Net neutrality
blog.samaltman.com
blog.samaltman.com
And yet, you claim free market fails. Dear american internet users. The only reason you have what you have - shitty speeds and near monopolies - is BECAUSE you have government sticking its nose where it shouldn't (I'd say, it shouldn't stick its nose anywhere, but that's another story). Comcast is the second largest lobbyist in Washington. And still you want to fix the problem by introducing more of the same, that is more regulation and more government, whereas the only way to fix things is to not allow governmental interference in the first place. You can't blame evil Comcast. Why? Because if not them, someone else would lobby and win. If you can lobby, you have to or you're gone.
1 - http://s.wsj.net/media/050710pow14_J_20100506172349.jpg
2 - http://farm7.static.flickr.com/6142/6205357944_8056b01e05_m....
BTW do they operate their own wires to the building? If not is the owner of the wires allowed to compete in the market, raise prices or deny service?
Well yeah, that would be a pretty awkward way to encourage competition in the soft drinks market.
However, they do say things like: "You can't temporarily drop your prices just to wipe out competition." and "You can't agree on prices with Pepsi to avoid price competition" which work pretty well to keep that market competitive.
Suppose you have company A trying to outprice company B, which is a much smaller company. If company A wants to drop its prices, it can't just drop prices on just the number of products equivalent to the market share of B, it has to drop prices on the whole line of products of its own. Even if it succeeds in defeating company B, it has to make sure it will make up for the losses in the future. And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing? Therefore, for company A it's much less riskier to compete with B on the market by doing honest things, rather than cheating with predatory pricing and hoping company C will not come to crush it.
Why?
>And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing?
The competitiveness of a market depends on the costs of entering it. If the amount of capital needed to enter the market is significant, new entrants willing to risk that much will be much less frequent.
Predatory pricing allows monopolies to artificially raise those costs, simply by amassing a reserve of cash. Indeed, the real problem is not company B being defeated, but company B never even trying because the returns just aren't enough to justify the inflated entry cost. Company C never gets a chance.
Suppose you produce socks and another company does the same and tries to compete. You produce 1 million socks a month and another company only 10 thousand. You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business - since there is demand for the rest of 990k of socks at your high price, your competitor would simply grab another 10k of your socks market share and then you'll only be able to sell 980k at your high price and not 990k. You actually have to drop prices on all 1 million socks of yours, which is going to be pretty damn detrimental to your profits.
> The competitiveness of a market depends on the costs of entering it.
What's there to prevent a rich investor from entering the market and competing? Google had no problem competing with Apple on the smartphone market, it seems. The goal is not to allow anyone with no money to compete. The goal is to allow to compete companies who have sufficient resources to do so. That's what the competition is about.
Ah sorry, I misunderstood. I thought you were suggesting they'd have to drop prices on a range of different products.
>What's there to prevent a rich investor from entering the market and competing?
The fact that there isn't an infinite supply of rich investors queueing up to disrupt markets. And that there are likely much better investment opportunities than entering an expensive price war just to gain a foothold in a newly competitive market (at which point company C can enter, and reap the same benefits without the inflated upfront costs).
Except that with internet access, you can do exactly that. Any new competitor is going to have to choose to wire up a particular set of neighbourhoods with a particular 10 thousand customers in, and they're going to need a decent proportion of people in those neighbourhoods to sign up in order to make a profit. You can easily cut prices just for customers served by your smaller competitor whilst leaving them the same for everyone else - it doesn't matter that there's still demand elsewhere, because your competitor doesn't have infrastructure elsewhere.
And indeed, you can. In this example you have to realize that what government is selling to consumers is the service of preventing eventual rise in prices after the competition is weeded out. If, as a consumer, I am worried about such predatory pricing as in your example, what is to prevent me from signing a contract with a company which specifically states "you are not allowed to raise the price"? Then this contract can be enforced by whichever private court and protection agency I hired (how this would work is a matter of a separate post, but I recommend reading "The Machinery Of Freedom" by David D. Friedman on that subject).
However, I don't really think you'd need that contract. What would really happen is that many companies would have infrastructure in many places (as is the case in my country) or you would have alternative connections (as, again, is the case in my country with a 4g operator Yota). Or you would have willing rich investors if they see that opportunity exists to disrupt the market. Finally, people may move and stop using the service if they dislike it.
There are all sorts of opportunities. Government is just one solution with a very high cost indeed: you have many people die in bloody wars which are run for your tax money and on your behalf (as is the case with both of our countries, I suppose). And no, however you wanted it, with government you can't have only the good things and none of the bad ones. It's logically impossible, because for a politician the economic incentives are always in the wrong place.
And how they will enforce this contract? If it involves the threat of violence, how is it better than government? If it doesn't, how does it enforce your contract against the threat of violence?
>It's logically impossible, because for a politician the economic incentives are always in the wrong place.
Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.
I would recommend, again, watching David Friedman's talk on the "Machinery Of Freedom", it's on Youtube. He's got excellent examples and explanations. It's 20 mins and totally worth it. In short. on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning. With government, neither me, nor the company signed any contract with the government. The government just comes and starts interfering when it pleases.
>Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.
You cannot know whether a politician is truly a good guy or if he's lying to you. The only way to know that is to give him power first. Notice how different the situation is with a businessman: a businessman should first produce something and convince you his product is good before you give him your money. If the product gets worse over time, everybody stops buying it and he goes out of business the next moment. Not so with a politician, who knows he's going to keep getting his salary at the very least, and hopefully bribes, for the next 4 years. A politician knows very well that his voters will keep paying taxes, whether or not they like what he does. That is because if they stop paying, they risk getting in trouble and will possibly go to jail. A businessman doesn't have that luxury. He cannot force you to pay, he can only convince you by offering something you genuinely want to buy. Of course a businessman can also lie to you, but unlike a politician, his lies is more easily discovered and you have the option to stop paying him immediately.
And so, the incentives for a politician are in the wrong place. If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that. But simply saying “we should elect good people” is not a mechanism. It is an intention, and intentions are not results.
What's the alternative? Having no politicians and having only the market. On the market, you can decide to buy or stop buying things immediately with your own money.
I will try and watch this when I get chance.
>on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning.
So you have some entity with the power to enforce contracts by violence? What incentive do they have to do that instead of simply mugging you? A democratic government has to care about elections. A private company has no such concerns.
>If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that.
Well first of all, you're assuming that I mean representative democracy, rather than direct democracy. The system I've been thinking of recently tries to combine the best of both: Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time.
> On the market, you can decide to buy or stop buying things immediately with your own money.
Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.
Of course, it's the first reaction to say "but your private protection agencies are going to turn into de-facto governments". If you think long enough about it, you understand that they won't. Violence is never profitable unless somebody else pays for it (as with the government). Private protection agencies are in the business to make money long term, just like every other business. And that is only possible if you produce something people truly want.
So, two things as incentives to not rob you. 1. Your future business - if they rob you they, obviously, aren't going to get your business in the future. 2. Competition. Those two things government doesn't have to worry about! You always pay and there's no competition.
>Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time
It's better, but it's still worse than the free market with no government, because you still have to pay taxes. You cannot just say "no, no, thank you, but I prefer to keep my money and not use these and these services or fund these wars". You still have to give politicians power first. And you still use government power to make other people pay for what the majority considers a good idea. I think this principle of majority is rather insane. A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.
>Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.
When you have a democracy, you're still paying for it. Nothing is free. When you say "some freedoms should be guaranteed" you probably mean "some services", which is different. Freedom is not the product of someone else's labor. It simply is inaction, when you don't tell other people how to live their lives and how to spend their money. I may or may not agree that healthcare should be available to everyone at no cost, but you have no moral right to come and take my money to pay for something you consider to be good. You may, however, convince me to give you money and I may do it.
Well yeah, your victims pay for it. My point is that there's no inherent incentive for a private entity capable of violent coercion to use it for the benefit of anyone but itself. A truly democratic government has an incentive to use it to benefit at least a majority of people.
>I think this principle of majority is rather insane.
It's not perfect, but I think it's the only way we can make fair decisions about how to share limited resources.
In theory Capitalism distributes the most to those who provide the most, which sounds great. In practice those with more resources are more able to provide utility in future, so the distribution ends up being very unequal.
(EDIT: One solution might be a free market + enforced wealth redistribution at a rate based on the level of inequality. I think this would actually be much better at encouraging people to actually produce new utility constantly, instead of rent-seeking.)
>A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.
And you think a society that would pass such a vote would be any kinder in a free market? If a majority of people actively want redheads to be killed, then your supposed protection agencies would be happy to oblige.
