5 ms·

In the US, many telecoms operate as a legal monopoly. In exchange for a more or lesscaptive market, telecoms are legally obligated to maintain certain levels of

by hguant 11y ago

In the US, many telecoms operate as a legal monopoly. In exchange for a more or lesscaptive market, telecoms are legally obligated to maintain certain levels of service, among other things - such as rolling out upgrades. This is supposed to provide a higher level of service to the consumer/citizen of the area that makes the agreement, while also meaning telecoms don't waste their massive upfront costs by having no customers. It's supposed to provide the same impetus to improve service as competition. In practice, you get this kind of nonsense.

rayiner 11y ago
It's not quite so simple. The whole point of the 1996 Telecom Act was to get rid of the legal monopolies and get the government out of the business of regulating them. What we have now are incumbents not monopolists. However, in a low-margin industry (Verizon's wireline operating margin is 2-5%) with enormous capital costs, that's kind of a theoretical distinction.
- empath75 11y ago
  ILEC's still have a monopoly on copper runs in most jurisdictions afaik.
  - rayiner 11y ago
    They own the copper runs. But if you want to compete with them by building your own infrastructure you're allowed to do that. In most places, it's the power companies that own the utility lines, not the telcos. The problem is it's not worth anybody's while to do it to earn 3-5% return.
    - dragonwriter 11y ago
      A monopoly doesn't require that other people be legally prohibited from competing (if they are, that's a granted-by-law monopoly), it requires that you have sufficient dominance in some market as to exercise pricing power within that market.
      - rayiner 11y ago
        "In the US, many telecoms operate as a legal monopoly." I assumed we were talking about ^^^. I'm not being pedantic about the distinction. If you're of a libertarian bent, there is a big difference between legal and de-facto monopolists.
listic 11y ago
So, there are no smaller telecom companies (internet providers) in the US?
- blakeyrat 11y ago
  Tons, but odds are if you select 100 Americans at random, 95 of them won't have access to a smaller ISP than Verizon or Comcast.

by hguant 11y ago

rayiner 11y ago

It's not quite so simple. The whole point of the 1996 Telecom Act was to get rid of the legal monopolies and get the government out of the business of regulating them. What we have now are incumbents not monopolists. However, in a low-margin industry (Verizon's wireline operating margin is 2-5%) with enormous capital costs, that's kind of a theoretical distinction.

empath75 11y ago
ILEC's still have a monopoly on copper runs in most jurisdictions afaik.
- rayiner 11y ago
  They own the copper runs. But if you want to compete with them by building your own infrastructure you're allowed to do that. In most places, it's the power companies that own the utility lines, not the telcos. The problem is it's not worth anybody's while to do it to earn 3-5% return.
  - dragonwriter 11y ago
    A monopoly doesn't require that other people be legally prohibited from competing (if they are, that's a granted-by-law monopoly), it requires that you have sufficient dominance in some market as to exercise pricing power within that market.
    - rayiner 11y ago
      "In the US, many telecoms operate as a legal monopoly." I assumed we were talking about ^^^. I'm not being pedantic about the distinction. If you're of a libertarian bent, there is a big difference between legal and de-facto monopolists.

listic 11y ago

So, there are no smaller telecom companies (internet providers) in the US?

blakeyrat 11y ago
Tons, but odds are if you select 100 Americans at random, 95 of them won't have access to a smaller ISP than Verizon or Comcast.