[Florin_Andrei]

> The competition got serious.

It's interesting how pure competition and "rational self-interest" got us the likes of Comcast and Cox and Verizon and all these other awful, awful companies. They quickly locked up the market, injected their own lobbyists into Washington, and then were content to provide a poor service for a lot of money.

What is shaking them out of their complacency now is not "the market" or "competition" as it's usually understood. It's a very large company, with tons of cash, led by someone (Larry Page) with goals beyond pure financial gains and rock-bottom self-interest.

Perhaps it's time to go back to the drawing board, and figure out what's wrong with these purely mechanistic models of society and the markets. It seems like it's time to ask ourselves if a dose of self-less-ness is perhaps required to make the whole system work better. Not a very large dose, mind you, but just a little bit; anything over the current level of zero, really.

[cheald]

You don't think that the core of the issue is regulatory capture, rather than a failing of "the market"?

It takes a lot of money to break into a captured market, which is why it takes a large company to do it. Google entering the ISP market has done more to shake up and spur on the incumbents in the past couple of years than anything regulators have done. And furthermore, you can be assured that their doing so is absolutely self-interested; Google isn't building fiber for the betterment of humanity, they're building it to improve the delivery of their services which make them money.

[rayiner]

People trot out "regulatory capture" but can never give a straight answer about what is being captured and how that leads to a lack of competition.

Verizon wants to wire up the yuppie neighborhoods here in Baltimore with FiOS. That'd be major competition for Comcast, because those yuppies subscribing to triple play are where all the money comes form. The city won't let them do it, because they demand Verizon wire up all the poor neighborhoods too (which cost just as much to service but won't turn a profit).

Is the theory that Comcast has regulatory-captured the Baltimore city government, forcing them to impose this requirement? Because I've seen absolutely zero evidence for that proposition.

When Google goes into cities, they demand exemption from regulation. The regulations they get exemption from are not ones that give benefits to incumbents. They are liberal public policy choices: you have to wire up poor neighborhoods if you want to wire up rich ones, you have to kick in money to support public access TV, you have to get permits and your fiber cabinets can't be too big, etc.

[daniel-cussen]

This is too true. It's more regulatory moats than regulatory capture. At any rate, it's not profitable after, probably, the first time.

It's strange how cities force companies to wire this way. It's as if they forced a luxury brand, Hermès, say, to open a store in the most shit-hole, criminal part of town in order to gain the right to open a store in the yuppie part of town.

[jpatokal]

Access to the Internet is increasingly viewed as a right and/or an essential service. Access to overpriced handbags, not so much.

Providing health care to the destitute isn't profitable either; doesn't mean we shouldn't be doing it.

[JumpCrisscross]

> Access to the Internet is increasingly viewed as a right and/or an essential service. Access to overpriced handbags, not so much.

Clothes are seen as essentials in Western society. Luxury brands, not so much. Yet access to internet and access to cutting-edge broadband are treated similarly by regulators in the U.S. That's the asymmetry.

[nitrogen]

...access to internet and access to cutting-edge broadband...

At the pace technology advances, there's not so much difference between the two. Since companies are still constantly pushing the limits of technology, the majority of the benefits of connectivity come at the higher end of the bandwidth spectrum.

[snowwrestler]

Regulatory capture doesn't have to mean literal corruption. It can cover situations where governments acting on their own and in good faith, assume the status quo and grandfather incumbents. It might not even be on purpose, but rather the logical consequence of a distaste for laws and regulations with retroactive effects. But the end result is the same: legal obligations that impact new players more than old.

So the question is whether Comcast has to meet the same standard of building out their network in poor neighborhoods as Verizon does.

[rayiner]

The "capture" part of the phrase necessarily means corruption. It's where incumbents control the regulatory process to keep competitors out. Unintended consequences from regulation is not "capture."

In every city I've studied, incumbents are bound by the same requirement to build-out their network as potential competitors. I'm sure there are exceptions to this, but the only one that comes to mind is Google Fiber: they get a pass on build-out requirements. These requirements curtail the most obvious route to competition: deploying in dense, rich neighborhoods where the incumbents generate most of their profits.