And even without violence, the majority needs only to deny them work and they would starve to death, or at best live in ghettos.
> When you say "some freedoms should be guaranteed" you probably mean "some services", which is different.
No, my whole point is that access to services is a form of freedom. The freedom to eat. The freedom to learn. The freedom to be healed. If these things are contingent on labour, then they are lesser freedoms.
In a world with limited resources, some freedoms will always be curtailed. The question is which ones are the most important? I think the freedom to eat is more important than the freedom to decide how a portion of the utility you provide is shared.
> Well yeah, your victims pay for it.
That's not what I meant. I meant that when a country starts a war, it's not politicians who pay for it. Citizens pay for wars with their taxes. Politicians simply sell them a war, while not investing any money of their own. In fact, what happens is, politicians make money, because there are companies who benefit from wars (oil, military equip and tech), so they lobby politicians. If politicians or companies had to pay for wars out of their own profits, there would be no wars.
> In theory Capitalism distributes the most to those who provide the most, which sounds great.
That's a misunderstanding. A rich person can only spend that much for himself (even then, by buying things, he actually creates jobs). He then has to invest into something he believes to be sustainable. Thus, I see businessmen as ultimate redistributors. They proved on the market they're good at handling money, thus they deserve to have more of them. Politicians only proved they can manipulate public opinion and you are entrusting them your own and someone else's tax money. I don't think it's a good idea at all.
> And you think a society that would pass such a vote would be any kinder in a free market
Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them. With government, since it has the monopoly on protection and laws, no such thing would be possible. In other words, in a completely free market minorities are able to put a price tag on them being discriminated against, while when you have government, they would actually be paying for their own discrimination. Gay people have been paying taxes just like everyone else, yet until some point, it was even illegal to be gay, not even talking about marriage.
>No, my whole point is that access to services is a form of freedom
Very well. Even by your definition then, when government takes a portion of my money as tax for the services I don't use or disagree with (like wars) it takes away my freedom to use other services I consider good.
The crucial distinction is force. Government is force that is abused because it's so centralized. Government is telling other people what they can or cannot do, how they can or cannot spend their money and what services they can or cannot use. It doesn't matter what you consider freedom to be. With government some may indeed get a little more "freedom", but always at the expense of someone else and always with people in the government benefiting most from their position. I'm simply against this redistribution, because it is based on a system that is inherently unfair and broken. No, it cannot be fixed.
I think you've misunderstood my question then. I never mentioned wars. I'm asking why these entities with the power to violently coerce others would operate friendly protection agencies, instead of simply stealing from everyone around them?
I consider this a pretty obvious and fundamental flaw with anarcho-capitalism, and I've never heard a coherent argument against it, so I'd really appreciate an answer here.
> He then has to invest into something he believes to be sustainable.
Which works pretty well in our current situation where you have a bunch of regulations in place to stop them abusing that power. They can't use violence. They can't lie to consumers. They can't make dangerous products. They can't abuse their workers. You only have to look at developing countries to see how companies operate outside these restrictions.
> Thus, I see businessmen as ultimate redistributors.
Except nothing gets redistributed. They invest, and unless they fail, they get even more money back. And after a certain point, they can even leave the investment to other people. Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth. Their investments may slowly improve life for the poor, but the massive inequalities remain.
> Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them.
Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.
> With government some may indeed get a little more "freedom", but always at the expense of someone else
Freedoms always come at the expense of other freedoms. Freedom from slavery means limiting the freedom to keep slaves, but I think most people are happy with that. There will always be trade-offs, the question is how we decide which freedoms are more important than others.
Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?
> No, it cannot be fixed.
Why not? I have already suggested the solution (direct democracy) and your only objection is that it allows the majority to abuse the minority, but you haven't explained how capitalism fixes that.
So the first thing to understand here is that monopolies and cartels can't exist without government protection for a long time (if you look at every case of a monopoly/cartel careful enough, you'll see some government involvement). When some company introduces a new, revolutionary technology (Microsoft or Apple both being examples) they may capture the market for a while, but not for long. Government didn't order Google to compete on the smartphone market. It happened because it was profitable to do so.
Now back to protection agencies. Suppose I'm an evil protection agency that wants to force everyone to pay, just like a government would. Alright. I send everyone an extortion notice and suggest that if they don't pay, we come and take money + fines (for our extra effort) by force and if they resist - we imprison them. People, being free and not brainwashed as they are, wouldn't see us as a protection agency anymore, but as an extortion agency. They wouldn't have any illusions about us being nice and kind. Therefore, there would arise a demand for another protection agency, that would offer protection from the evil agency. Naturally, people would rather pay the second protection agency, as it doesn't demand pay, but offers a service, therefore presenting itself like a legitimate business. The other protection agency would quickly lose its market share and wouldn't be able to finance its extortion, not even talking about any kind of war with the second agency. In the case in which the two agencies form an extortion cartel, it is not difficult to imagine a third firm emerging. And so on.
Therefore, competition is the key. Free market always serves the customer.
>Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth
You have to be precise here. What does enjoying the wealth mean? If they buy stuff, they create jobs. If they don't buy, but hoard, they are not enjoying the wealth in any way. Every time an evil businessman tries to enjoy his wealth, he creates jobs. And the more he enjoys, the more jobs are created. That's inevitable.
>Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.
Now let's look at this comparison fairly. We talk about two societies, one with no state and one with a state, both hate redheads. Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty? You'd think that. So redheads wouldn't have any money either. Worse even, in a society with a state if it's not the rest of the 90% that hate redheads, but say, only 70%, they can still pass a law that says "redheads cannot be hired for more than $1 an hour". Then, even those who have nothing against redheads will not be able to hire them, whereas in a stateless society they would.
>Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?
I think it's very important to communicate one sound principle, with which I hope you might agree sometime: you can't do good by forcing other people to do it (that is, by using the money you stole from them). If I had nothing to eat tonight, do you think it's okay if I go and rob you? If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf? How is it more humane or fair to you? If anything, I'm not going to ask you to fill any forms, so it's gonna save you some time.
And what do you think a government is? They're monopolies on violence that have existed for a long time in an otherwise free market. If demand for an alternative was enough to defeat a protection racket monopoly, then surely the same argument would apply to governments? Is there any argument you can make for why governments haven't been out-competed, that couldn't equally well apply to a private protection agency?
> If they buy stuff, they create jobs.
In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.
> Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty?
Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.
> you can't do good by forcing other people to do it
Of course you can. If someone is about to kill someone else, and you stop them, in what way have you not done good? Why is the situation any different when it involves property? If someone is withholding surplus food from a starving man, they are just as much a murderer as if they stabbed them.
> If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf?
Because the government's actions are approved of by a majority of society.
> How is it more humane or fair to you?
Because in your society, if I have no money, I die. In my society, if I have no money, I survive.
It is a monopoly, of course. It clearly demonstrates that monopolies cannot exist without the threat of force, which isn't profitable to do in a free market, where you cannot force people to pay to sustain that force indefinitely.
>In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.
Did somebody build that machine? Doesn't that situation incentivize people to learn more sophisticated skills? And if a machine makes some product cheaper, wouldn't the poor benefit the most from it, since they would now be able to afford stuff they couldn't before? Would you like to be rich 200 years ago or lower middle class today?
>Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.
It is an argument against democracy, because I clearly demonstrated to you how in a democracy the minority would be in a much worse situation if the majority of the society hated them. Please re-read it and I'd really like to hear your response to that.
>Because the government's actions are approved of by a majority of society.
So, if the government approved me robbing you directly, you'd be okay with it too?
>Because in your society, if I have no money, I die. In my society, if I have no money, I survive.
That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.
Private protection agencies do have the threat of force though, so they can force people to pay to sustain them. And clearly it must be sustainable, because governments exist.
Or do you think there some magical property of things called "governments" which protects them from the market forces you claim something called a "private protection agency" would be subject to? In what way are they different?
> Did somebody build that machine?
For now. My point is that as capital overtakes labour as the primary factor in production, using jobs as a means of wealth distribution will no longer be effective.
> Doesn't that situation incentivize people to learn more sophisticated skills?
And how will they learn those skills if they have no money?
>Please re-read it and I'd really like to hear your response to that.
You threw out some arbitrary numbers with no real basis. Why does it take 90% of society to harm the minority in a free market but only 70% in state?
The actual difference is that in a democratic state, you need a majority of people to harm a minority. Whereas in a free market, you need a majority of capital. If capital is evenly distributed, then they will be roughly even, but if there is massive inequality, then genocide could easily be committed in a free market with support of only 1% of society.
