

Most good theories of monopoly power encompass the abuse of natural monopolies via collusion

Wouldn't it make sense to share the pipes the dumb light pipes and compete on service?

That's more or less how it works here in New Zealand. A private company, Chorus, has a monopoly on the network itself, and can only provide the network to other ISPs and not direct to the consumer. I kind of presume there are other regulations in place, or conditions for the $1B subsidy they got for rolling out the fibre network.

As it is, for a household to get a plan that offers download speeds of 700Mbps-900Mbps and no data caps, we're paying NZ$109, or about US$72/mo.

> As it is, for a household to get a plan that offers download speeds of 700Mbps-900Mbps and no data caps, we're paying NZ$109, or about US$72/mo.

Which is pretty good, relatively speaking. 330Mbps HFC Comcast is USD$74.99/month here in SF.

And there's good competition, I'm paying NZ$90 for the same speed (900/400) with no data cap. Static IP. And all the NZ prices quoted include sales tax (NZ law requires this) so the equivalent US price without sales tax would be about US$52/mo.

Your building, you say. I can choose between at least two providers in my apartment in Brooklyn, NY.

But somebody in upstate suburbia cannot, and they are lucky if their only provider is not utterly bad.

Density is key here. Suburbia is not dense enough, and is finicky enough about digging or running wires, to make building a competing network lucrative. And the US has a ton of low-density suburban population, even in formally urban agglomerations like LA or Houston.

One solution is to live in a proper city, but proper cities are not very numerous in US, and living there is more expensive.

Agreements between the local government and the provider aren't really collusion, just government created monopolies.

As for some kind of collusion between providers, if not competing is preferable for companies, why does anyone ever compete? Verbal agreements or not. Common sense says if you undercut someone's price they will cut their price too in response. Just offer the same price, stay out of their neighborhood, etc. Don't need to wink and nod about it. Yet we see fierce competition all over the place because that strategy doesn't work. New entrants always come along and they can't make a profit by playing that game when others already have all the market share. If you only see a single provider it's either a govt-protected monopoly as I mentioned above, or a beneficial monopoly that is holding prices too low for competition to see an opportunity.

> _You_ _cannot_ _legislate_ _good_ _behavior_ _into_ _monopolies_

Why not? Yes, breaking up monopolies is good but that doesn't mean we can't regulate industries before the point where things get so bad that there is enough political will to break them up.

I mean, feel free to provide an example where we successfully regulated a monopoly to encourage competition and consumer choice...

Obviously you can't have a competition with a monopoly in place. Regulation could help to keep prices down and to expand access in areas covered by only a single broadband provider.

Cellular carriers and electric power providers, and the success has been repeated in many countries.

The Microsoft case seemed to work out well

Basically anything that historically falls under common carrier regs. None of this debate is new. We saw it with railroads.

Natural monopolies need counterbalancing regulation. This isn't even remotely a controversial statement in economics.

> Natural monopolies need counterbalancing regulation. This isn't even remotely a controversial statement in economics.

Unless your argument is that the Austrian and Chicago schools of economics doesn't actually exist, this is quite wrong, since the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation, and the Chicago school likewise holds that absent regulation, monopoly is a transient condition, not a stable one; both favor removing regulations that they see as stabilizing harmful monopolies, rather than regulating to manage naturally-formed-and-self-stabilizing monopolies, which they don't acknowledge the existence of.

Now, I think the Chicago/Austrian positions on monopolies are wrong, but you really can't reasonably deny that this is a fundamental area of controversy.

Yes. I am entirely comfortable in saying that the economic consensus is strongly against the Austrian and Chicago perspectives. Both of these schools value prior ideology over empirical data. It's a "debate" on forums like this, but not even remotely so amongst the economists I talk to.

> Both of these schools value prior ideology over empirical data.

Austrian overtly so, Chicago less so, but, yes, its another issue that "is economics an empirical science" is also a controversial position in economics.

> but not even remotely so amongst the economists I talk to.

That's a very different claim than your original one. That last qualifier does quite a bit of work.

Yeah, it does the work of every actual credentialed economist I know has nothing but utter contempt for praxeology. As should be. As should you, if you cared enough.

