So why is there so little competition? Because municipalities make it unattractive for companies to compete. American cities are totally dysfunctional when it comes to socioeconomic conflict, and it plays out in a way where building infrastructure becomes a huge political battle: http://www.crainsnewyork.com/article/20140219/TECHNOLOGY/140.... If you want to bill fiber in New York City, you can't just operate like a regular business, targeting the most profitable customers. You have to play in this insane socioeconomic battleground with a civil rights lawyer breathing down your neck turning a simple business into an economic justice issue. Or you go into San Francisco, and your fiber upgrade gets stymied because people don't like how the boxes look: http://www.fiercecable.com/story/judge-orders-att-halt-u-ver....
The current way, the rich are in some way subsidizing fast internet for the poor, and telecom companies are deprived of high profits. That is excellent.
As for cross-subsidization, it's bad because it obscures the trade-offs that are being made. I'd be happy to pay tax money to subsidize internet for low-income households. But I want that on my tax bill, not my cable bill.
But you know it as well as I do that that's not happening. I had to hear it from my grandma, Rush Limbaugh, and about 4 or 5 neighbors on my street about Sandra Fluke having the nerve to suggest contraceptive drugs be included as part of healthcare - can you imagine the kind of outrage you'd see at the idea of people's internet being put on your tax bill? That's never happening, it's not a politically viable solution, full stop. Heck, I know even very smart and educated people who like to regard the internet as a waste of time with nothing of worth.
> Depriving the telecom companies of profits just means that investors will take their capital somewhere more profitable, like peddling advertising to kids: http://ycharts.com/companies/FB/profit_margin.
You're very correct there. Personally, I'm convinced that Facebook is a house of cards that will soon fall (https://www.youtube.com/watch?v=oVfHeWTKjag) and I hope and pray that it does so very soon. And that it'll take down a lot of others too, with it. I have no good answers here, I just people were a little more assertive in spewing away anything with the FB logo. Let's hope all of this advertising model is a passing phase and we get over it.
Cable companies choose not to compete against each other in order to keep their profit margins high. It's unofficial collusion between all the major players.