>So, if the government approved me robbing you directly, you'd be okay with it too?
Why would they come to such a decision? Why would society at large care about you and me in particular? If you mean as part of some wider social program, and I happen to have more wealth than you, then I would be happy to share it.
>That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.
Right, and what if they don't have any money to spare either? Or simply don't want to help me? I still die.
That's not what I did. I gave you examples that with any distribution of opinions in a society, minorities would be worse off with a state. My examples, if you read them carefully, compared two situations with equal variables given. I first looked at what would happen in both societies if 90% hated a minority, then looked at what would happen if only 70% hated a minority, again, in both stateless and statists societies.
> The actual difference is that in a democratic state, you need a majority of people to harm a minority. Whereas in a free market, you need a majority of capital. If capital is evenly distributed, then they will be roughly even, but if there is massive inequality, then genocide could easily be committed in a free market with support of only 1% of society.
That is a misunderstanding of how state works. When there is a government, rich people still control it, not the voters. This is because they can buy election campaigns and control public opinion through the media they own. Then, when politicians are voted in with their help, they get the laws they wish to be passed. Suppose a billionaire wishes to commit a genocide. What do you think is going to be cheaper: directly finance the genocide or influence a public opinion and sponsor a politician who would do it for him using taxpayers money? Of course the former is the cheaper route!
You can say, "but other people would oppose genocide and another politician would try to beat the one who's evil". Well, same would happen in a free market, except with more certainty and less risk: everyone would be able to vote with their own dollars. If one businessman decides to kill 10% of the population who are redheads do you think other businesses, that redheads are customers of, are going to do nothing and allow their profits to be destroyed too? Do you honestly believe that other people, who clearly see this guy is nuts, are going to keep doing business with him knowing he goes and mass murders people using profits he gets?
I'd like to quote Leo Tolstoy once again who more than 100 years ago already understood a very simple and powerful thing: "without Authority there could not be worse violence than that of Authority under existing conditions".
To condense my question: Doesn't the existence of stable governments demonstrate that monopolies on violence are a sustainable business model?
(Indeed, by your own argument, one could conclude that there must be market demand for the existence of current governments, otherwise they would be out-competed?)
>I first looked at what would happen in both societies if 90% hated a minority, then looked at what would happen if only 70% hated a minority, again, in both stateless and statists societies.
With no real basis for either conclusion. You just assert that a free market where 70% of people hate redheads would be totally fine, because they can still trade with the remaining 30%. Which says nothing about the far far more important factor of wealth distribution.
>This is because they can buy election campaigns and control public opinion through the media they own. Then, when politicians are voted in with their help, they get the laws they wish to be passed. Suppose a billionaire wishes to commit a genocide. What do you think is going to be cheaper: directly finance the genocide or influence a public opinion and sponsor a politician who would do it for him using taxpayers money? Of course the former is the cheaper route!
(I'm assuming you meant latter?)
If people are apparently so gullible in their political decisions, what makes you think they won't be equally gullible in their financial ones? If it's possible to convince people to vote for genocide, then surely it's equally possible to create market demand for genocide?
>"without Authority there could not be worse violence than that of Authority under existing conditions".
To be honest, this kind of statement just highlights the naivety I see in anarcho-capitalist arguments: "If only there were no tyrants, everything would be better." But in a world with power imbalances, there will always be more tyrants.
Democracy is the only system we have seen which attempts to solve this fundamental problem of power imbalance.
Would the new competitor you envisage need to run their own?
But we are past this point. So what is the solution now?
This is not an issue of political correctness. Saying "not go full shit-head" falls into the same category. Please treat your opposition with respect, even if you disagree with them.
Guessing, but I think snitko may have actually meant "full retard" in the sense of "retard" meaning to slow down or apply the brakes, rather than meaning "dumb" or "mentally retarded".
Yes, but also the communist architecture. Those buildings are easier to wire and the way they're managed makes it easier to get a permit. It's the same in Poland, if you live in one of those atrocious apartment blocks[1], you'll have a pick of three, or even seven various ISPs but move to the suburbs and it's suddenly either the national telekom or some crappy wireless.
Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl. And having a garden is almost a birthright. Ironically, it's the Americans in the big cities who favour regulation, and Americans outside of them who don't.
[1] http://www.michaeltotten.com/images/Communist%20Blocks%20Geo...
Not quite, they just favour different regulation.
> Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl.
Perhaps that would convince some people to de-sprawl?
This is a little imprecise; "free" and "free of governmental interference" are not the same thing. More likely it is because you have a _competitive_ ISP market. That might in turn be because of how free your market is, but in order to really know we'd have to know how your area solved the problems that led city governments to grant monopolies in the first place.
Since "free" in this context means absence of coercion against extant or would-be competitors, and since government regulatory efforts are a source of such anti-competitive coercion, unless one is concerned with firms sending hit squads against each other (which would more rightly be considered "crime"), the distinction isn't particularly useful.
Predatory pricing. Buying up necessary capital. Paying other companies to not deal with you (Suppliers, Retailers, Advertisers etc.)
All completely voluntary, and these are just off the top of my head.
Offering a lower price to consumers than your competition is not coercion against a competitor.
>Buying up necessary capital.
Offering a higher price to suppliers than your competition is not coercion against a competitor.
>Paying other companies to not deal with you
Entering into exclusive deals with other firms is not coercion against a competitor.
Indeed, even your decision of whether to start the company is influenced by the same market pressures.
In the end, if the market leader is constantly crushing competitors through undercutting to maintain their position, they are not really exploiting their customers at a monopoly and its a market win. It is still competition - the leader just moves to eliminate competition (which would piss off shareholders or anyone in general with a long term outlook on the company) rather than compete against it. As long as they cannot stop competition (and in a voluntary fair system, they cannot) then they have to deal with it one way or another.
It is if you are offering a price lower than your costs which you offset by cash from earlier deals, which the new upstart cannot do. When the new upstart is bankrupt you push the price higher, because now there's no competition anymore. That's the reason such stunts are forbidden (at least in civilized countries).
Your argument, even though it reads like liberal laissez-faire stuff, actually is: the government is being controlled by corporations.
So, your solution of "stop regulation" is offtopic. Come up with something relevant to your own argument first. Like, hmm, "stop corporations from dictating governance". That'll work.
After all, they use money to do other things all the time, and those other things are not nearly as important for them as roads or education.
Taxes don't finance US government expenditure; they create demand for the currency.
> Then, the question we should ask ourselves, would people still invent awesome things and build roads and educate their children without government funding
Government provides the coordination required to accomplish these things. The private sector is notoriously horrible at coordination between competing actors.
This must be why I can never get my luggage handled flying two or more airlines or why I can never use my cellphone in another country connecting to another operator's network. Can you give me some examples where the private sector is actually bad at coordination?
Telecomm, again, is only heavily regulated in the US. In my country it isn't, yet we do enjoy rather low prices and quite a nice service overall. Telecom operators also cooperate without any government intervention: at some point they realized it'd be great to have incoming calls from ALL operators free (they weren't before) and outgoing calls to be of the same price for any phone (they weren't).
Regulation harms the public when it thwarts those democratic institutions. By protecting incumbents, limiting liability, forcing litigants into arbitration, hiding important information, etc.
Some things only government can provide well. Clean air, fire fighters, standards. Matters of public safety and health really shouldn't be (wholly) privatized, because profit motive is in direct opposition to the public good.
Maybe some day government can provide good (enough) internet service. Perhaps after the technology and rate of change settle down. But not today.
Having the government pay for such resources (as with roads) with tax dollars and then providing free access to the public is massively more efficient than private enterprise, because you eliminate the incentive for rent-seeking and economically harmful usage-based billing and for that matter eliminate all the overhead of billing, marketing, collections, denying access to non-subscribers, etc. But the only way to do this is if the resource can be funded in some other way, specifically through taxation.
So are you saying that feeding the whole IRS is LESS expensive than having an automated billing system that could track who is subscribed and who can enter a certain road? Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation? Too expensive to check tickets and deny access to free riders. It's better to just let everyone fly for free. Hell, you can say anything is more effective when funded by taxation. But that doesn't make it true. I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example. It's like as if I had to pay the same price for 1 airline ticket as the other person paid for 10. And while it may be a burden for a company to deploy a billing system, with government the burden is on the consumer: I have to fill all those tax forms and make sure everything is correct (or pay an accountant) - talking about some economically harmful activity, I don't like it when someone conscripts me to be a part-time accountant.