The problem is that a monopoly may naturally be disrupted in decades, while people want an improvement during their precious only lifetimes.

A temporary regulation could possibly help, but making it temporary is the hard part. And if it lingers, the inefficiencies it creates let some companies become incumbents, and, with some luck, even monopolies.

I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades. But this is purely speculation (not entirely unprompted by reading speculative fiction).

Is there any evidence that unregulated free markets actually tend towards competition, rather than consolidation?

>I'm more inclined to think that under a completely unregulated free market a monopoly today would instead be more likely to turn into a de-facto nation state over the course of decades

Based on recent experience this does appear possible, that some monopolies have gotten savvy enough to become long-running nation-state-like entities if left unregulated.

We know from the science of complex systems that one characteristic non-linear dynamic systems, like markets or national economies, is that the critical resources of the system tend to concentrate and consolidate over time.

We’ve witnessed this over the past several decades with the deregulation of the US banking industry, its subsequent concentration and consolidation.

Libertarians like to believe that such economic problems are self-correcting, that eventually such concentrations of wealth and economic power will either asymptotically collapse, or become ossified and be supplanted by something newer and innovative. Either way there’s a reset.

But I don’t think either is inevitable, in all domains. What we’ve actually observed with the banking system is that:

1) powerful monopolies/oligopolies use their resources to capture the actual government and regulators, and use those entities to shape favorable laws, and to bail out the monopolies when they collapse, preventing the reset, and

2) even if the collapse and reset occurs, it causes far more damage and misery to the rest of the economy and society than to the people responsible for causing it.

All else equal I’d rather live in a society that simply prevents those extreme cycles by making natural monopolies into well-regulated public utilities. Public utilities in the US have worked very well for a century, they’re a far more desirable economic arrangement for 99% of society.

You are making a rather large jump here. A natural monopoly in broadband services for example is very unlike to turn into a nation state.

You assume markets are inherently centralizing. Where is this assumption coming from, its actually Marxist economics. If you critic Austrian for being empirical, we should first admit that this base assumption is purely based on a school of thought that is much more un-empirical then any Austrian or other market oriented schools ever where.

This prediction was made 200+ years ago, and we have seen a trend towards ever greater number of companies. The amount of interventions by government, with things like anti-trust act were incredibly few and far between.

If there was any validity to the concept, of inherent centralization, we would have seen government having to near constantly fight monopoly.

Both in illegal and legal market we constantly see disruption of big players. The stability of the farmer own farms, rather then the inherent centralization corporate farming. The distributed production of meth, replacing the centralized supply of other drugs. The restaurant industry has existed with few regulation and no anti-trust cases for 100s of years.

I would argue the argument that all markets are inherently centralizing has been totally dis-proven by evidence. Even in the cases where Anti-Trust cases were launched, usually by the time they came anywhere near breaking up a company, the original problem had basically passed. I'm only 30 and in my lifetime I have already seen like 4 tech companies who were gone dominate the world and if Anti-Trust wasn't invoked society was doomed according to people on Hacker News.

There are natural monopoly, and markets where one player can dominate. These are more complex cases, but they are also limited in scope and unlikely to grow out of that market. In fact in general those companies usually become rather happy with just profiting from their monopoly and quickly lose the drive to go into the competitive markets.

In those cases regulation in the short term can help, but being aware of locking in the system are very real, making any kind of disruption in those markets incredibly difficult.

At the time, a broader evaluation of the concept of monopoly must realize that threw-out history, the majority of monopolies were state created. In fact, one of the kinds prime way of making mponey, was selling monopoly rights and using royal power to suppress competition. Some economists have even modeled the Soviet economy along those lines as well. This is largely still the case, the places where monopoly are most persistent, are places where it is created and sustained by regulation.

More common then strict monopoly is some small to mid sized group, getting regulation that protect them. My fav example are the like 15 families who produce cane suger in the US who have for 50 years profited from a sugar import tax. This is party the reason corn sugar is so much used in the US.

In the end, pragmatically the state should likely be aware of citizens being exploited in some natural monopoly situation, but also be aware that if it is actually a natural monopoly, even regulation can not systematically fix the problem either and can do harm in the long run.

