> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service.
Why? If the Free Market Fundamentalists are correct, the for-profit company should have it all over the tax-funded service, because the company would be interested in efficiency and technological advances and so on, as opposed to just being a... welfare... thing... like the US Post Office and everything else which, per dogma, Does Not Work.
> You can prevent rent-seeking by repealing any "sponsored" laws that protect their monopoly.
Like the property laws which prevent others from using the wires they pay to put in, or do you think three cable companies should mean three completely separate sets of coaxial cables running everywhere in town?
The vast majority of local municipalities have to balance their budget. And their options for credit are vastly more constrained. And they have essential services that can not go unfunded.
A private company that thinks it can be profitable can go to a bank. A city will probably have to have a bond on the ballot. And a city can't really get out of things like road repair, law enforcement, etc (they can subcontract, but they still have to provide service) whereas a private company can sell of or shut down any unprofitable aspect of it's business.
So on the surface, comcast or whomever has a lot more leeway then a city.
The issue is, a service like last mile broadband is not incredibly profitable, for a telecom. But if a city can do it, or have a local company do it and it doesn't cost too much (they can waive fees for running cable, or whatever) then it may pay for itself, at least in part, because not only do they benefit from whatever they collect in fees, but broadband can increase local tax revenue (a house with 1000mb/s internet is worth more then a house with 2mb internet).
I think the parent is asking/claiming that public options are almost universally less desirable than the product of self-interest in the presence of competition, so their main effect is just to ensure that the private would-be monopolies need to actually provide a good service.
In domains like Internet infrastructure and health insurance which are empirically pretty terrible when there's no public option, I think there's a lot to be said for that argument.
Is it "fair" for a monopoly to have to compete against an organization that has nearly infinite resources but terribly inefficient operating ability? I don't know. Maybe yes, maybe no. Is it fair to huge ISPs to impose net neutrality on them? Maybe yes, maybe no. But it's no less fair for them than not having net neutrality would be for companies who want to use that infrastructure. It's certainly no less fair than life would be for a child who can't afford access to health care in a black market-like total laissez-faire economic system. I'd prefer to live in an imperfect implementation of capitalism that tries to regulate out negative externalities when possible (despite often failing) and provide as much fairness for as many people as possible, to one that provides so much "fairness" to certain corporations that they can make the game unfair for everyone else, people and companies alike.
> I think the parent is asking/claiming that public options are almost universally less desirable than the product of self-interest in the presence of competition, so their main effect is just to ensure that the private would-be monopolies need to actually provide a good service.
Well, actually, I'm claiming that a Free Market alternative should be able to win even if the Free Market includes the government.
Nobody is guaranteed to win, and I don't think a public option would necessarily be odious, but if someone's so gung-ho about competition, they shouldn't be scared of competing with a government.
Edit: OK, yes, I was mocking the Free Market Fundamentalists in my post. Fair's fair, they mock the government and the moderates, often using japes invented by Ronald Reagan (peace be upon him).
Right. Free market alternative should be able to beat government, so in cases where the free market isn't producing acceptable results, rather than forcing them to change through legislation, government can just compete with them until they beat the government.
> Because unlike companies, governments¹ can function long-term even if they don't balance budgets.
Except that shouldn't matter if the private company can compete on technology and service.
If your opponent has unlimited funds but the customer service policies of the DMV and the technological acumen of, uh, some very-non-technical government office of your choice, shouldn't you win?
The local government has plenty of other advantages. For one, they have a vested interest in not imposing costly requirements on themselves, while they continue to do so to private ISPs. In other words, they set the rules that everyone has to play by (ie you must cover this entire area, event the parts where no one can afford your service) while preferentially setting better rules for themselves. In the same way, I wouldn't be surprised if they can get permits and other government imposed roadblocks out of the way faster.
ISPs can vote just like everyone else. Even more so, in fact, because they can influence others to vote their way by buying ads. Governments are constrained by those votes. ISPs therefore have leverage over the way in which governments have leverage over them; they just need to convince their potential customers to vote their way, much like they need to convince their potential customers to become actual customers.
I've had recent experience with the DMV, Charter, and my doctor: of the three, I was treated most professionally and with least wasted time, at the DMV.
The hidden assumption is that by favoring, or at least not opposing, municipal broadband, you are supporting the total ban of competing networks, subsidizing network infrastructure with property taxes, five-year plans, gulags, etc etc.
> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service.
But if last-mile links are a natural monopoly (or at least demonstrably low competition markets), how do we get better broadband than we have now? We have data points from other nations that seem to indicate that publicly owned or open-access last-mile links create market conditions that deliver broadband more efficiently - both in lower cost and higher bandwidth. There is still competition - it just shifts to different market boundaries.