Your claims that government provided services are better because their production is more effective is not proven. Show me the exact mechanism. Show me how is it cheaper for everyone and not just for some? Can you demonstrate that the money spend on running the IRS is actually less than private enterprises would spend on the billing system? If you can't do it, then your words shall be called a speculation, not proof.
The IRS is not a relevant cost because deciding not to have municipal fiber doesn't cause the IRS to go away. You have to pay for it regardless, unless your proposal is to have no taxes.
> Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation?
Because air travel has a significant unit cost. You have to pay for fuel, pilots and flight and ground crews, significantly increased maintenance of aircraft, etc. Moreover, governments have often subsidized the up-front costs of air travel, like airports and planes.
> I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example.
Because you're not subsidizing them, you're asking them to subsidize you. It doesn't require fewer road workers to pave the road in front of your house and the weather doesn't stop creating potholes just because you don't drive on it as much. You're asking for there to be a road in front of your house so that you can drive to the beach or call a cab or get on a bus or have an ambulance come to your house and you want to claim the advantages of having that available, when the availability whatsoever is the primary cost, without paying your share of the cost of that availability.
What measure of proof do you require?
PS- AnthonyMouse has been exceedingly gracious and patient with you.
When private enterprise makes decisions, those with more money get more choice. If a road gets built, it's because those with money agree it will benefit them.
If a democracy starts letting the rich have more say, then it needs to be strengthened to resist them, not weakened so they can do as they please.
Isn't this an assumption? Perhaps if the system were such that every issue were up to a nation-wide popular vote, the statement would be true...not that such a system is a good idea.
Some votes are worth infinitely more than others. That is to say, many votes are worth nothing. If you vote for the opposition party in a district that is 75% supportive of the incumbent party, your vote doesn't matter. It will (hopefully) be counted, but no one will take your opinion into account.
The other assumption is that majority rule is something worth working towards. Everyone wants government power to work for them. Problem is, it's a power that can't really be controlled. You might get your way this election cycle, but that same power could be used against you when the uneducated reactionaries rise up next time around.
The theory of free market capitalism presupposes competitive pressure as a check on the power of market participants. A monopoly has no such competition, allowing it to be abusive and reactionary.
There is no such expectation of competition with governments. The check on the government's power comes from the political system. Checks and balances and the four boxes of liberty. It is completely possible for this to fail too, but when that happens the efficiency of telecommunications provisioning is the least of your worries.
> With a private enterprise, even if it is a monopoly, I still have a choice: I can stop paying and not use the service. Can I stop paying to the government?
Of course you can. You can move to another country, or another planet. It's becoming about as practical as not having internet service.
Good point that needs repeating, thank you.
I agree with business management guru Peter Drucker when he states that waste is immoral.
I support the most efficient solutions for a context, whether its collectivism, competition, cooperatives, lotteries, various kinds of auctions, whatever.
Whenever a better solution is found, I will support that. Because, you know, things change.
Seriously? You have a cheaper/better internet access in Russia compared to the USA and suddenly the Russian (extremely corrupted) political and social model (a modern monarchy of sorts) became a model economy over the US?
PS. I can't find the source, but I've read that in the last Russian elections more than 35% of the population wanted to return back to communism.
ps. I'm not saying that he wouldn't have won anyway, but I'm sure that the elections in Russia are extremely well guarded.
While Russia does have it's political elites and corruption (Like pretty much every other country) they aren't idiots, they have been on the other side of free markets and there are few there that know it's value.
In the US when you want to win a court case, you spend money hiring top lawyers. In Russia you buy a judge. Results are the same. Who's to say one way is better than the other? You still need money to win, so how is it fair to the poor? In fact, I think it's incredibly irresponsible and actually immoral to tell the poor the system is fair while it's not.
The question is, which system restricts the free market more. That is very debatable. In some areas Russia's incredibly backwards simply because corruption expenses are higher than the equivalent expenses would be for complying with the regulation in the US. In other areas, it's great. City transportation is great, for instance. We have many private jitney services and they are not expensive, so people use them all the time. Same goes for cab services: you can literally raise hand and get any car at any time of day for much cheaper than in the US. You don't need licences to drive people around (at least nobody enforces that).
So, I'd say, in some areas the US definitely sucks. The quality of life you have in the US is most definitely not thanks to your government, but thanks to your private enterprises.
That's an extremely dangerous oversimplification: It's a fact that getting a good lawyer will give you more chances. But buying the judge it's a totally different thing.
Your claim is that the process somehow makes a difference. But if the results are the same, then it doesn't. It's like saying that war is NOT murder, because it's being declared by people in Washington wearing suits. Or that taxation is not theft because it's being done by a "legit" three letter agency.
And yet the countries that are consistently in the top 5 or top 10 of most quality-of-life measures are those countries that are social democracies (generally scandanavia and aust/nz/canada), where the government puts its fingers in a lot of pies. If the things that your government touches is bad, then that's a problem with your government, not the awesomeness of the free market.
Out of curiosity, how well do your ISPs cater to rural users? People in urban centres are cheap to service, but spread-out rural users are quite expensive.
It's the same principle that led municipalities to grant taxicab monopolies, of the kind that stifle companies like Uber today. The idea is that in a free market, providers would only focus on the profitable parts of the city, leaving the lower-income areas without service.
Universal access is why it's impossible to "disrupt" the market for local internet. A new entrant can't just come into the market and pick off the most desirable customers or the ones that are cheapest to service. They have to be prepared to service everyone, even many customers who can only be served at a loss, in order to be allowed to operate at all. Additional regulation in this space isn't going to eliminate the underlying problem, it will just make infrastructure construction a more unattractive business and decrease investment.
There is no free lunch. You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two. If you think universal access is important, and net neutrality is important, you have to be willing to publicly subsidize the construction of telecom infrastructure.
PS. Some folks have mentioned BT OpenReach, but it's important to understand what did and did not happen there. First, BT was originally a government-owned corporation before it was privatized, so the government was in a position to set the terms of the privatization. Second, the government used a fairly generous "RPI - X" price cap to certain of BT's services. Between monopoly pricing power and a relatively generous price cap, BT made very healthy returns on investment. See: http://www.academia.edu/3399930/LESSONS_OF_PRIVATISATION_IN_... (p. 28-9).
In the U.S., unbundled DSL was a failure. First, it got caught up in litigation because the infrastructure was never public at any point. Second, it was an almost pure losing proposition for the telecom companies. The FCC mandated a not-very-generous cost-based price control (TELRIC), which made further investments in DSL infrastructure unattractive.
With Internet access, you're looking for SPECIFIC packets. Those packets have to be routed in a certain way and delivered over a shared, multicast last mile infrastructure. If you want the ability to choose your ISP, then while it may be the same Hacker News, the route the packets take to get there might be very different.
Similarly, with electricity you're not looking for SPECIFIC electrons.
Actually, I am, though its more the source of those electrons. I pay more specifically to get as much power from wind/solar sources. This is an option on my power bill that I explicitly support. I would pay more for internet access that isn't comcast and isn't tied to their stupid bs.
So keep that in mind.
And you are able to do this because there is a grid network, which allows your alternative energy provider to enter the market simply by connecting themselves to it, instead of having to run cables to your house.
I don't think the actual electrons come from there its just a budgeting trick I expect.
Your "preference" is nothing more than providing an extra subsidy to generating stations that make the electrons wiggle via renewable energy sources.
That is only really true in the parts of the network that don't matter for network neutrality. If you want to send or receive 500MB worth of data, the last mile doesn't care whether you're communicating with Hacker News or Google or Amazon, it's all going over the physical wire that comes into your house. It's only after you cross the last mile and get into the central office that the paths of packets diverge in every direction, but those are the parts of the network that have competition.
That's a big assumption, and an incorrect one at that. Most content delivered to large ISPs is delivered by CDNs over paid interconnects (and it's been that way for a decade or more). They either pay the ISPs directly or for transit at a peering point.
> IE, the modern "pricing schema" for data, where a gigabyte costs multiple dollars, is an insanely unrealistic measure - if you are not paying for the wires in the dirt.
If you're expecting pricing to be tied to cost, you're gonna have a bad time. That's just not how modern product pricing works for ANY product. You pay as much as the service is worth to you; if it wasn't worth it, you wouldn't pay it.
So deciding the "right" number of network operators in one place is subjective, and comes down to what consumers are willing to pay for. Or at least it would, if competition weren't illegal. There's nothing "natural" about the monopolies we have now.
And even if it turns out that a single network is the best arrangement, it should still be possible for municipalities to choose to own their own last mile fiber and buy transit at competitive rates. Which is also generally illegal in most of the US, thanks to the lobbying efforts of the big incumbents.
