[rsync]

"There is simply not enough competition to rely on the free market to keep net neutrality as a fiscal priority."

You're answering a question I didn't pose.

I wasn't even specifically speaking about net neutrality - something I am sympathetic to.

I was lamenting the fact that the level of discourse is lower than I'd hope it to be. Knee jerk "that guys not on my team" responses aren't helping to encourage me.

[thomastjeffery]

> You're answering a question I didn't pose.

I am clearing up some points you seem to have misunderstood or glossed over.

> > > "In short, the regulation is needed to protect against ISPs prioritizing their profits over their consumers"

> > It's not encouraging to see that your broad, summary statement is nonsensical.

> > A for-profit business firm prioritizes their profits over their consumers by definition.

Since, as you pointed out, a business prioritizes profits over customers, there needs to be an incentive for these businesses to prioritize their customers. That incentive is either competition or regulation.

The first choice is not currently workable, since competition between ISPs is impractical.

This is the same problem that net neutrality exists to prevent, just in a different problem space: Without a free market, competition is unfeasible.

> Knee jerk "that guys not on my team" responses aren't helping to encourage me.

Could you elaborate on what you see as a "knee jerk response"? I am not seeing any here.

[waterhouse]

> The first choice is not currently workable, since competition between ISPs is impractical.

Could you explain why that is?

[thomastjeffery]

There are 6 ISPs that control the majority of the market for the entire US. Most Americans have only one ISP to choose from.

When a company like Comcast or Verizon owns, or owns the rights to the existing infrastructure, they can refuse to sell or lease that infrastructure to other businesses, thereby stifling competition.

That is the current state of affairs.

For a competing business to be successful, it needs infrastructure, most of which is currently controlled by 6 large companies who do not want competition, so competing businesses fail.

[tripzilch]

> 6 large companies who do not want competition

I don't think we are disagreeing, but if we're being pedantic and frame the discussion to axiomatically state that, by definition,

1) business firms value profit over people

we should also pose that

2) large companies do not want competition

continuing,

3, .., 98) the human condition, etc

finally,

99a) arseholes

99b) and why we can't have nice things

because, defending that "businesses value profit over people" as a fact of life instead of, well, fighting it as something undesirable (like stealing, mass murder or poisoning a town's water supply), kind of sounds to me like a lot of twisting and turning because deep down you really want to retain the option to value profit over people, for yourself, your own business, because surely you can be trusted to responsibly mind your own business unlike everybody else who believes the exact same thing and on that note I refer back to my earlier points 3 up to and including 99b.

[thomastjeffery]

What I wanted to make clear is that points 1 and 2 compound each other.

When there is healthy competition, businesses will consider fulfilling their customers' needs as the best way to increase profits.

When there is not healthy competition, businesses will be able to increase profits using methods that go against their customers' needs, because their customers have no alternative.

That is why we can't have monopolies.

But we do have monopolies, so we need a workaround: regulation.

[betterunix2]

FYI the United States had line-sharing requirements for DSL service until 2005; that could always be reinstated if the FCC actually wanted to rely on a competitive market for ISP service.

[thomastjeffery]

> for DSL

DSL can barely compete anymore.

The only reason that it can is that there is no competition.

[betterunix2]

Actually, there are certain technical characteristics of DSL that make it better than cable (DOCSIS) for certain use-cases. Fiber obviously takes the cake, but fiber has not been rolled out everywhere yet.

[waterhouse]

I guess there would be a couple of approaches. (1) would be for some companies (possibly a consortium thereof) to build new infrastructure. (2) would be to force companies to lease out their existing infrastructure indefinitely. (Er, "rights to"—does that describe cases where the local government owns the infrastructure, but one company has an exclusive contract to use it for N years? It seems that case could be addressed by letting the contract expire and then only agreeing to nonexclusive contracts thereafter.) The first option seems to require less extreme intervention, so let's consider that.

What are the obstacles to (1)? There's the complaint in a sibling thread about "digging up the street to put in more cables". I suspect that if homeowners were given the choice of putting up with that in exchange for substantially reduced costs and/or higher bandwidth, many would take it, possibly enough for majority votes if it's the city government that makes that choice. The other question would be, is it economically feasible? There are high fixed costs, and some maintenance, and in exchange I guess whoever owns the new infrastructure can charge the use of it to new, competing ISPs. It'd probably pay for itself over some time horizon, but is the return better than investing the money in something else? I don't know the numbers on that.

