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Comment by josu | Hacker News Reader

Disclaimer: This is an observation, unsupported by facts, and please take it as such.

I'm pretty sure that the ISP sector is not constrained in any way by a natural monopoly. Take a look at the Internet in Romania wikipedia article[0]. In my view telecom companies have grown to disproportionate sizes, almost everywhere in the world, and this has given them enough power to buy the lawmakers. A lot of legislation has been passed to protect them, state laws, national laws and even international laws. So no, I think that the telecom sector has been intervened enough since its creation, what the consumer needs is to completely deregulate it, and to let the free market work its magic.

[0] http://en.wikipedia.org/wiki/Internet_in_Romania

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So just anyone can dig wherever they want whenever they want, laying redundant fiber and tearing up the streets?

Somehow I doubt that that would be the most efficient way to do it. But maybe a couple or three companies could lay redundant fiber, while another two used existing infrastructures with new implementations, and maybe a couple more could offer satellite connections.

I don't know, this is just pure speculation. What I know for sure is that the reason to protect companies that exploit "natural monopolies" is to protect the consumer. And right now, the protection of these companies is hurting the consumer, more than helping him.

Yeah, in an ideal situation the state would be able to provide "free" internet at a really low cost. But that solution overlooks this huge problem: https://www.youtube.com/watch?v=mgJ644LPL6g

I strongly suggest that if you're going to espouse these opinions, you do some math first.

In this case, I suggest you model rural America's density, and the cost to lay down a wire, or fiber, or whatever in a town, along with all the needed infrastructure.

Then I suggest you model the financial returns of that investment under conditions where there are multiple players.

If you do this well, you'll find that as you add competition, you add marketing cost, and you're also forced to amortize the fixed infrastructure costs over smaller and smaller numbers of consumers. And you'll also find that whoever was first to market in that area has a dominant position from a game theoretical perspective, and can make moves that would make it essentially impossible for any competitor to enter the marketplace profitably.

Natural monopolies aren't made-up things.

Assuming that natural monopolies do exist, you just described how they actually work. They don't need the protection of the government because the incumbent has so many advantages over the entrant, that (most of the times) there is no need to offer any incentives to any company for it to be the first one to exploit a natural monopoly.

The government regulations aren't there to create or protect monopolies. They're there to control monopolies that were likely to occur anyway, so that the monopolists can't use their position in an overly extractive manner.

Since these regulations occur at a local level, some of the rules are more effective than others, and some of them are straight-up corrupt. But the common case is not government creating monopolies, but rather government restraining them by regulating them.

Ok, I guess I was looking at it wrong.I was thinking about government-granted monopolies where the government willingly prevents competition. It is my understanding that this was how of most of the telecommunication companies around the world started.

I've heard of other scenarios where the government prevented competition, but they nearly all boil down to the same core: the constituents want X, but some sort of market failure is occurring (or likely to occur) and a temporary market intervention was able to resolve it.

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