"the Austrian school denies the existence of natural monopoly and argues that harmful monopoly can only exist as a product of government regulation"

This sounds prima facie absurd to me. Are they just throwing phrases out of Ayn Rand novels on paper and calling it science?

I say this only half-sarcastically, the Austrian school seems to start at their desired solution & worked backwards from there.

They similarly deny the existence of externalities- although depending on who you read the justification varies widely.

It's not even sarcastic. The Austrian school literally starts with assumptions that basically imply their solutions, that people always act in their best interest and so on, and reject any kind of empirical test of their theory. At all. The Austrian school assumes that these bases are absolutely and completely true, and then posit that all economic truths can be derived thereof and cannot be impacted negatively or positively by empirical evidence.

I'd say that's treating econmics as pure math rather than science.

No, no it's not. It's treating economics as some bastardized version of philosophy, not math. Mathematical axioms are based on the principle that you cannot imagine an alternative axiomatic system, I can easily imagine a different axiomatic system for economics, and that the axioms cannot be empirically contradicted. And I can actually justify it empirically.

You maybe right, but not the way you interpret math. Mathematical axioms are not empirical, and contradictions do arose from those axioms. Non-Euclidean geometry[0] would be a good starting point, Russell's paradox[1] is also worth entertaining. Mathematical axioms are assumptions made that works treated as truth, not the truth taken for granted.

[0]: https://en.wikipedia.org/wiki/Non-Euclidean_geometry

[1]: https://en.wikipedia.org/wiki/Russell's_paradox

That's exactly my point. Mathematical axioms aren't empirically testable, and mathematics accepts many different axioms.

Praxeology doesn't accept other axioms, and the axioms it accepts are empirically testable. Which is the why math is fine but Austrian economics isn't.

Also, mathematics doesn't make claims on the real world.

You may want to brush up on what's happened in mathematics over the past 150 years:

https://en.wikipedia.org/wiki/Non-Euclidean_geometry

https://en.wikipedia.org/wiki/Axiom_of_choice

That's exactly the point. Non-euclidien geometry is still geometry, and axiomatic systems without the Axiom of Choice is still math.

The Austrians start with their axioms and do not accept anyone with other axioms. And unlike mathematical axioms, their axioms are actually empirically testable.

Not actually the case. You are massively overestimating the impact of praxeology on Austrian economics. Austrian economics predates praxeology for 80 years.

The problem is that you are not actual arguing against austrian economics but a political movement that has hijacked the ideas and presents itself as 'the solution' that proves their political view. This is mostly driven by some conservative finance and the 'The Mises institute', that should actually be called 'The Rothbart Institute'. As they don't really represent Austrian economics as a whole, but rather a narrow minded interpretation of Mises.

If you look at the Austrians generally and those still in academia, they do not actually work that way, and they don't reject empiricism as a whole. The reject pure empiricism and pure positivism, in favor of a individual and institutional approach that is validated by data. In practice and historically Austrian economics was much closer to what we today would consider institutional economics, Law&Economics and Political Economics.

I have years ago stopped fighting since the term has been so discredited by the mob of morons on the internet. Some economists that solidly work within Austrian tradition have stopped using that term because of those bad associations.

But I'm just telling you, your argument really is just like arguing against some Burnie fam who proclaims Keynsian economics implies socialism.

The Austrian school is pretty famous for rejecting empiricism and basically saying it's their way or nothing; it may come to valid conclusions but because they reject any evidentiary evaluation of their assumptions its unfalsifiable (and therefore not a scientific way of approaching the world)

If their conclusions didn't happen to support those in power and capital in particular, they'd be just another meaningless research group.

Given the fact that the Austrian school literally rejects the scientific method, I think that it indeed barely qualifies as economics.

The Chicago argument on this matter is pretty generally rejected.

Austrian economics doesn't actually deny the existance of natural monopoly. That is simply a wrong headed reading of Austrians by people who hate it.

If anything it says, natural monopolies exists, but some of the regulation designed to fight it, can be more harmful.

