[c3534l]

Telecommunications tend to form a natural monopoly. It's a bit like roads and railroads, only you're transporting information rather than people. I looked online and it's got all the common characteristics: there are few close substitutes, the product is non-storable (although, maybe if it gets bad enough in the US we'll start seeing services that mail us USBs full of last week's Hacker News posts), supply is all about location, and fixed costs are unusually high relative to variable costs.

[skrause]

That's why you need something municipal dark fibers that every ISP can cheaply rent. The last mile is the expensive part or a network which should be open-access and never belong to a single ISP.

[bo1024]

Agreed. There is an additional simple point of view which I believe clarifies the situation, which is to look at the total costs and total "value created" ("social welfare") under different systems. In other words, you ask what is the "first best" and what system can achieve it.

Consider selling wheat. If one company owns all the wheat fields, or the wheat fields are evenly split among two companies, the total amount invested in growing wheat is the same. And since multiple companies means competition, lower prices, and more consumers served, having multiple companies is more efficient in the econ sense (higher social welfare = total value - total cost).

But with fiber infrastructure, having two copies of the infrastructure is a huge waste of total resources. It is far more efficient to only have one set of wires. The problem is if they are controlled by a monopolist, they will keep high prices and serve fewer people. So a single copy of infrastructure with a monopolist is sub-optimal, but so is multiple copies of infrastructure with competition. Optimal is a single copy of infrastructure along with regulation or some other means of keeping prices lower than monopoly.

Of course, you can still try to implement market competition over those wires via regulations that force companies to share the wires, etc.

[masklinn]

Oh no, don't you read mises and vood^H^H^H^HAustrian Economics? Natural monopolies don't exist: https://mises.org/library/myth-natural-monopoly

[logfromblammo]

Natural monopolies exist, but they don't perpetually persist. They can fluctuate between monopoly, single firm with pricing power plus challenger(s), unstable market, and complete market collapse with no suppliers.

Legally protected monopolies are intended to avoid the latter state, especially where interruptions of service could have ripple effects on other industries.

I believe the legislative goal was never about costs or overbuilt infrastructure, but to ensure that at least one provider was always available. So they chose to mandate that there could never be more than one. For the sake of having a dial tone 99.99% of the time, they made the choice for everyone that phone service would cost more, for everyone, every day, forever.

Talking about "natural monopoly" is just a distraction. The de jure monopoly is about the difference between "no choice" and "zero choices". You may have made the same choice on a smaller scale when designing code that expects exactly one input instead of zero to N inputs. An alternate solution would be to operate a state-owned, not-for-profit utility, as the supplier of last resort, but that has its own problems, which may be more or less difficult than the monopoly problems, depending on specific circumstances.

Von Mises is a good economics resource for libertarian-leaning folks, but you can't trust any single macro-economist to get everything right. I'm actually not sure any single one of them is more than 50% correct, or even if their amount of correctness is stable over time. Markets have this annoying habit of integrating all information, whether true or false, and reacting to it. This includes everything that all economists in all schools have ever written. It truly is a dismal science.