[hyperpape]

I've never felt that implication.If companies engage in effective (but legal) lobbying to benefit themselves at the public expense, that's regulatory capture even if it's not literally corruption.

I guess it could be an argument about what corruption means, but I think that people underestimate how dysfunctional the legislative and regulatory processes can be even without any legal violations.

[rayiner]

Regulatory capture is more than just lobbying, it's a hijacking of the regulatory process by regulated companies. In any case, lobbying is an attractive narrative, but I don't see the link between lobbying and the actual anti-competitive regulations. Verizon and Comcast didn't lobby to be forced to build fiber/cable all over vast swaths of ghetto. AT&T isn't lobbying for San Francisco to impose inane restrictions on where you can put fiber cabinets.

To put it another way: look at the regulations Google demands exemption from in return for building fiber: build-out requirements, slow permitting, etc. Did the incumbents lobby for these things? No. They arose out of municipal politics that have little to do with lobbying.

[nl]

Self interested lobbying is different to regulatory capture.

Even Wikipedia says:

Regulatory capture is a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating.

I don't think I could say it better. Regulatory capture is different to lobbying because the regulatory agencies act in the interest of the company instead of the public. Lobbying is when the company puts forward its own interest.

[snowwrestler]

If all the ISPs have to meet the same build-out requirements then I agree that that is not regulatory capture. Thanks.

[xenadu02]

It's horribly inefficient to lay new fiber for every ISP that wants to enter the market. At some point the economies of scale are such that it becomes impossible to even enter the market; many thought two entrants was the limit, Google is proving that the market can support three.

This is a classic case where government should be laying fiber to cover the last mile and selling access at cost to any ISP that wants it. The equipment on either end can be the ISP's equipment, a fiber is a fiber. Except for cuts, there's nearly no maintenance required.

[nickik]

If three fiber nets are not enougth to creat a good market, why not lay another? If all the ones that are there are really shit there are costumers to be had.

And just by the fact that there are three horrible equally sized companys there we allready know that they are not able to change because if they could, they would allready be winning over market share there.

Also its easy for one of these providers to sell of there own fibers to many providers on top of itself so they dont have to figure out all the costumer managment and things like that.

There are many, many option outthere but the are currenly very hard to take (because of old and new regulation).

Everything from a truly huge company building a huge new net for the hole country in order to provit from economy of scale to small local companys that take offer specialised communitys and then spread from there.

In principle letting government lay down the fiber sound like a fine idea that can work, but juging by other technical project governemnt do I have my doutes.

[michaelt]

It's not just "regulatory capture" stopping competition in the broadband market.

Let's say I launch a startup fiber ISP that serves a small area, planning to use the profit from that area to expand to cover the entire country, and to show investors there's money to be made so they'll loan me money for the expansion. I invest a bunch of cash digging up the roads to lay new cables.

All the national incumbents have to do is drop their prices and increase their performance - which they can easily subsidize with profits from the vast majority of the country where my startup isn't operating, and economies of scale.

Now I've spent a load of money digging up the roads to launch a service that is lower performance and more expensive than my subsidized competitors. My planned expansion never goes ahead, and my initial investors lose their capital.

Far better to spend my time on a photo sharing app, where you only need nine employees to start a company you can sell to facebook for a billion dollars :)

[nickik]

The reality is that arguments of this kind are always made by people who dont have any fantasy on there own. This mechanical story you layed out is devoid fantasy.

In the real market people take advantage of oppertunities, large companies are not always so flexible and dynamic for example, companies can survive in small market, more companies may join.Maybe for some other reason all the streets have to be opened and you can somehow get your cable in for cheap. Maybe you have a groupes of special costumers that require special networks and you can give them a discount because you wanted to do that anyway.

The are for example universtiy networks in some country that are connected by glass outside of the internet. Now if you can find a costumer like that you can lay some internet glass as well.

Or how about a big company that did something diffrent joining the game (google in this case), they will not be underpriced so easly.

A small company could survive in a single place or town, and if they can do it other might be able to do it as well.