[betterunix2]

The problem with building new infrastructure is that the first company to do so will always benefit the most. It costs the same amount to lay fiber regardless of whether or not another company has laid the fiber. If you are the first to reach the town, you pick up all the customers. If you are second, you pick up only a fraction, despite spending the same amount to get there; in other words you will see a lower return on your investment.

Basically, what you have with ISPs is this:

https://en.wikipedia.org/wiki/Natural_monopoly

[waterhouse]

The first company to enter any market will always benefit the most. All industries have some fixed costs. And breaking into an existing market is always difficult for a new company. These things are not specific to this industry, yet there manages to be competition in other industries. Are the fixed costs really that high? Does that apply everywhere? I won't buy that without a strong argument, which would have to provide some numbers. I have an article that describes similar industries in which natural monopolies were claimed, yet successful competition existed in many places.

Can you provide any specific criticisms of arguments made in this article? It's a long one, so feel free to address just the "cable TV" or "telephone services" sections. I've reproduced three paragraphs of the section on cable TV below.

https://mises.org/library/myth-natural-monopoly

Cable television is also a franchise monopoly in most cities because of the theory of natural monopoly. But the monopoly in this industry is anything but "natural." Like electricity, there are dozens of cities in the United States where there are competing cable firms. "Direct competition … currently occurs in at least three dozen jurisdictions nationally."[1] ... The cause of monopoly in cable TV is government regulation, not economies of scale.

Also like the case of electric power, researchers have found that in those cities where there are competing cable companies prices are about 23 percent below those of monopolistic cable operators. Cablevision of Central Florida, for example, reduced its basic prices from $12.95 to $6.50 per month in "duopoly" areas in order to compete. When Telestat entered Riviera Beach, Florida, it offered 26 channels of basic service for $5.75, compared to Comcast's 12-channel offering for $8.40 per month. Comcast responded by upgrading its service and dropping its prices.[1] In Presque Isle, Maine, when the city government invited competition, the incumbent firm quickly upgraded its service from only 12 to 54 channels.[2]

In 1987 the Pacific West Cable Company sued the city of Sacramento, California on First Amendment grounds for blocking its entry into the cable market. A jury found that "the Sacramento cable market was not a natural monopoly and that the claim of natural monopoly was a sham used by defendants as a pretext for granting a single cable television franchise … to promote the making of cash payments and provision of 'in-kind' services … and to obtain increased campaign contribution."[3] The city was forced to adopt a competitive cable policy, the result of which was that the incumbent cable operator, Scripps Howard, dropped its monthly price from $14.50 to $10 to meet a competitor's price. The company also offered free installation and three months free service in every area where it had competition.

[1] Thomas Hazlett, "Duopolistic Competition in Cable Television: Implications for Public Policy," Yale Journal on Regulation, vol. 7 (1990). http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...

[2] Thomas Hazlett, "Private Contracting versus Public Regulation as a Solution to the Natural Monopoly Problem," in Robert W. Poole, ed., Unnatural Monopolies: The Case for Deregulating Public Utilities (Lexington, Mass.: Lexington Books, 1985), p. 104.

[3] Pacific West Cable Co. v. City of Sacramento, 672 F. Supp. 1322, 13491340 (E.D. Cal. 1987), cited in Hazlett, "Duopolistic Competition."

[thomasfortes]

Would you like to have 30 different companies digging your street to lay cables?

Or 10 energy cables over your street because energy competition would be great?

Even in a perfect world, infrastructure is a natural monopoly.

The government could handle all the big scale infrastructure and let small players handle the last mile, but that's not the case and even if it was, people would still complain.

[waterhouse]

If people accept 1 company doing it, would 2, or even 3 or 4, be so bad? Whatever rules limit it currently could be relaxed instead of eliminated completely; competition-wise, going from 1 to 2 is a much larger step than going from 5 to 10. Regarding power—as a matter of fact, I've had some power outages recently. I think 2 would provide some nice redundancy.

[thomastjeffery]

New businesses do not necessarily need to own the infrastructure. They just need bandwidth.

Competing businesses could even work together to improve existing infrastructure.

The problem is that existing monopolies do not dissipate without external pressure, because it is not to their benefit.

We have 6 monopolies now, and we need to actively break them up. Short of that, we need to regulate them.

[jlillyreed]

Existing businesses have many incentives to not give bandwidth on their infrastructure to their competition - especially at competitive prices

[betterunix2]

In some countries, and in the USA until 2005, the regulations require incumbent service providers to lease their infrastructure to competitors. France has such requirements, and unsurprisingly they pay less for their fiber optic service than Americans.

[thomastjeffery]

That is the heart of the problem.

[tripzilch]

How did you in the US ever manage to get cable TV everywhere?