I've always felt the real problem is the monopolies. Net Neutrality doesn't fix that--it's up to local governments to fix it.
In the early 2000's when my home town still had dial-up only, Comcast came into the town and offered to build out cable broadband. They would even throw in a $300k grant to the school district for new laptops. The only catch? They needed to be granted a monopoly on all the telephone poles in the town. The town agreed.
As circulated on HN recently, the town of Chattanooga, TN is another interesting example[0]. Chattanooga made the smart decision many years ago not to grant a monopoly in exchange for a fiber build-out. Instead they built their own fiber network. Years later they offered to expand their ISP to the surrounding towns, which only had dial-up and satellite. It would cost zero taxpayer dollars. Instead the state decided to give $45 million to Comcast/AT&T to build out--get this--DSL!
As the parent article points out: despite cost-per-bit plummeting over the years, the cost to consumers isn't going down. The problem is monopolies naively being granted by local governments. In a world where that didn't happen, Pai would be right: ISPs would be forced to compete on features and quality, and so nobody would be talking about bundling websites like they do with cable channels, or whatever other nonsense Net Neutrality is designed to prevent.
I don't favor monopolies but, because I live in Los Angeles, I see that a city can act like a sluggish, greedy monopoly, too.
Here, the city owns the roads and electrical grid, and it's doing a mediocre or poor job of maintenance. We don't, for example, have "state of the art high throughput roads." Many of the roads are crumbling and need complete replacement. There's a huge backlog.
There's also a multi-year backlog of decaying wooden power poles which need to be replaced because they're in danger of coming down during a windstorm.
And, when people go to the expense of having solar panels installed on their homes, they have to wait many months for the city to come out and inspect and give permission to connect to the grid.
The city does not have a good handle on the problems. (Don't get me started about the leaky water mains.) City ownership of infrastructure is no guarantee of good service and value for money either.
And of course, as you say, with monopolies, we're screwed too. I don't see any easy answer.
All very good points, with great examples from where you live.
At the very least when decisions are made on a local level as opposed to state/federal, there is more of a chance that 1) people will be able to wrangle control of the situation by voting, and 2) the people who don't like the result can move away.
But you're right, it sounds like there is no easy answer for Los Angeles.
> In the early 2000's when my home town still had dial-up only, Comcast came into the town and offered to build out cable broadband. They would even throw in a $300k grant to the school district for new laptops. The only catch? They needed to be granted a monopoly on all the telephone poles in the town. The town agreed.
I suspect you're not correctly remembering what happened. It's illegal under federal law for municipalities to grant telecommunications monopolies. Municipalities hand out cable licenses in return for 5% of gross receipts + random giveaways like school district grants. But there is absolutely nothing exclusive about it.
> despite cost-per-bit plummeting over the years, the cost to consumers isn't going down.
Bits per second have been going up dramatically. My parents' house in Virginia, got 256 kbps SDSL sometime around 2000-2001. They got 50 mbps fiber over BPON around 2006. That got upgraded to 500 mbps over GPON around 2008. They just got gigabit this year. That's doubling of speed every roughly 15 months.
The problem is not that municipalities are granting monopolies. It's that municipalities impose restrictions on building that make it untenable to compete with the incumbent. In most cities, a startup cannot come in and build out neighborhood-by-neighborhood based on demonstrated demand. They're required to commit to building out the whole city in a short time frame, without regard to demand.
Thanks so much! I imagine you're right, I must have misremembered. Though as you insinuated, this is the same thing in practice:
> In most cities, a startup cannot come in and build out neighborhood-by-neighborhood based on demonstrated demand. They're required to commit to building out the whole city in a short time frame, without regard to demand.
-- EDIT
I checked on this, and you're indeed correct. The franchise in my home town includes a non-exclusivity clause.
As you said, it also contains a clause stating that "The Licensee shall make its Cable System Service" available to all residents of the town within seven business days of a request". So the network must cover the entire town.
Finally, in the non-exclusivity clause, it states that if any other cable provider is ever granted a license with "more favorable or less burdensome" terms, then the town will renegotiate terms with Comcast.
To me, this is the same thing as "granting a monopoly" in practice. But I appreciate your clarification!
-- END OF EDIT
I want to also point out:
> The problem is not that municipalities are granting monopolies.
In the case of Chattanooga that I mentioned, the law preventing the municipal ISP from expanding is unfair in the same way, even if this is not a case of a monopoly being "granted". Why shouldn't a company created by a town be allowed to compete in the marketplace?
> Why shouldn't a company created by a town be allowed to compete in the marketplace?
Because EPB is a monopoly. In Chattanooga, it's illegal for anyone besides EPB to provide electric service. It's fairly conventional thinking that companies shouldn't be permitted to leverage their monopoly in one area to expand into a different area.