Okay, so you could to break down the ISP vertical into companies that only supply service and companies that only do the last-mile infrastructure. It would allow the government to regulate the industry without being involved in the supply side of things.
One other option is to opt for a consumer ownership model where the each home pays for the bit of fiber that connects them to the neighborhood hub or w/e.
I would be happy with either (particularly the first) but politically the chances of something like that, which almost certainly would require legislation -- and would without question require a Sherman act prosecution from a Justice Department with some actual spine -- are approximately nil.
The UK did this with British Telecom (BT). In a word, it sucks. It creates confusion for consumers:
* "I get internet from Twinkle but they say they can't repair my line."
* "I signed up for service with Floyd's Internet but a truck showed up at my house that says Ben's Broadband."
* "Decker offered me fast fiber, but when I called to sign up, they said WestLane only has copper to my home and they aren't allowed to run the fiber."
The names have been changed to protect the guilty, but the experiences are real.
OpenReach (the BT subsidiary operating the line network) has a clear (available on their website) policy for how their engineers should interact with people that includes guidelines for informing ISP-customers about who they are and who they represent (OpenReach and the end-user ISP) and how to deal with customers in a way that represents the ISPs well (the customer of OpenReach is the ISP - they're a service delivery company working on behalf of the ISP, not the end-user).
A few years ago some of this may have been confusing, as customers used to have to deal with BT directly, but now "everyone" knows about BT/OpenReach handling the installation on behalf of a lot (not all) ISPs, and every ISP I've had in the last decade has explained this to me when I signed up, and these days customers do not have to deal directly with BT other than OpenReach engineers. And people are used to outsourced service companies dealing with utilities. E.g. I get power from Npower, and over the years a dozen different companies have done meter readings on their behalf where I live.
As for your "Twinkle" and "Decker" examples, blame your ISPs that have decided to use this as an excuse for their own problems. In the Twinkle example, the ISP is a customer of OpenReach, not you, it is their responsibility to deal with OpenReach, not yours. If they're trying to push OpenReach in front of them, that's their bad customer service.
As for your "Decker" example, it's Decker's fault they've not checked coverage prior to making promises they can't keep. And "aren't allowed to run the fiber" == "we've decided (as most, but not all, UK ISPs) that OpenReach provides a good enough network for us, so we won't make any investment in rolling out our own, sorry". Nothing prevents UK ISPs from trying to build competing networks, other than the capital investments needed, and the low projected rate of return for most of them outside of the most densely populated city cores.
The relative lack of competition for OpenReach is a good demonstration that the market doesn't share your assessment of them. Many are unhappy with them, but not unhappy enough to pay for anything better.
They did it in Sweden too (Telia/Skanova) and I haven't heard any such complaints. Just because something can be poorly implemented doesn't mean it has to be.
Living in the uk all my life and having switched adsl providers pretty much every 12 months for the past 10 years I can honestly say the above is utter nonsense. Yesterday bt wholesale can be a pain sometimes (the company that manages the lines and exchanges) but then they are bt; they've always been awful at this sort of thing. Ever since ISPs have been taking advantage of llu though things are much better, especially if you use a provider who has their gear in the local exchange already.
I still find it strange that the U.S., which is such a bastion of the free market is so anti-free market In regard to internet ISPs.
I think that kind of structural split you mention first could be a nice low-regulation/high effectiveness solution, at least compare to other alternatives. However, I haven't seen any kind of willingness to impose that kind of regulation by agencies for at least the past two or three decades. As a matter of fact past structural regulatory market walls have been getting consistently removed in other industries.
I find it a quite amazing situation. It's a good demonstration that US politicians are not interested in free market competition. In Europe, this structural split was a key part of the de-regulation of the telecoms market.
In the UK alone, OpenReach, the BT subsidiary that inherited the last mile network, counts more than 500 companies as customers that provide telecoms and ISP services to end-users. Many of them are business focused or offer only specific subsets of services, but there are a huge number of nationwide ISPs using OpenReach's services.
Especially because the starting point is very simple: You can start out using their "backhaul" service which lets you integrate with OpenReach a couple of places and be able to offer broadband nationwide in the UK and have OpenReach provide you with IP connections to each customer for you to do whatever you want with. You can then if you want "graduate" to local loop unbundling where you put equipment in local exchanges as/when demand justifies it, allowing you to connect directly to the local loop (line) of each of your subscribers, which allows you to offer services in excess of what OpenReach does (e.g. some ISPs offer higher speeds).
Once you go the LLU route, you can turn around and offer backhaul services yourself if you wish, in competition with OpenReach.
If even that isn't enough, and you have the capital, you can look at laying your own lines. E.g. in some cities we're starting to see alternative fibre connections to many apartment buildings etc. as providers are capitalising on the density to bypass OpenReach.