Austrians also try to not narrow down market so much, that monopolies are everywhere. Is Tom Hanks a monopoly on Tom Hanks, sure but does that matter. Is the market acting? Entertainment?

Just saying 'its a natural monopoly, therefore government need to come in with some strong handed specific regulation' is often a bad approach that can stop other mechanism from functioning. For example, locking in natural monopolies forever, even when future technologies means that monopoly would have been broken.

ISPs are NOT a natural monopoly, you can have multiple sets of wires going to every building. This is the situation in my part of Europe and my internet is pretty damn fast.

Treating ISPs as a monopoly is fundamentally wrong.

Multiple sets of wires going to every building is feasible and perhaps even reasonable when we're talking about an apartment building. But digging multiple trenches along suburban and rural roads and driveways leading to single-family homes is very wasteful. It's usually prohibitively expensive for the second company that wants to come into town, and is basically guaranteed to be a negative ROI for the third company that tries to lay fiber to customers who already have two incumbent options.

In the US, Google Fiber has had limited success entering a handful of carefully-picked markets where the incumbent options are rotting copper POTS wires vs coax that can only compete on downstream bandwidth. In some of those markets, the incumbent phone companies have replaced some of their copper with fiber, but a third residential fiber option is still unheard-of. That may not fit the strictest definition of natural monopoly, but it's pretty close: in areas where both Google Fiber and eg. AT&T fiber are competing against coax, it would not be surprising to see one of the two fiber ISPs give up. We've already seen Google give up on bundling TV service, and both Google and AT&T are very reserved about further expansions.

Also in Europe the owner of a cable to a build is required to rent it out to other providers at cost. So if DTAG builds a cable to my apartment complex, then I can later go an buy a DSL from Vodafone, despite the line begin DTAG. Since it's at cost, Vodafone has no further costs than what they would pay if they put down the line themselves, they even save some since they typically delegate support to DTAG technicians for on-site issues.

(FWIW this is called Local Loop Unbundling [1])

[1] - https://en.wikipedia.org/wiki/Local-loop_unbundling

Yeah, the US had a similar concept that was changed about 15 years ago for phone circuits. Owner of the "dry pair" had to lease it out at a regulated rate, around $10 a month. At the time that was still law/policy, I had great DSL service through an independent ISP. It was far more reliable than the other options available at the time. The legal change destroyed that entire company, and left me with the typical duopoly choice for broadband since.

Before the 1980s long distance calls from AT&T landlines were very expensive. The FCC forced AT&T to allow competitors to use their infrastructure at a reasonable price. MCI and Sprint entered and the cost of long distance calls fell pretty quickly. Sadly, this may partially explain our terrible and expensive cell phone service. In many countries, the first competition to the national phone carrier were mobile services so the early mobile entrants were competing against massively inflated prices for long distance calling and quickly built high quality alternatives.

It seems odd that you assume the goal of regulating a monopoly must be to encourage competition and consumer choice, ie. breaking up the monopoly, directly or indirectly. Why is enforcing reasonable prices and business practices not an allowable goal?

BT Openreach and Local Loop Unbundling comes to mind.

Because companies are really good at optimizing and the outcomes are usually bad behavior that is not-yet legislated. It's a cat and mouse game. Much better to have a plethora of competition so that the competitive market provides the tight feedback loop. With wireless carriers the MVNO rules mean that I can shop around and jump ship pretty easily. I just switched providers a couple of months ago.

Look at PG&E. They're badly behaved but also highly regulated.

> If you want to emphasize a word or phrase, put asterisks around it and it will get italicized.

https://news.ycombinator.com/newsguidelines.html

Sorry :( I come from planet markdown

Oh I ~~kinda~~ _totally_ get that.

But Markdown doesn't work here.

Banning states from banning municipal broadband would help (by making broadband providers less monopolisitic).

All incumbents have some advantage over a new player -- that doesn't mean monopoly.

A good example of how Comcast will be disrupted is Starlink. Though I'll concede that US Internet infrastructure seems outdated compared to the EU. So perhaps this aging infrastructure suggest monopolistic practices as does any phenomena characterized by stagnation.

Reply on news.ycombinator.com