I agree with you, although also agree with another poster that net neutrality is still important, mostly because of interoperability reasons.
However, you're also bringing up an issue that seems really neglected in public discussion, which is the role of municipal infrastructure and policy.
To me there's three things:
1. The importance of net neutrality to the working of the internet, at a theoretical level.
2. The lack of competition.
3. The obligation of companies to the public because of advantages they've been granted.
These discussions always proceed like big ISPs own the land that cables are going over, etc. when that's anything but the case. There's things like the telephones you mention, plus right-of-way laws.
Why the EFF doesn't publish a huge map showing land used by ISPs that's not owned by them I don't understand.
It outrages me to see these ISPs being given right of way, and then having them turn around and act like they don't owe anything to the public, when in fact they wouldn't exist without the public bending over backward to give them all sorts of privileges. They're acting like parasites.
To me I might take arguments against net neutrality more seriously if those arguing against net neutrality would:
1. Lobby for the rights of municipalities and other institutions to set up their own ISPs and networks. No laws against public ISPs.
2. Lobby for ISPs to be held responsible for any and all criminally or civilly infringing content going over their networks. Want to preferentially treat packets? Then you should scan for child porn too. If not, you're implicitly supporting it.
3. Lobby for the elimination of right-of-way. Let municipalities, state and federal governments, and private landholders charge ISPs whatever they want for access over their land.
Of course, ISPs would scream bloody murder and argue such things are ridiculous, but I would argue that they're not at all unreasonable given what the government is asking for in terms of net neutrality. They want to have their cake and eat it too.
> Why the EFF doesn't publish a huge map showing land used by ISPs that's not owned by them I don't understand.
Likely because it wouldn't show anything interesting. State and local governments may only "manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government." https://www.law.cornell.edu/uscode/text/47/253. In practice, rights of way are poles and conduits, which are rented to all companies at published, non-discriminatory rates: https://www.law.cornell.edu/uscode/text/47/224. The idea that companies are sitting on all these free rights of way they don't own is largely false.
Except that, as what happened in Nashville showed, the incumbents will take up all the available space on those poles, requiring any newcomers to wait for them to move their wires up or down a bit in order to make them ready for the newcomers to hang their wires. When these moves happen is apparently left entirely up to the incumbents discretion, as 18 months into Google Fiber attempting to deploy here about 33 poles had been touched. That's a brisk pace of two each month. So, with AT&T and Comcast left to themselves, some of Nashville will actually be ready for a new player at about the same time as we're ready to formally declare 32-bit time() functions unsafe to use.
Some sort of make-ready work is unavoidable when you have shared poles. But it's not left up to the incumbents' discretion. Under current rules, existing attachers have 60 days (105 days for orders involving large numbers of poles) to move their lines. The FCC is currently considering shortening those periods, or adopting a "one-touch make ready" process that would permit the new attacher to move other companies' lines.
I don't know what's causing the hold up in Nashville. The lawsuits don't stop Google from deploying, only from relying on the city's "one-touch make ready" ordinance which would allow bypassing the FCC process. But Google deployed in Kansas City, etc. without the expedited process, so that doesn't explain the delay. And Google Fiber's deployment in newer Fiber cities like Atlanta has been slow even though they face no litigation there. I suspect it all has to do with the fact that Google Fiber only has like 1,500 employees and recently cut 10% of its workforce.
I agree that local monopolies is the major problem, but I could still see the value of net neutrality if that problem was fixed. At least I as a consumer want companies to compete in efficiency of service, economies of scale, technology, etc, and not compete in whoever can sell me out the most or force services I don't want down my ISP subscription.
Theoretically. It's not as uncommon as one would hope with cartels and lowest common denominators. And if it's cheaper/more profitable to screw the end-user (I deliberately chose not to say customer) then why wouldn't they, unregulated?
Competition. If we take lobbying out of the picture, and therefore prevent ISPs from drafting legislation to suppress competition, it would allow for small, local ISPs to spring up.
A lot of customers will pay more to get decent service. (Otherwise, McDonald's would have driven sit-down restaurants out of business entirely.) If you're running a local ISP, whose business is based on providing good service, screwing over your customers would seriously hurt your business.
> Competition. If we take lobbying out of the picture, and therefore prevent ISPs from drafting legislation to suppress competition, it would allow for small, local ISPs to spring up.
You are assuming capital needed to set up an ISP is non-prevantably low. This can only be the case if the state, county or city owns the last mile and allows any business to rent it.
> A lot of customers will pay more to get decent service. (Otherwise, McDonald's would have driven sit-down restaurants out of business entirely.) If you're running a local ISP, whose business is based on providing good service, screwing over your customers would seriously hurt your business.
