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Comment by ojbyrne | Hacker News Reader

For those who think this is going to be an anti-government regulation, libertarian orthodoxy type article, here's the tl;dr:

"government regulators who have forced more competition"

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Well this is how it happend in Romania:

----------------- 2000 - 2002

There was NO regulation. We just threw UTP cables from building to building, and bought external connectivity from bulk sellers. We didn't pay any taxes. We didn't have any signed agreements with "customers". We didn't have any permits from the city council either. There were no employees... heck, we weren't even registered as a business.

We just threw UTP cables through the city like it was in our own backyard. The only problem was after thunderstorms, when there was a shortage of switches to replace the burned ones :) Oh, and from time to time I had to call some customer's mom to ask her to reset the stuck switch hosted by her kid, because half the network couldn't connect to the internet.

Users paid about $10 for 100 mbps connectivity with other users (multiplayer games and movie/mp3 sharing) and 64 kbps internet access.

Basically we were just some highscool/college kids building a LAN, and every user paid a share of the costs. My network had about 200 subscribers and covered a 2x2 km area. Several networks like this one were scattered throughout the city. Every month a couple of new networks appeared, while others bit the dust (including my own).

----------------- 2003 - 2004

(By this time me and my friends lost interest in being a "pseudo-ISP", so I can only speak from the POV of a customer)

Networks with 100-300 users began joining together forming networks of 1000+ subscribers. Companies were formed, real sys-admins were hired. Some backbones were now built with fiber optics.

Big companies noticed this and started to complain in the mass-media, calling such networks "illegal". Well, they were partly right (nobody gave a f#ck about building permits and taxes).

Now users paid $10 for 100 mbps connectivity with hundreds and even thousands of other people, and 256 kbps internet access. Big telcos were barely able to offer 128 kbps with a monthly traffic limit.

----------------- 2005 - 2008

Big telcos stopped complaining and began building their networks. Then increased their networks speeds, removed the FUP, offered subscriber packages (phoneline + cable + internet access). For $10 you could get a landline and 5 mbps internet.

A lot of city "LANs" couldn't keep up with the big guys and crumbled. Others joined forces and became real ISPs (with tech support, tax payments, ...) and some even managed to obtain money from investment funds. They could still compete with the main ISPs because they offered much better tech support, and the 100 mbps LAN speed was still of huge interest, even if the internet access was limited to 1-10 mbps.

----------------- 2009 - 2010

Small ISPs begin implementing Fiber to the Building. Hello Gigabit (well, 1000 mbps with others subscribers only... the internet connection is limited to 20-30 mbps).

Big telcos buy more and more small ISPs, but also continue to improve their infrastructure. Some drop the old cable (with its DOCSIS modems) and begin implementing Fiber to the Building too.

----------------- Today

For $10 per month you can get 100 mbps internet access + 5GB of mobile 3G connection. My ISP started installing Fiber Optics to the home (GPON technology) for houses and continues installing Fiber to the Builing (and UTP from there to your apartment) for high buildings. They also began installing WiFi access points through the cities (free access for all subscribers).

-----------------

IN THE END, I WOULD LIKE TO THANK THE ROMANIAN GOVERMENT FOR NOT INTERFERING. And if the large companies will try to form monopolies, I'm sure new ISPs will appear. I don't care about regulations. Thank you.

Awesome story. I like the idea of a city or neighborhood LAN with an internet gateway.

This makes a lot of sense, especially when local online businesses want to serve their local community (like a local Groupon or live streaming of the neighborhood's Little League game from multiple cameras).

Well, back then we didn't see it as a business. Of course there were also people who knew what they were doing, but if I remember well, my network started with three teenagers wanting to play Quake and Need for Speed. Then more and more people joined... hundreds of them.

Internet access wasn't a priority (most users wanted it for IRC, and there were very few local websites/services anyway). As long as we could share movies and play games, everything was fine.