And it's also absurd that we're still letting analog-era regulations govern our use of wireless spectrum. We should really have ultra wideband wireless ISPs by now.
It can be implemented fairly easily by separating a company into two and forbidding them from giving special deals to their former counterpart.
That seems to have a very good effect on competition in practice...
I think the British rail network might work on similar lines? The German electricity companies emphatically do not work on those segregated lines. There are some politically pushes every once in a while---Germany has some biggest price differentials between domestic and wholesale electricity prices (and some of the highest domestic prices), but the regulatory capture seems to be too much to overcome.
If you have one wide, dumb pipe, and you paid an ISP to route your traffic from some other point on said local pipe into the backbone, you would have tons of ISP choices. The only reason more ISPs do not exist is because of the infrastructure costs.
And those won't change. You will never be in a climate where it is haphazard to rip up roads or peoples lawns or add more mess to the overhead lines to run fiber channel everywhere. In terms of cost, the fiber cable itself is not even expensive - it is the manual labor installing it all.
> we're still letting analog-era regulations govern our use of wireless spectrum.
It isn't ideology, it is the current incumbent owners of spectrum like having artificial superpowers over the future of communication.
Simple question: Silicon Valley talks a lot about the problems with the telecom industry, but why does nobody want to actually invest money building telecom infrastructure? Google is the only one doing it, and they're only doing it on the condition of not abiding by any build-out requirements. See: https://news.ycombinator.com/item?id=7889163.
The incumbent--descendants of local/regional/national monopoly telephone or cable--providers have little competitive pressure to do so, and other people face intrinsic (largely non-regulatory, except to the extent that real property rights are "regulatory", though there are some regulatory burdens as well) barriers to entering the market, which make it enormously expensive with very little chance of any positive return for most players.
At the end of the day, the math has to work out. Everyone assumes, arguendo, that the value proposition of building out fiber is there, but if telcos continue to be required to offer universal service, and if they are forced to operate in a regulatory regime where they can't capture some of the money generated by services running on top of their infrastructure, it's not at all clear that the enormous investment into fiber is going to be justifiable for the shareholders of telecom companies.
If they're not getting enough money to continue building, first off, I find that hard to believe, second off, they should just charge more to consumers, either additional $/month or an additional fee per GB.
Orrrrrr we could have a crazy system where they manage 50,000 unpublicized relationships with different websites, charge them, pay the people to manage those relationships, and the websites charge more to consumers, hiding the pricing information about network connectivity in the process. That sounds way more 'free market', not to mention more efficient.
What's so anti-competitive and backward thinking about "I pay you $ for bytes, cough up the bytes"?
As the author of the article above concluded, Verizon might not even come out ahead on each customer with FiOS.
[1] You can ask "why spend so much on advertising?" and the reason is that you want to maximize uptake, otherwise you spend a lot of money running fiber past houses that don't actually subscribe.
But back to my actual point -- It costs money to deliver the service? Charge more for the service if you can't deliver it profitably. That's fine, I even suggested that in my comment, charitably allowing for 2 different ways they can do it.
I'm going to pay anyways, whether it's a check to verizon or additional costs on my amazon streaming -- I'd rather pay up front for the service I'm consuming than f-up the marketplace with a bunch of submerged hidden transactions. That's why libertarians are on board with liberals on this, they believe in market transparency.
What's your objection to our actual point? Remember, raising the price for the service they deliver to their customers is ok, we're not arguing they should provide it at a loss. You'd rather the costs of the network were hidden in a bunch of backroom deals? You think that netflix paying comcast won't ultimately come out of consumer pockets anyways?
No they're not. They cover, e.g., marketing to get you to hook up in the first place, but not, e.g., marketing to keep you from switching to Comcast a year later. They account for the cost of hookup, but not, e.g., ongoing maintenance.
As to your other point, charging up front is not the same as charging services that operate on top. The former effectively creates a cross-subsidy: my parents who just want fast-loading web pages end up subsidizing Netflix junkies. Now you can charge per-GB, but Netflix really doesn't want to go in that direction. They're quite happy with this implicit cross-subsidy.
"Market transparency" is a red herring. You pay $10 per month to Netflix, because that's the value of that content to you. You don't care if some of that money goes to Verizon any more than you care that some of it goes to the studios that own the content. Indeed, the "backroom deals" ultimately have the effect of allowing Verizon to capture the costs from the people who derive the most value from the infrastructure, because the consumer value represented by one GB is not equal across services.
I'm ok with paying $100 for internet access (well, not really, but still). If $100 cannot get me internet access at the advertised speeds, I'm ok with paying 120, or whatever additional cost per GB.
What I'm not ok with, is if $100 doesn't do it, Verizon goes out and shakes down the companies I do business with on the internet connection that I ostensibly paid for, who then raise their prices (gotta pay the bills) for reasons I don't understand. I'm still going to pay, there's no such thing as a free lunch. And not only does this obscure information about the real cost of my connection and the services I use (and that does matter), not only does it open the door to all kinds of anti-competitive practices around who gets the best deal with comcast/verizon, it's guaranteed to be less efficient than just upgrading the network and charging me for what it costs. Now I'm paying for all the hotel rooms and buffet spreads that went into that deal being struck? In addition to the cost of the fiber? Just build the fiber, and charge the customer (me) for it.
But that's what it costs. Make it clear to the consumer what things cost and they'll either curtail their usage or cough up the money. Maybe they should have a charge per GB of transfer over some monthly limit. I don't know. But obscuring it through a bunch of additional business deals on the back-end isn't going to make those costs go away, it's just a way to hide them and delay the day when ISPs compete with each other on actual cost per GB delivered.
Now, you can ameliorate this somewhat based on per-GB charges, but people have an irrational hatred of that. The business deals on the backend are obscure, but at the end of the day, how much a customer spends on services on top of their internet connection is a decent proxy for how much utility they derive from that connection.
Is your case that more money would go to network improvements with the backroom deal routine? Have you considered that the backroom deal routine allows a lot more room for pocketing money and not really investing in the network?
If he's on $OTHER_ISP, I'm sure he's not thrilled that some of that money is going to Comcast and Verizon.
Entirely possible that they are getting enough money to continue but they want to take a break to inhale some excess profits not hindered by more expansion. Get something in the bank. (Kind of opposite of what Amazon is doing I guess.)
Secondly, it's not clear that the implied solution in your comment ("more competition") would lead to firmer protections for net neutrality. Any changes to open the market to competition would take many years to come to fruition while current ISPs would jump at the chance to discriminate traffic immediately. By the time competition arrived, it is likely that the idea of traffic discrimination (and extortion) would have become so standard and endemic that it would no longer be a point of competition for these new competitors (especially true given how hard it is to explain net neutrality to laypersons).
It's for these reasons that I support both strengthening net neutrality regulation and loosening universal access restrictions (although, to be honest, I would rather have a government ISP with a universal access responsibility, similar to USPS).
Neither does Comcast and AT&T. I've lived in several areas where they won't provide service.
Is there a reason why the FCC couldn't provide a similiar regulatory climate in the US? Even with subsidies if required?
Presumably because there is a difference between "libertarian-leaning" (to the extent that is an accurate description of the group described) and "having a blind, kneejerk preference for deregulation".
> Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies?
Because incumbents that got infrastructure built with government support in acquiring property for infrastructure as monopolies have an insurmountable advantage as a result of the access they acquired then, and effectively leveraged that cable infrastructure to internet infrastructure, whereas without direct government support that comes with that, its pretty much impossible for anyone else to build the necessary infrastructure because property rights.
> You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two.
Okay.
> you have to be willing to publicly subsidize the construction of telecom infrastructure.
There are extensive public subsidies that have been given in the US for telecom -- and specifically broadband -- infrastructure [1]. So can we have our neutrality and universal access already?
[1] E.g., http://www2.ntia.doc.gov/infrastructure
Where do you live that you do not have universal access and net neutrality?
It's true that universal access is what causes networks in major cities to lack competition. But getting rid of it wouldn't solve the problem anywhere else, because there are still millions of people who live in areas that couldn't economically justify more than one ISP. The only way those areas can justify the investment is if the ISP can collect revenue from a majority of the customers (and/or not compete aggressively on price), meaning that a competitor entering the market would cause both ISPs to become unprofitable and so no rational investor will be the second to service that market. Those geographical areas are natural monopolies. There is very little realistic alternative to utility regulations in those markets, short of massive government subsidies to create market conditions that can sustain multiple competitors.
> There is no free lunch. You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two. If you think universal access is important, and net neutrality is important, you have to be willing to publicly subsidize the construction of telecom infrastructure.
