[ficho]

"“Two years ago, I warned that we were making a serious mistake,” Pai said. “It’s basic economics: The more heavily you regulate something, the less of it you’re likely to get.”

Just reading this makes me angry. Has he ever heard of monopolies / oligopolies, or simply the place of government in regulating public utilities.

Apply his quote to water supplies and see what happens.

[r00fus]

You presume that Pai even cares about whether his words make sense. His voice has the tones of dictat.

[twoodfin]

Demand for water isn't growing at nearly the rate of demand for bits. If communities expected their regulated water utilities to deliver twice as much water every 18-36 months, they'd be in for some tough times.

[ficho]

That's irrelevant, if anything in your example you should compare growth in productivity for bits and for water independently and see if they manage to meet their demands Also water is a much more finite supply.

The point of my example was that as you leave government out of the tap water market and instead of getting more of it, you get less, more expensive and of lesser quality. Economics teach that in some industries, the government and a certain amount of regulation is healthy and good for the market; leaving actors to themselves just makes them tend naturally towards monopolies which then trifle innovation. Communications is one of those markets.

[rayiner]

The difference in demand is highly relevant: U.S. water utilities can't even attract enough investment to replace century-old lead pipes and sewers; similarly tepid investment in internet infrastructure would have left us all with dial-up still.

The U.K. and France have both privatized their water systems and it has worked fine. Conversely, U.S. water systems, which are mostly still publicly owned, are a total disaster: http://www.mlive.com/news/index.ssf/2015/09/epa_1_trillion_n....

Economics certainly teaches that some markets are susceptible to natural monopolies and government regulation is appropriate there. But it also teaches that making a kind of business less profitable will drive investment away from that business. The question is how do you regulate to balance those competing concerns. You have to protect consumers, but you also have to figure out how to get sufficient investment into the industry.

The U.K. does a good job balancing the interests. There is a single, regulated monopoly that owns most of the last mile (BT Openreach), but the regulations are designed so that the monopoly is actually very profitable. Most state and local governments do a terrible job balancing those interests with regards to utility companies. Regulated rates keep water and sewer bills low, but dramatically limit the profitability of water utilities. As a result our water infrastructure is hundreds of billions of dollars in the red.

[problems]

> The U.K. does a good job balancing the interests. There is a single, regulated monopoly that owns most of the last mile (BT Openreach), but the regulations are designed so that the monopoly is actually very profitable.

Yeah, the situation is similar in Canada, the CRTC has forced the big ISPs to lease to smaller ones. It's led to some great reductions in our costs, we used to be limited by extremely low data caps - they're now much higher or gone for a bit extra. Speeds have comparably gone up about 10x in a span of a few years.

I don't even think they'd need to be nearly as aggressive with the net neutrality laws if they could manage something similar - the competition creates a much better environment to address the problems.

It's a matter of creating a competitive market instead of restricting or destroying one.

[ficho]

Regarding the example of France the trend you're pointing out is out of date. After years of water privatization which drove costs up for municipalities and quality down, there's a reversal towards public management of the water supply. Privatization and deregulation pushed the market to an oligopoly of three main actors, Veolia, Suez and SAUR which eliminated competition and pushed costs up for consumers for a worse quality of water. That trend that was before celebrated (and embraced in the US, with Veolia and Suez heavily active there), is now being full on reversed, with measurable benefits for consumers and municipalities.

The US is still lagging behind on that realization and it's a common mistake to think that privatizing water supplies holds benefits for towns and consumers. Most often in these cases, deregulation brings benefits in the short term as private actors compete heavily to win public markets, but not in the long term when the market tends to an oligopoly / monopoly and private actors don't have any more incentive to push on innovation or investments.

The issue of lack of investment isn't a problem of too much regulation, on the contrary. These are markets with very high costs of entry where you need a strong regulatory framework to mandate a couple actors to a large enough market for those investments to be viable. You quote the example of communications, in France by law France Telecom had to expand its network to reach any citizen, whether 10km away from the grid or 10m at no cost for the consumer. This led to a great coverage of the territory and very high access to broadband for most of the population.

Take the example of the US, where internet access costs easily $100 a month, has just a couple actors sharing the market in each city, in a proper position of cartel, and where government regulation is nearly non-existent; and oppose this to most european countries where a 100mb symmetrical connection will cost you 30 EUR.... On the counter, what really disrupted the French Telecom market was the arrival of Free, which offered costs so low Telecoms had to find ways to match their prices.

It's a fallacy to think that these markets don't need regulation, but it's another one to think government can do everything ;)

Sources: http://in.reuters.com/article/water-utilities-paris-idINL6N0... http://thewip.net/2009/01/28/local-water-renaissance-in-fran...

[rayiner]

For context, the recent move in Paris ends over a century of water privatization. The city seems to have managed fine during that time frame. The focus on consumer prices is emblematic of the problem with public water management. Water/sewer services shouldn't be cheap. Prices should be high enough to adequately maintain infrastructure. Water rates in the U.S. are less than half of what they are in France,[1] and as a result, our water infrastructure is in terrible shape.[2]

> You quote the example of communications, in France by law France Telecom had to expand its network to reach any citizen, whether 10km away from the grid or 10m at no cost for the consumer. This led to a great coverage of the territory and very high access to broadband for most of the population.