Today things changed. I think that most users want 100 mbps internet access instead of 10 mbps internet + 1000 mbps LAN. But I'm confident that, if the ISPs fail, people could build their own networks as long as the State doesn't interfere.

The problem with US seems to be that the Government is bullying (through all kinds of regulation) small ISPs in order to protect the big guys.

---------- EDIT: I have to admit that (in 2003 or so) it felt good when a big telco, with a budget of millions, could barely provide 128 kbps, while the small ISP which I joined was providing 512 kbps internet access + 100 mbps LAN. Today I'm a subscriber of that big telco, because they managed to pull their stuff together and now provide a really good service (at least in my area). But Gov regulation had noting to do with it. It was the competition: improve your service or die. Plain and simple.

The interesting thing in the report is that they blame Romania for introducing "noise" in their statistics, so they did not include it. In one place they actually blame the ad-hoc networks for this, probably thinking that most of the country still has the pseudo-ISPs that were usual back in 2003.

He's right, My dad, who lives in Romania, has a 100mbps internet connection bundled with a 5GB 3G plan for about $13/mo.

I am paying $60 for a 50/8 pipe, and consider myself happy, compared to other US residents.

... after creating monopolies in the first place

The logic there is astounding. The government broke up AT&T into a bunch of little companies. These companies then merged their way back into a handful of large corporations and are still trying to merge even more. Did the government force them to join up together? Of course not. The government is actively discouraging a lot of these mergers, i.e. the government is forcing there to be a more competitive marketplace.

The government broke up AT&T into a bunch of little companies

After establishing it as a federal monopoly in 1934. (And in TFA, we're talking British Telecom.)

Similarly, there are a lot of municipal agreements in the US where one company gets the exclusive right to handle local phone or cable service within a city or region. More companies or smaller companies doesn't mean any benefit for consumers when they still just end up choosing between "the phone company" and "the cable company" as designated by law.

> After establishing it as a federal monopoly in 1934. (And in TFA, we're talking even worse entities.)

In order to regulate it (putting it under jurisdiction of the FCC) as Bell was already a natural monopoly by this point, even after the Kingsbury Commitment.

At the top of this thread, ojbyrne says we need to have government regulation in order to create competition.

Here you say that we needed regulation to make AT&T a de jure national monopoly so that we could further regulate AT&T.

So, regulation grants monopolies, then regulates those monopolies, then also regulates more competition into the monopoly market it had previously granted? This is good governance?

Regulation did not create AT&T's monopoly. AT&T did that, the government later sanctioned it in order to try and better regulate the monopolistic company (it failed).

The original AT&T was made into a national monopoly by U.S. government regulation: http://en.wikipedia.org/wiki/American_Telephone_%26_Telegrap...

Likewise, in many European countries, telecoms were originally national monopolies. Both in Europe and in the United States those national monopolies were either broken up or subjected to more competition.

VMG is quite correct to point out that telecoms gained monopoly status due to government action.

There are two differences (though I don't think they're very important):

* In Europe, it was generally an artificial monopoly through a state company, Ma Bell was a natural monopoly sanctioned by the federal government.

* Where Ma Bell was broken up following an antitrust case, most european monopolies were simply privatized along with new regulations (or deregulations depending on the market) forcing them to open up their market (instead of turtling)

That doesn't really explain the difference though. The one Dutch telephone company used to be state owned. Now we have multiple competing telephone/tv/internet companies.

The government doesn't have to create these monopolies. Utility (i.e. telecom) companies naturally tend towards a monopoly because of the absurdly high cost of rolling out duplicate infrastructure. Usually the first mover is able to fend off any real competition by lowering its prices below that which its competitors can afford, given that they still have an infrastructure to build.

And even if the first mover does not end up alone on the market, after some time the market tends to undergo significant consolidation (once most of the organic growth has been achieved). And you end up with a natural monopoly anyway.