That isn't necessarily true. What it means is that without public investment, the subscription fees for internet service have to be sufficient to justify private investment. It isn't at all clear that they aren't already at that level. The lack of investment in many markets is at least in significant part attributable to the fact that neither competition nor regulation currently provides a large incentive to make infrastructure improvements. But there is no reason that in markets with insufficient competition, regulations could not be made to create that incentive, e.g. allowing ISPs to charge higher rates only if they provide higher speeds and then over time increasing the required speed for a given rate. And ironically the rates required to justify a given level of investment would be lower if we had less competition, because the cost to wire a street is in large part proportional to the number of miles of road rather than the number of subscribers, so Verizon and Comcast having to build parallel networks each with half the total number of subscribers causes each to be significantly less profitable and that much less likely to make future investments. "More competition" is not a panacea.
And more than that, why is public investment in infrastructure a controversial position? We have public roads, what's wrong with public last mile networks?
So city dwellers have to subsidise the country folks?
No, build out requirements are actually very stupid and we should get rid of them. It's just that getting rid of them doesn't magically create broadband competition in unattractive geographies.
This is because last mile internet access is a textbook Natural Monopoly: http://en.wikipedia.org/wiki/Natural_monopoly
Indeed, why isn't anyone willing to take this logic as far as it should go? Publicly funded highways have facilitated trillions of dollars of economic activity. How much more growth could be enabled via publicly subsidized gigabit fiber?
A good metaphor would be government trying to do try/catch all on entry point solving every little problem we have. While we should have explicit exceptions such as use of violence, fraud etc. We should not try to fix every little problem. When user enters data into a form, a password into the email field and an email into the password field. Sure you can make a change in code that would allow both cases. But now you have tons of other vulnerabilities exposed this very instant.
Thus. Neutrality means bandwidth cannot be manipulated by companies, well I remember 90s when we had LAN and private internet bandwidth shared with LAN. Bandwidth had to be chopped, http protocol had to get guaranteed bandwidth otherwise bunch of leechers would destroy vital internet access with their kazaaa, emule, napsters and what not. So Neutrality is not a necessity. While its not a big problem nowadays it was a problem back then and imposing this solution would have made it worse.
Universal access. Well I can easily argue that. There is a bunch of irresponsible people who build house in complete desserts. I know some people like that and they can that but society now has to fund them access to water, electricity and internet. I mean its their choosing. They can build their property closer to the city limits where they would get access to those for significantly less amount of money, they chose otherwise and they are free to do so. So should be I to not help them with their life choices. Problem only escalates as they start to demand shop/grocery access, leisure facilities, public transport etc. By making guarantees of those services we essentially lead to inefficient land usage.
This is pretty much how it works in the UK; see http://en.wikipedia.org/wiki/Openreach
It does seem to work pretty well.. there are a wide variety of operators and prices are very low. If I had to pick out common criticisms, Openreach can take their time if you have to deal with them directly (getting a line installed in a new office or apartment can take a few weeks), and there seems to be very limited innovation in the last mile - even in London it's hard to get more than 20mbps, and many people in rural areas are stuck with a crappy DSL line at 2mbps or so.
How much truth is there to this?
Though AT&T and Verizon are ripping out the connections if they bring fiber to your house, and you can't share that line.
In cities which have been dense for a long time, like San Francisco, there are lots of central offices, and competition using leased access is feasible, but in cities where density is more recent, such as San Jose, there may only be one central office, and there's only a small area with feasible competition with leased access.
That's exactly what I'd expect. Make infrastructure a low margin utility and a true monopoly and you'll get utility-grade results.
If everyone here (as I do) hopes they'll have gigabit speeds to their homes in a few years, you have to plausibly explain how those upgrades happen in a utility infrastructure regulatory world.
We've already seen that expecting multiple last-mile physical providers everywhere is impossible due to cost reasons and the fact that land lines are a natural monopoly, therefore you'll have to manage it as such in the face of absence of normal market pressures.
It's still a better scenario than the current situation in the US
Hopefully not gas-delivery grade results. 5-10% of methane delivered via mains in the UK is lost to atmosphere. Similar leakage rates are found in the US, sometimes much worse. The main (heh, no pun intended) source of these leaks are cast iron pipes that are over 100 years old.
And unlike the Internet, when those things fail, things literally explode.
Unless you already live in a very densely populated area[0], I don't think there's any reasonable chance of that happening for most people, whether we go the Title II route or not.
Title II is better than the alternative, but having gigabit speeds for most households is quite a ways off no matter how we do it.
[0] And even then - I live in Manhattan and several buildings on my block have FiOS, but mine does not (thanks to TWC's exclusive agreement with the building owner).
This is a problem with MDUs and why the big telecoms have dedicated sales teams assigned to make these kinds of deals. The more likely scenario is that Verizon was working on getting these kinds of deals set up, then they halted FiOS expansion and stopped adding new buildings before they got to yours.
I don't think contractual exclusivity is legal, but a building owner does have to set up agreements with a company like Verizon or TWC to allow them access to the building, provide a contractual basis as to who owns what wiring, etc. So if Verizon doesn't reach out to the building and set that up, FiOS isn't going to be offered.
Actually, no, they are still adding new buildings in NYC, but only on the condition that they provide both television and Internet service to the building. (For a short period of time they did Internet-only out on Long Island, but they've stopped that).
I got very far up the Verizon chain and found out a lot of information about this, which is why I know the specifics here.
In my case, I requested that Verizon figure out whether they wanted to provide service to my building (they did) and that they then contact my building (they did), at which point it turned out that TV (not Internet) for the building could only be provided by TWC.
For what it's worth, I'm pretty sure Verizon uses this as an easy excuse to avoid expanding their service (since 2010 or 2011, Verizon has been very half-hearted about FiOS and doesn't really seem to care about expanding FiOS as much as they care about appearing to care)[0].
> I don't think contractual exclusivity is legal,
No, but they've found creative ways to get around it, and it's certainly not something that's widely enforced.
[0] My evidence in favor of that comes more from my experience dealing with them in New England.
I've seen several different models and most have their uses. I pay roughly $80/month for mine in a somewhat dense suburban area.
Also the government just forces ISPs to provide specific speeds in specific areas.
And we have many small ISPs which provide their own network, most of the time they are the same company that also provides water and electricity, and these ISPs compete heavily with the government-owned ISP.
Also right now ISPs have to upgrade rural areas first, so in many rural areas you can already get 200mbps to 500mbps for 50€/month, while I'm in the city and can only get it from next year on.
Overall: It is possible to create competition and still have governmental regulated fast internet.
This is the entirety of the problem with the DSL-style line sharing. If the companies operating the infrastructure get paid on a per-customer basis, they have no incentive to make the service better by improving service for individual customers. The incentive is to provide service to as many customers as possible regardless of the quality / speed of that service.
If you want DSL-style line sharing to work in the US, the line owners will need to charge the ISPs on a per-gigabyte basis. This pretty much requires the ISPs to charge on a metered basis as well. This would be an overwhelmingly bad thing for companies doing business over the Internet.
I've been banging this drum for a while: companies will act in their own best interest, so you have to align the economic incentives with the desired behavior. If you try to regulate to enforce the behavior you want without the proper incentives, the investment dollars will just move somewhere else because it becomes too hard to make a profit.
Why? It seems to me that metered internet could work just fine, if the prices are at least somewhat connected with reality (meaning cents per gigabyte at most, with a base cost not more than about $20/month). The form of metering we currently have in the US is usually punitive overage charges for data in excess of some unrealistically low monthly quota, and is applied on top of $60+/month subscription fees. That's obviously bad for internet content providers (since their whole point is to deter further usage), but I think reasonable prices are possible.
It's also a well-known psychological phenomenon that people will curtail usage if they know their usage will cost them more -- even if the amount is trivial. The last thing Internet-based companies like Netflix or Amazon want is for people to use the Internet less. Current metering systems really only "catch" the most egregious offenders (less than 1% of total customers). Most ISPs have a "business class" plan you can purchase for more that truly is unlimited, if you find yourself exceeding the caps on a residential account on a regular basis.
Those are effectively a source of hidden profit margins--NFL, Major League Baseball, et. al. get them instead of the telecom operators, but when looking at how much prices could drop, you have to consider that.
The huge marketing budgets don't go away if you suddenly split the market between a dozen or so providers. In fact, overall marketing spend across the industry would probably go up substantially because there would be more competition for limited consumer mindshare.
