[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.