Your restaurant comparison doesn't work, because you don't have McDonalds customers or TGIF customers, you have people who eat at both at varying frequencies.
And as for your second point, I said screwing over you end-user for a reason. If it's more profitable to undercut prices to get the cheapest users, while selling data and deals to other market actors based on your users data, ISPs will compete for that instead of speeds, privacy concerns and other. And your choice becomes between varyingly shitty deals.
The "market" can't then make a choice until:
1) Someone wants to start an ISP with users as primary customer.
>This can only be the case if the state, county or city owns the last mile and allows any business to rent it.
Telephone companies are a public utility, and are, in most jurisdictions, legally required to lease space on utility poles to ISPs.
Laying lines is the largest cost of setting up an ISP; by using telephone poles, the cost would become manageable for a small business. Small business loans would be sufficient to cover the cost of setting up a small ISP.
As far as profitability goes, end-users could come together to set up a co-op, if they wanted better service.
>And as for your second point, I said screwing over you end-user for a reason. If it's more profitable to undercut prices to get the cheapest users, while selling data and deals to other market actors based on your users data, ISPs will compete for that instead of speeds, privacy concerns and other. And your choice becomes between varyingly shitty deals.
ISPs can undercut prices for the cheapest users, but the cheapest users aren't everybody. As I said, a lot of people will pay more for decent service. If you want a better analogy, consider a user choosing an iPhone 7 over a no-name Android phone. If price were the only consideration, Apple would not be one of the largest businesses in the world.
> Laying lines is the largest cost of setting up an ISP; by using telephone poles, the cost would become manageable for a small business. Small business loans would be sufficient to cover the cost of setting up a small ISP.
So you're arguing for tier 2/public utility/net neutrality? Then we agree. Otherwise you have to realize that DSL is already available as an alternative to cable or fiber. The problem is that the speeds are too low to even be called broadband.
> ISPs can undercut prices for the cheapest users, but the cheapest users aren't everybody. As I said, a lot of people will pay more for decent service. If you want a better analogy, consider a user choosing an iPhone 7 over a no-name Android phone. If price were the only consideration, Apple would not be one of the largest businesses in the world.
Alright, let's take your phone analogy. What we've heard is that Apple is somewhat protective of your privacy, at least that's what they're posturing publicly. We know fairly certainly that neither MS or Google (and all licensed phones) care for your privacy at all.
Now assume that Apple doesn't care either (we really don't know). You have a huge catalogue of phone options, but if you want something for privacy you might be able to get some fringe Finnish phone or a failed Ubuntu kickstarter. We've come to accept this for phones because we haven't known anything else, but we're not there with ISPs... yet.
This is what an unregulated market looks like. They all end up selling you the product, and then selling you on the backend making (more than) twice the money. And you're stuck with the illusion of choice.
Why would we want this for ISPs when we can make them a utility and both cheaper and faster? (see Japan, Korea, Nordics, Germany, etc)
> Years later they offered to expand their ISP to the surrounding towns, which only had dial-up and satellite. It would cost zero taxpayer dollars. Instead the state decided to give $45 million to Comcast/AT&T to build out--get this--DSL!
This isn't even just Monopoly issues, it's pure corruption. That will require fixing gerrymandering and electoral corruption - a tall order.
One of the things Richard Thaler points out in Misbehaving (on behavioral economics) is that traditional economics cannot decide whether out is descriptive or normative.
Descriptive economics would be the science of how people actually engage in economic activity. Normative economics describes how formally defined rational actors should behave to maximize their formally defined utility.
Unfortunately, what economists do is create a normative model and then retroactively assert that real people follow the model. As a result, their conclusions don't necessarily relate to the real world.
> One of the things Richard Thaler points out in Misbehaving (on behavioral economics) is that traditional economics cannot decide whether out is descriptive or normative.
That's because "traditional economics" doesn't actually exist as an entity, it's a strawman.
It can't "decide" because it includes different people amd groups who can decide, and who have decided differently.
"Suppose the government its economy plunge into a deep recession and decides to give everyone a one-time tax cut of $1,000 per person. The consumption function tells us how much of the money will be spent and how much will be saved. Economic thinking about the consumption function
changed quite dramatically between the mid-1930s and the mid-1950s.
"[Keynes] assumed that if a household received some incremental income, it would consume a fixed proportion of that extra income.... If we take the case of a middle-class family that saves 5% of any additional income earned, Keynes predicts that the MPC from a $1000 windfall would be 95%, or $950.
"[Milton Friedman] proposed that households would use a three year horizon to determine what their permanent income is, so would divide the extra spending evenly over the next three years. That means that in the first year, the family would spend about $317.