There is no free lunch. More money spent covering more people means less money invested in improving infrastructure in urban areas.

France is not a great counterpoint to the U.S. model of regulating ISPs. According to 2016 OECD data, France does have higher overall broadband deployment (40 per 100 inhabitants versus ~33 per 100 in the US).[3] But the vast majority of it is DSL rather than much faster cable. According to Akamai's latest broadband speed report,[4] France ranks 52nd in the world in average speed (page 32). The U.S. ranks 14th (page 24). The U.S. has 42% of connections above 15mbps, versus just 16% in France (pages 25, 34).

https://www.akamai.com/us/en/multimedia/documents/state-of-t....

> Take the example of the US, where internet access costs easily $100 a month, has just a couple actors sharing the market in each city, in a proper position of cartel, and where government regulation is nearly non-existent; and oppose this to most european countries where a 100mb symmetrical connection will cost you 30 EUR

The fact that you can get 100mb symmetrical connections cheaply in some places doesn't reflect "most of Europe." Fiber is available in almost every U.S. city I've ever lived or worked in (Atlanta, Chicago, New York, Philadelphia, Wilmington, Washington, Annapolis--all except Baltimore and Wilmington, but even those have fiber in the surrounding suburbs). But that's not necessarily representative of the U.S.--you need to look at aggregate, not anecdotal data.

Almost 2/3 of the EU lives in: Germany, France, the U.K., Italy, or Spain. According to Akamai's data, those countries all have slower average internet speeds than the U.S. That is consistent with the OECD data, which shows that three of the five lag the U.S. in fiber deployment (counting the U.K.'s FTTN as fiber rather than DSL) and rely predominantly on slower DSL rather than faster cable technologies.

[1] http://everylittledrop.com.au/knowledge-center/the-cost-of-w...

[2] http://www.huffingtonpost.com/entry/us-water-safety_us_56bcf....

[3] http://www.oecd.org/sti/broadband/1_2-OECD-WiredWirelessBB-2...

[4] https://www.akamai.com/us/en/multimedia/documents/state-of-t...

[ficho]

> For context, the recent move in Paris ends over a century of water privatization. The city seems to have managed fine during that time frame. The focus on consumer prices is emblematic of the problem with public water management. Water/sewer services shouldn't be cheap. Prices should be high enough to adequately maintain infrastructure. Water rates in the U.S. are less than half of what they are in France,[1] and as a result, our water infrastructure is in terrible shape.[2]

No, that happened in 1984. (https://research.ncl.ac.uk/media/sites/researchwebsites/goba... slide 11 or http://www.eaudeparis.fr/lespace-culture/patrimoine/).

> You quote the example of communications, in France by law France Telecom had to expand its network to reach any citizen, whether 10km away from the grid or 10m at no cost for the consumer. This led to a great coverage of the territory and very high access to broadband for most of the population.

>> There is no free lunch. More money spent covering more people means less money invested in improving infrastructure in urban areas.

The point here is that the regulatory authority creates a legal framework which favors investement in the grid, resolving one of the inefficiencies of the market (no interest in paying 2MM euros to connect a person who's distant in the country side), makes investments happen which would never take place under a fully deregulated environment. This addresses issues of digital inequalities which would push actors on investing only on people or products which can yield the higher profits. At term it hurts society.

I'll take your points on the OCED and Akamai rankings, and yes I provided anecdotal evidence, not a lot of time for research :) But my sense is that if you compare speeds delivered to prices paid, consumers are still much better off in Europe. The other point which might be hard to quantify is the little choice US consumers have when choosing their ISP. It's often one or two actors who offer the same speed, price points and whose situation of oligopoly allows them to forgo proper consumer support alltogether (TWC). That is the result of no regulation and I don't see how more of that will benefit consumers.

More sources on water remunicipalisation: https://www.tni.org/en/article/180-cities-take-back-public-c...

https://www.tni.org/en/publication/here-to-stay-water-remuni...

[AnthonyMouse]

A government fiber utility installs fiber once, just like a government water utility installs pipes once. Making it faster means replacing termination equipment. In what way is Verizon better at doing that than a public utility company would be?

[thinknot]

Fibre is a very recent development... and there are a few kinds of it. Like, GPON, EPON, etc.

Before we had coax cable which required updates very often (DOCSIS versions) which usually required changing lots of equipment (not termination equipment/CPEs).

Before we had DSL which also saw lots of improvements over the years. (ADSL, ADSL2, ADSL2+, annexes, etc).

Also all these technologies require an uplink which needs to be updated from time to time.

These updates are very expensive, you can't imagine how much. A comparison with tap water is moot because, well, you don't need new, thicker pipes every 10 years.

[vacri]

> The more heavily you regulate something, the less of it you’re likely to get.

Sounds like Pai should talk to someone on a cardiac pacemaker.

[rhino369]

The "regulate it like water" argument is less persuasive since we found out that many of our water utilities are making our children retarded because of lead poisoning.