All I'm saying is that the marketing costs wouldn't go away even if the big cable companies do: they would just be replaced by a dozen smaller companies doing the marketing, billing and connectivity. These smaller ISPs would just be taking each others' customers rather than customers jumping ship to DSL or some other last-mile tech.
The infrastructure is owned by the incumbent monopoly provider, but the service over the top can be supplied by any one of a number of large and small suppliers.
1. BT was very much against it, claiming they would lose a lot of money. They now admit it was great for them.
2. AT&T and Verizon were strongly in favor of this. Ask them about doing it in the US, and they say it would be terrible for consumers.
The reporter for that PBS show did an updated print version of this story for Engadget [2].
[1] http://www.pbs.org/wnet/need-to-know/culture/video-high-fibe...
[2] http://www.engadget.com/2011/06/28/why-is-european-broadband...
That's just not true - vast swathes of London now have access to the VDSL-based Infinity service which is up to 76Mb down; there are quite a few FTTP exchanges too.
The first one was imposed to lift the monopoly of France Télécom (then the universal telecom public service, now Orange), while the second one was imposed not to repeat mistakes made when cable operators created local monopolies by negotiating cable installation at discounted prices with syndicated building owners or neighborhoods (Of course prices went through the roof once the monopoly was in place, and up again when one ended up buying them all).
Pragmatic result: I'm paying 35€/mo for 100Mb/50Mb (incl. TV/IP and landline/IP), due for an upgrade to 300Mb/100Mb.
Requiring the incumbent mono/duopolistic last-mile ISPs to lease their lines may improve the situation, but I'm not as sure as Sam Altman that it would bring about real competition, because of the difficulties inherent in enforcing "fair, transparent leasing." Incumbents surely would find lots of clever ways to game any leasing scheme imposed by the FCC while technically "complying" with it.
I expect it would be better for US consumers than the status quo, though.
Honestly, what I find most striking is how bad cable boxes are simply because there is no completion.
Every single one was wowed by my TiVo. Just seeing how fast it was to respond (which has never been a TiVo strong suit) and how reasonable the interface was amazed them.
That's pathetic.
The two techs I worked with were very nice and clearly frustrated with their inability to help me at times due odd barriers in the way Comcast has things setup, stupid hoops to jump through.
I've edited my comment.
How would that help? As long as there is still the one company owning the one last mile line. Whether it's consumers buying it or intermediaries leasing it in order to re-sell, there is still no competiton. I suppose, an itermediary may have more pull then a consumer, but in the end it's the operator that the leverage as there are no alternatives in that area.
Anecdotally, my Comcast X1 is worlds ahead of the old Comcast boxes. Not perfect, but no longer so bad that I look longingly at Tivos. So, slowly but surely, they're making some progress...
Previously, it was nearly impossible for me to reconcile a valid reason for regulating the telcos. It's their pipes, they should be able to route it however they want. And aside from that, we've never had net neutrality -- there's no ISP I've ever used that allows unfettered upstream access to port 80 from my home, for example. That was, up til now, my belief, which I understand is not a popular one.
That said, the final paragraph actually hit home with me.
"As long as consumers don’t have freedom of choice, last-mile traffic discrimination should be per se illegal."
If the game is already rigged, then the players should have to play by the same rules.
Edit: s/traffic/pipes/g
It's their pipes, not their traffic. A minor distinction, but an important one. :)
Back in the day, I used to subscribe to Sprint's wireless cable equivalent. It had a range of 30 miles from the base station, and provided cable-equivalent speeds (for the day; the upstream was very slow by today's standards). Notably, they also provided a static IP address and unfettered access to ports 25 and 80, so I ran my own personal web and mail servers.
As you realize in your last two lines, if we had more competition, ISPs might still block ports by default for consumer safety, but provide a no-cost, no-hassle option to unblock them.
Sure, they may be the ones making money hand over fist on the pipes, but we US taxpayers invested $200 billion for them to build out that infrastructure. We paid for the pipes that they are profiting off of and now mismanaging.
I don't understand where people get this impression. If there is not enough capacity in the network then yes, some packets have to be dropped, but there is no cause for the ISP to be looking at what kind of packets they are. Building a network where this is considered necessarily is inherently defective because the ISP cannot possibly even know what every kind of packet contains.
The only sensible algorithm for ISPs to use is to drop the packets of the users currently transferring the most data. This actually does the right thing in the large majority of cases. If you're using VoIP, your packets don't get dropped because VoIP is not very bandwidth intensive. If you're doing some bulk transfer at full bore then your transfer slows down because you're transferring more data than anybody else. If you're streaming video then you're fine as long as the bitrate is less than what the ISP can currently provide to each active user, and if it isn't then you're screwed in any event.
The alternative is begging for gamesmanship. You can easily make a bulk transfer look like a hundred VoIP streams. Especially with P2P. Building a network where cheaters get ahead and innocent but unrecognized protocols get downgraded is completely unreasonable. You can't cheat an algorithm which is completely fair to all protocols.
Just browsing through a couple, some people give one-liners but a few comments are all-out, nearly essays. I assume the FCC doesn't read all of these. Do they just use a program to analyze these comments, and gauge overall content?
As a favor to a colleague I once did some data-analysis for public comments. She just shipped me everyone's data. I asked if that was legal and was told that she was required to give it to anyone who asks.
This feels weird for a web-comment BBS, but it's totally normal for the government requesting comments on policy.
Knowing that the data could be verified is supposed to be a deterrent to acting in bad faith. Later, one could do the verification if they doubted the comments were genuine. Given the amount of tech power behind keeping net-neutrality, we should want the process to be as open as possible, so we could verify it ourselves.
The alternative is that we have to trust the government to do the verification with no check or balance.
http://www.fcc.gov/page/fcc-establishes-new-inbox-open-inter...
Or use/create a Twitter account:
http://www.fcc.gov/events/twitter-chat-gigi-sohn-netneutrali...
"Prior to working at the FCC, Wheeler worked as a venture capitalist and lobbyist for the cable and wireless industry" -Wikipedia
Really? Somehow I doubt that he has turned a full 180 and is now trying to protect the internet against people in his former occupation.
Truth is he is probably a politician. He will do whatever he thinks is going to get him the most support. So if you can convince him that is going against his former friends, he will do that. (180 flips in policy are very common in politicians.)
2) He worked for cable in until 1984. Cable wasn't even operating in internet then.
3) Most of his tenure when he was a cellular and internet lobbyist was in trying to get more spectrum for wireless use.
Read this article from Wheeler about SOPA, written long before he was at the FCC:
http://www.mobilemusings.net/2012/02/how-sop-was-undone-by-s...
> Backed by Hollywood and others whose business model requires controlled scarcity of product, SOPA in many ways echoed the cable fight of 40 years earlier. The policy matter is not whether copyright holders should receive recompense for their products (they should), but whether legislation to protect that right is aircover to perpetuate old practices at the expense of new networks. There is no doubt there are honest-to-God Web pirates operating in China, Russia, and elsewhere who are stealing copyrighted product. These pirates should be stopped. But SOPA’s effort to accomplish this – which also just happened to strengthen the hand of content companies in other regards – applied concepts more applicable to the command and control networks of yesterday than to the open access networks of today. The result was an unparalleled protest and a political train wreck.
Does that sound like some mustache-twirling lobbyist-in-disguise?
Or his thinking about net neutrality from 2009:
> So, in a world where spectrum licensees are unwilling to part with their assignments and the spectrum agency wants to help while at the same time increasing demand, why isn’t net neutrality an opportunity for the wireless industry? Viewing the current spectrum and net neutrality issues holistically rather than in isolation just might be an opportunity for both the wireless industry and the Administration.
> President Obama campaigned on his support for net neutrality. Thus, it should come as no surprise that his FCC chairman has moved promptly on the matter, or that a Democrat-controlled commission is likely to adopt it. How it is implemented thus becomes more important than whether it exists. Rules that recognize the unique characteristics of a spectrum-based service and allow for reasonable network management would seem to be more important than the philosophical debate over whether there should be rules at all. Similarly, a rule that allows for variable pricing is an opportunity for wireless carriers to change the revenue paradigm at a time when revenue per megabyte is in a freefall.
http://www.mobilemusings.net/2009/11/net-neutrality-and-spec...
The central problem: trying to apply the concept of money and economics to packets doesn't work, because money and economics are tools for handling scarce resources, while the major benefit of the modern "digital age" is that you can copy those bits without a per-copy cost[1]. As bits are not scarce, "pay per GB" becomes a case of applying to wrong tool or trying to solve the wrong problem.
Observing that the infinite scalability of bits isn't leading to free high-speed internet for everybody, a better question is: which resources really are scarce? These are the costs that billing should be based upon.