You can even see that in very recent history: the US government broke up Bell in 7 in 1984, it's already merged back into 2 companies (AT&T and Verizon are composed of 3 baby bells each, the 7th is part of Qwest/CenturyLink)

Correct me if I'm wrong, but the baby bell split was a vertical split. In other words, it left 7 regional monopolies, rather than 7 companies covering the same regions, competing for the same customers.

That means that customers were still stuck with one choice for phone and internet access, but the choice merely varied based on where you went. The Baby Bells weren't competing with each other.

>... after creating monopolies in the first place

If you are really trying to advance the theory that "the market", left to itself, won't generate monopoly after monopoly, perhaps you could point us to actual examples of those golden times when the absence of regulation served consumers more than they served business oligarchy.

Are you trying to say that unregulated monopolies like US Steel, Standard Oil, the railroads, AT&T, American Tobacco didnt have the best interests of the public in mind? After all Carnegie gave us lots of libraries and without Rockefeller we would not have had the Rockettes.

I can't comment on the other three, but Standard Oil was fantastically good for the United States and the world. I'd really recommend the biography "Titan" by Ron Chernow about John Rockefeller's life.

Tons of advances in efficiency, chemistry, operations, logistics. Oil prices fell dramatically, consistency and quality went up, supply went up through all of Standard's monopoly years. Breaking it up was far more about political factional conflict than it was about problems for consumers.

(Preemptively: Before anyone decides to jump on it, Rockefeller's rebate deal with the railroad wasn't above board. But Standard Oil was a huge net gain for the world. Absurdly so, actually.)

If American Tobacco had the best interests of the public in mind, do you think they'd still exist in any form?

Being philanthropic is not mutually exclusive with owning an amoral or even unethical business.

I'm pretty sure he was being sarcastic.

One man's robber baron is another man's philanthropist.

Did you ever use Windows Millennium Edition?

Properly speaking, the concept "monopoly" properly pertains only to situations where the government enforces the monopoly. This is the original meaning of the word (before it was altered in the 19th and 20th centuries).

There is no proper political right for a "consumer" to have a choice between multiple brands of a product. If there were such a right, it would be violated the moment they walked into a remote store that didn't happen to carry every single product currently sold on the market. Remember, rights are contextually absolute. Their purpose is to subjugate society to moral law. And the purpose of moral law is to make individual flourishing possible.

I'd love to see where you got that idea because it isn't true.

The first use of the word was by Aristotle, where he describes Thales of Miletus' (who was a private citizen) cornering of the market in olive presses as a monopoly[1]

It's true that later there were some government sanctioned monopolies, but it is a mischaracterization to say that the word's meaning has ever changed. It was well understood then that there were monopolies that weren't sanctioned by the government (eg, the guild system in Europe).

[1] http://en.wikipedia.org/wiki/Monopoly#Historical_monopolies

I'd love to see where you got that idea

http://www.etymonline.com/index.php?term=monopoly

weren't sanctioned by the government (eg, the guild system in Europe).

No, this proves my point exactly. See http://en.wikipedia.org/wiki/Guild. Here's the fourth sentence: "They often depended on grants of letters patent by a monarch or other authority to enforce the flow of trade to their self-employed members, and to retain ownership of tools and the supply of materials."

Your definitions do not address the point of the comment to which you're replying.

To restate, the point is that many markets tend to wind up as monopolies or cartels. This turns out to be bad for the people making up society, and they (we) will not put up with it, so we pass laws against it.

This is why we have and use the words "monopoly" and "cartel". And other terms like "price fixing", "bid rigging", "market failure", etc.

> This is the original meaning of the word (before it was altered in the 19th and 20th centuries).

Considering the origins of the word (monopōlion, from monos "single" and pōlein "sell."), that does not feel correct.

While there were a number of de-jure monopolies (English and Dutch East India companies in the 17th century for instance) the origin of the word comes from a natural monopoly (of olive presses).

You lost me with that post there, Max. The opposite of "there is an absolute right to have choice" is not "you must not do anything to promote choice".

Besides, rights are not contextually absolute, as exercising them may conflict with the rights of others.

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