There are a millions of possible ways that your mechanical view does not take into account, and that why we have markets. Im not smart enougth to figure out a good solution, you are not smart enougth but somebody might come up with something. There were many great and powerful countrys that crashed in a suprisingly short time because of these sorts of things.

If we can get away from "regulatory capture" we have change to see these effects. For what is worth in Switzerland a new company is laying down massiv amount of fiber right now and the competition has yet to dynamiclly rearange themself to this new challange. Also even if it fails, its not at all clear that once prices went down, they will go up again. Just because the new competition is gone, does not mean a company wants to take the marketing hit of rising the price again. People might switch to the equally bad competition just because they are angrey at a company raising prices on them.

[Florin_Andrei]

Regulatory capture is definitely involved, yes. Except it's not the originator of the woes, it's merely an instrument.

It's not the bullet that kills the victim, it's the assassin that pulls the trigger.

[cheald]

We have empirical evidence that competition has an immediate effect on improving the marketplace. Competition is hindered because of regulatory capture. It would seem to follow that competition is the cure, and impediment of regulation bought through corruption is the disease.

[jimktrains2]

> Perhaps it's time to go back to the drawing board, and figure out what's wrong with these purely mechanistic models of society and the market

I've always had the impression that it's more a matter of timescales. Places do what's best for them in the next year, not the next 50yrs. If companies thought further ahead and building long term plans and potential would be a reason to spend capital, then I think we'd see a very different market, in many markets.

[throwaway90999]

"with goals beyond pure financial gains and rock-bottom self-interest."

This doesn't paint an accurate picture. Google isn't deploying Fiber out of any notion of selflessness. This is a competitive play, and a very good one at that.

You say selfless ideals, I say this is exactly how "the market" and "competition" are commonly understood to function -- in the absence of corruption, regulatory capture and state granted monopolies.

[Florin_Andrei]

> This is a competitive play, and a very good one at that.

Absolutely it is, yes. You're just not looking beyond that level.

[oldmanjay]

And you're ascribing purity of motivation based on nothing more than apparent religious belief in your savior Larry. Hardly a more convincing argument.

[r_edwards]

but I would argue a bigger hedge against net neutrality -> not banking on defeating what increasingly looks like regulatory capture.

[jmilloy]

I tend to think that it's just really easy to look at things on too-small a timescale.

Consider the extreme: in a single second, there aren't any discernible market pressures in the ISP industry, and it would be weird to expect it.

Which is mainly to say that it is important to talk about how quickly you want competition and market forces to come into play (not just that you want them to) when talking about why and how to change "the system".

[chrismcb]

While I agree that Page has more goals than pure financial gain, I don't see how those other goals really play into fiber. More bandwidth to Americans means more potential money for Google. No one else was increasing the bandwidth, so google is trying to jump start the process. But they are doing it purely for financial gain. It is just a bonus that it also benefits consumers. But isn't that how free markets are supposed to work?

[javert]

> locked up the market, injected their own lobbyists into Washington

Ergo, it was not a free market and it was not laissez-faire capitalism.

In a free market, i.e. laissez-faire capitalism, anybody is free to do whatever they want as long as they don't initiate the use of force, including the government, so you could not get into the situation you describe in the first place.

[hellbanner]

Have you read 23 Things they Don't tell you about Capitalism, by chance? I think you would enjoy it.

http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1...

[jpatokal]

> pure competition ... injected their own lobbyists into Washington

It's either pure competition, or they're injecting lobbyists to tilt the table in their favor, but not both.

[Retric]

A soft cap on corporate size seems like the simplest solution.

EX: 20,000 employs and or contractors and companies can’t own shares of other companies without being included in that cap. Outsourcing seems like the obvious loophole, but hardly an insurmountable barrier.

Though, increasing tax load as companies scale is probably a much better option. Not that there is a realistic chance of this passing any time soon, but large companies are harmful to both democracy and free markets so it's likely to be tried by someone.

PS: The only real counter argument I can think of is global completion.

Edit: (3 downvotes no responces.) How odd, looks like I hit one of those things you can't say. http://www.paulgraham.com/say.html I wonder why?