So it encourages competition massively by creating a very low barrier to entry, while allowing larger providers to compete with OpenReach itself.
Looking at some of the other complaints re: OpenReach, the best setup might be municipal ownership/oversight of the last-mile, but with operations contracted out to private companies. That way you can split the network ops among vendors, or periodically reassess effectiveness of the private companies.
Do other countries also have problems with their roads and bridges being in disrepair? How about their water mains, do they break and wash out streets on a regular basis?
US local governments do not seem to have a good record of maintaining public infrastructure, so why would public internet be any different?
The problem is that you have an asymmetry in resources between e.g. local officials who might want to stand up a fiber network and a company the size of Verizon, who very badly do not want this to happen. You need countervailing size, and in the US only the federal government has it.
The problem of asymmetry of resources exists in all domains that have high sunk costs. To reduce monopolies, using your logic ("you need countervailing size") the government would have to get involved in all of the other industries like shipping, oil refining, TV networks, etc.
Instead, why not change the law (if needed) to prevent monopolies from happening?
Shipping and oil refining are different. If you apply capital to over come the cost barrier of entering those businesses, you can still access customers and potentially put all that capital to work generating profits.
With last-mile internet, if you lay in a redundant competitive network in a neighborhood - the capital efficiency of both networks goes down, with no mechanism to make that capital work more. You're limited to the houses in the neighborhood. So in that case you have high cost barriers, and natural monopoly conditions limiting how well that capital can be used to generate return...
If all the gas stations in an area are owned by Exxon & priced too high, the customer drives their car elsewhere. There is a very, very high capital barrier to entering the market, but customers still hold choice.
You can probably observe some region-locking effects short of monopoly by relate the cost of gas in come areas with ability to choose alternatives. e.g. Driving in the middle of nowhere, there are few gas stations and the cost of gas is high. Redundant stations aren't built in competition to one another along those stretches because the volume of traffic isn't high enough along the 'network' of the road, but within the range of the typical car, some will drive on and others will be forced the stop. So even that isn't as airtight a natural monopoly as last-mile internet.
The government already does, for regional monopolies (power, water, sewer, transportation, etc.)
The problem isn't that the government should prop-up start ups in this specific industry to prevent a monopoly, but that the government should embrace communications as a regional monopoly - i.e. own the utility infrastructure and reduce costs for the entire economy.
Obviously they can't nationalize the current companies, but they can start building public infrastructure.
Because some markets will tend towards consolidation ,especially things involving networks, because the economies of scale are so important to costs. So , left to their own devices, the unregulated market would always tend to a monopoly.
Friendly reminder to people of HN. Please don't downvote to disagree. Is your objective to discourage dissenting opinion? Seriously? That's not healthy for a community.
Isn't there Sherman act already? Why can't it be applied to ISPs? I.e. there are existing laws which can put an end to anticompetitive behavior of ISPs, but no one applies them. So why would adding more laws improve anything?
Well anti-trust law are mostly applied on case by case basis. I believe the un-official term for judging is "workable competition". I don't know whether the ISP market passes that definition.
There are also various prohibitions about collusion. And that's a major problem with ISPs, i.e. even if there are several in the area they agree not to compete and hold prices high for example. I never saw anyone applying these laws to ISPs so far. Not sure why that is, may be government is too much in their pocket to actually apply existing law.
> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service.
Those for-profit companies have been granted extremely valuable rights-of-way by the municipal governments without needing to negotiate individually with each and every landowner whose property they cross with their lines. Their networks wouldn't be nearly as valuable if they had to negotiate and potentially (gasp!) share revenue with landowners.
Those for-profit companies have been at it for a while, and it's clear they don't provide acceptable services. Maybe they should have thought about this situation a little earlier? Then none of this would be necessary, nor even considered.
Regardless, this issue is a municipal government's decision-making. If a municipal government doesn't like how their ISPs are acting, they should be able to do something about it. There's no reason for it to be _illegal_, even if it is a bad idea in some places: the local government should be able to do what they think is best for them.
Also, if ISP's have so little trouble making obscene profits, there should be little risk of the government failing to do the same.
Maybe private companies shouldn't run the physical infrastructure - maybe it should be a public utility. In today's society, you need gas, electric, water and internet (which has replaced phone).
We can have for-profit companies in those industries, sure, but if the taxpayer is footing the bill for some of the research, then some of the fruits of that research ought to go back to the taxpayer.
How so? Whether its good or bad, ISPs would be against it. Most companies do not want competition. (regardless of what they say)
>by allowing the option of municipal networks.
I personally think its rather unfair to ask a for-profit company to compete against a tax funded service.
>Really, he's calling for the FCC to prevent rent-seeking
You can prevent rent-seeking by repealing any "sponsored" laws that protect their monopoly.