With networking, those costs are things like creating the network hardware, installing it, and maintaining that hardware. The first two are a one-time cost. We usually distribute that kind of high-variance, unpredictable cost into "monthly payments" in a variety of industries, and tthe maintenance costs are inherently a "per-unit-time" cost as well. This includes the expensive routers that you need to have anyway to be able to tolerate variations in usage[2]. At no point does the contents ("number of packets") enter into this as a cost.
A common rebuttal to the idea of usage not being a cost is to point out the problem of saturation and how an oversubscribed line would the ISP to make expensive upgrades. This problem does exist, and should be part of the billing... because it is a problem about bandwidth, not bits. You don't get to keep billing someone indefinitely for a one-time cost. Attempting to do make up costs like that would be rent-seeking[3].
Various ISPs have shown that billing for a given amount of bandwidth (at some defined defined guarantee of service) can easily be profitable.
[1] Electricity costs are not relevant, and are often not relevant anyway in physical layers where you have to send an empty carrier if there is no data. Most of the rest of the "costs" are associated with using those bits (see: CMOS), which is addressed above.
[2] The specific amount of tolerance required being defined by the guarantees (sometimes with SLA) offered by the ISP.
This works very well in the UK. We have no "net neutrality" problem as a result.
[1] http://en.wikipedia.org/wiki/Burstable_billing#95th_percenti...
This is often asserted, but not true. According to the FCC, 97% of consumers have access to at least 2 broadband providers. 67% of people have access to at least 2 providers at 10mbps.
Here is the graph from the FCC:
http://i.imgur.com/xhn1YCF.png
and the original source doc:
http://transition.fcc.gov/Daily_Releases/Daily_Business/2013...
AMD/Intel, Visa/Mastercard, Airbus/Boeing, etc. all have stiff competition.
And your local telecom and cable company are engaged in pretty stiff competition. At least Verizon and Comcast are where I'm at.
The report's title is: Percentages of Households Located in Census Tracts Where Providers Report Residential Fixed-Location Connections of Various Speeds as of December 31, 2012
If the census tract where a household is located has access to 2+ broadband providers it satisfies this test, even if the household itself has access to less than 2. An entire tract that includes 2 cable companies that offer 10+ mbps but only offer exclusive service to locations would still satisfy this test even though 0 of the residences have access to 2+ services.
This means that even a residence with literally 0 options would be counted as a "2+ broadband options available" house if there were 2+ broadband options available anywhere in the census tract it lies within.
The numbers don't have to be refuted, they simply aren't numbers that indicate whether there is a problem or not because they answer a different. But unfortunately no, I don't have any data other than this report. I was super disappointed when it came out because I don't know of anything else.
"make available so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, rapid, efficient, Nation-wide, and world-wide wire and radio communication services with adequate facilities at reasonable charges."
Net Neutrality seems to fit within the spirit of this mission statement. And yet the FCC is also in the business of censoring nipples. Do you want to risk the FCC to be in the business of censoring nipples on the Internet? I can already anticipate what people will say when that day comes. "Look, the government isn't perfect, we don't have to dismantle it, We the People just have to vote somebody into office who will speak for us and implement reasonable standards.". Ok, so when was the last time that happened to your satisfaction? Do you really want to risk having this kind of future on the prospect that reasonable people will be voted into office?
This is one reasons libertarians and certain conservatives fight tooth and nail against every increase in the scope of government, no matter how reasonable it may seem. I'm more interested in the future of mesh networking, or any number of things we haven't even thought of, to work around this sort of thing.
Government and corporations each have certain advantages and faults by design. I'd prefer a public road and a private car, to a private road and a public car.
I do not understand lobbying? Is it a euphemism about bribing a bunch of politicians? If yes, then why isn't it illegal? If no, then can someone please throw some light on it.
I was not born here in the US so I am always confused by what "powerful lobbyists" can do to deter someone like the chairman of FCC who can literally make the rules (right?).
However in our modern world it really is just blatant bribery. Because corporations and rich individuals are able to donate such vast amounts that they are the only ones people care about. Take a look at how much money is spent during election cycles and it's obscene how many millions are poured into running for office. All that money has to come from somewhere. Say, for arguments sake, you must raise at least $5m to have a chance of winning an election but you think you can only raise about $2m from small donations (individuals) and then a few companies come along offering you nice big money bags if you agree to support their causes. Who do you care most about?
Thanks for a nice explanation.
The big problems come when we do things like decide a multinational corporation qualifies as a person and therefor the rules around how much money a company can donate don't apply to them. And we do things like change the rules around what the limits are. And then people do things like fund PACs where they pool their resources and promote a candidate on their own without actually donating to the campaign itself directly. Some of these are just outright stupid decisions that never should have happened in the first place and others are loopholes. Campaign finance reform in the US doesn't have a single silver bullet that's going to fix everything. There's a lot of things that are wrong with it. Citizens United (the corporate personhood ruling) is probably the biggest but it's still just one problem among many.
This is not enough. In Germany we already do have that situation, and the big leader (German Telekom, who own the vast majority of cables) just leases them for bad conditions. For example, their own customers got "real" flatrates while leasing competitors got only traffic-based contracts, so when they sell flatrates they have big trouble with traffic-intensive customers. (In the last year, the situation became more complicated, but that's another topic).
We should go one step further and require a complete separation of infrastructure providers, ISPs and content providers.
That is, a company who owns cables should only lease them to ISPs and should not be allowed to play ISP itself. Also, the ISPs should not be allowed offer content themselves.
(Also, the owner of the infrastructure (cables) should probably not be a company at all, but that's another topic and not important here, as long as the separation works.)
As a bad analogy, a company who sells cars should not own the streets.
Devil's advocate, why would any company want to be the infrastructure-owning company then? Aren't they in the worst spot?
Do you want a local PUC deciding how fast your internet should and how much it should cost? Do you want them deciding that 5 dollars more a month isn't worth tripling the speed?
It works for power and water because the infrastructure doesn't turn over very fast.
If you had your way in the late 1900's we'd all be on ASDL right now.
Edit Plus, the electric company definitely does some kind of demand shaping: shutting off AC compressors on a rolling, as-needed basis. In water emergencies the water company will declare which days I can water the lawn or wash my car. "Utility" isn't synonymous with "totally dumb pipe."
Furthermore, Internet bandwidth is not a commodity like electricity or water. There's no supply to diminish. What the telecoms want to do is more like if suburban streets were toll roads, Amazon owned the toll roads, and Amazon wanted to add a "congestion" charge for trucks carrying non-Amazon packages.
I agree
Perhaps it still makes sense to turn the last mile into a utility, but best to go in with our eyes open about the looming downside. There's not a free lunch to be had here.
Also, you describe a last-mile competitive scenario that is very similar to the energy deregulation that recently occurred in New Jersey. I think it has produced pretty good results for customers. Here's a good/concise explanation of how they did it:
The book analyses monopolies in information businesses, since Western Union, going through Bell and proceding all along to the era of Google and Apple. The end of the book is filled with very good insight on the subject. If this is a topic that interests you as much as it interests me, you should get yourself a copy of this.
What I don't understand is why any new neighborhood could be built without such underground conduit in place. If they're going in for water, sewer, power, etc. then it should be trivial to pop in an additional tube for "future connections."
I've also always avoided deals where Internet operator owns cabling. It's much better that those are separated. There was a free offer for fiber connectivity. I refused it, ordered own fibers and now it's possible to choose provider quite freely. Because switching provider doesn't prevent using the same fiber with them.
I wonder technically how hard it would be to do this with DOCSIS 3, by having channels per competing ISP. There would be a relatively small limit to the number of cable ISPs which could be overlaid on the infrastructure (5?), but that would still be preferable to what we have today.
Half of this article is still free-market wishful thinking.
The Netherlands, where there are plenty of ISP's to choose from, made Net Neutrality law exactly because the mobile providers "magically" nearly simultaneously announced plans for breaking net neutrality. (And after net neutrality became law, they all decided to raise their data prices.)
In a market with a limited number of players (and there will always be a limited number of players, regardless of regulation), it's way too easy to form informal cartels. A free market doesn't mean we magically don't need consumer protection or civil rights.
Also "wireless Internet is good"? All mobile services in the US are overpriced, suck balls and generally exploit the lack of regulation in a way that would see consumers in most other countries revolt.
> Municipalities, often for good reason, gave these edge providers a monopoly (the bad kind of monopoly where consumers can’t choose to leave) and often used tax dollars to fund the development.
Your guess about the author was mistaken.