"[Franco Modigliani] predicts that the windfall will be consumed evenly over [the remainder of the individual's lifetime, say 40 years] meaning that the MPC to consume from the windfall will be just $25 per year.
"[Robert Barro] assumes that their time horizon is effectively forever. In this world, the predictions about how much money will be spent depend on from where the money comes. If the windfall had come from a lucky night at the casino, Barro would make the same prediction as Modigliani about consumption. But if the windfall is a temporary tax cut, the beneficiary realizes that his heir's taxes will eventually have to go up to pay for the cut he is receiving, so he won't spend any of it.
"I gave a talk in the Cornell psychology department. I began my talk by sketching Modigliani's life-cycle hypothesis. My description was straight-forward, but to judge from the audience reaction, you would have thought this theory of savings was hilarious. Fortunately, the economist Bob Frank was there. When the bedlam subsided, he assured everyone that I had not made anything up. The psychologists remained stunned in disbelief, wondering how their economics department colleagues could have such wacky views of human behavior.
None of that is relevant to the ability of “traditional economics” to decide between being a descriptive and a normative field, as all are examples of hypothesized predictive models, not normative ones. They may seem naive from the perspective of a field focussed on behavior at a more micro level (even microeconomics aims at predicting higher-level aggregate behavior than psychology), and, heck, they may even be hopelessly naive, but that's not even German e to the question.
(And whether or not an economist was there to put an imprimatur on it, all of those descriptions are mischaracterizations, but again that's neither here nor there.)
Bulgaria is a good example why net neutrality works. The capital city of Sofia is brimming with ISPs -- last time I checked, at least 15 companies with good coverage, fiber, and very affordable ($7 to $20 for 100Mbps ingress and egress) connection services. And probably 50 or so more which are smaller and with less coverage, but still with strong connections.
No prioritized traffic. No metered traffic. No endless Facebook and Whatsapp traffic. Shielded and reinforced fiber-optic cables, laid underground. Rain pours down as if it's the Apocalypse, both of my connections never flinch.
It's different in the USA. It's vast, it's costly to make a big fiber-optic network, and the company lobbies and legal monopolies are rampant. I don't think you guys will manage to push back anytime soon. You need somebody like Elon Musk coming over and saying "I don't care about being in a VIP oligopoly club, I'll do my own thing". Then you'll find Comcast suddenly improving service and dropping prices.
People like Pai aren't stopped by words. There has to be a way for the market to do its magic, otherwise it'll only get worse for the USA.
>>The capital city of Sofia is brimming with ISPs -- last time I checked, at least 15 companies with good coverage, fiber, and very affordable ($7 to $20 for 100Mbps ingress and egress) connection services.
Sounds like a domestic sector ripe for consolidation. I hope that doesn't happen for the sake of the consumers, but that seems like an overwhelmingly large number of players for a total market size of only 1.7M subscribers[1], which is even smaller from the census figures of roughly 500K households.
Some of the bigger players have been buying smaller ones but in general the sector almost hasn't changed because the consumers switch away if somebody slacks a lot -- the tricks of "we're in a merge and you may experience some disruptions in the process" and a lot of other corporate lingo absolutely don't fly around here. People just smile and switch away.
The mobile operators also pushed a lot for consolidation several years ago but it seems they didn't have the leverage (and the money) to make it happen. Thank the gods for that.
So far it's all good, we're enjoying healthy competition and extremely good ISPs.
It's not at all different in theory. In practice, Google Fiber is dead on its tracks, isn't it? They are no longer expanding.
The big players in USA need real competition -- something that goes to their cities and offers a better service. A very niche solution like Google Fiber won't do.
In the early 2000's when my home town still had dial-up only, Comcast came into the town and offered to build out cable broadband. They would even throw in a $300k grant to the school district for new laptops. The only catch? They needed to be granted a monopoly on all the telephone poles in the town. The town agreed.
As circulated on HN recently, the town of Chattanooga, TN is another interesting example[0]. Chattanooga made the smart decision many years ago not to grant a monopoly in exchange for a fiber build-out. Instead they built their own fiber network. Years later they offered to expand their ISP to the surrounding towns, which only had dial-up and satellite. It would cost zero taxpayer dollars. Instead the state decided to give $45 million to Comcast/AT&T to build out--get this--DSL!
As the parent article points out: despite cost-per-bit plummeting over the years, the cost to consumers isn't going down. The problem is monopolies naively being granted by local governments. In a world where that didn't happen, Pai would be right: ISPs would be forced to compete on features and quality, and so nobody would be talking about bundling websites like they do with cable channels, or whatever other nonsense Net Neutrality is designed to prevent.
[0] https://motherboard.vice.com/en_us/article/tennessee-could-g...