3 ms·

Sure, I'm painting a picture to illustrate the point. But reductio ad absurdum can be a useful way to explore the problem. I don't think there's anything in my

by redler 10y ago

Sure, I'm painting a picture to illustrate the point. But reductio ad absurdum can be a useful way to explore the problem. I don't think there's anything in my scenario that's beyond the pale. We could get there by degrees in an aggressively unfettered market.

hueving 10y ago
>We could get there by degrees in an aggressively unfettered market. Don't you mean the heavily regulated market we have now that prevents new ISPs from easily servicing customers? The entire reason ISPs can behave like this is because customers realistically have no alternatives. Look at how Comcast behaved in markets where Google Fiber showed up. They often increased bandwidth and reduced prices effective immediately to try to keep customers. An 'unfettered market' would be one where an ISP doesn't have to spend years negotiating with city councils just to get the privilege to put fiber in utility tunnels where local cable companies already have it.
- wtallis 10y ago
  Your "unfettered market" would still leave incumbents with the massive advantages conferred by their natural monopoly; it just lessens the artificial barriers to competition on top of that. Your "unfettered market" would not be a healthy competitive market. Government intervention akin to local loop unbundling would be necessary to create a freely competitive market where one will not naturally develop.
  - hueving 10y ago
    Google Fiber gave up on silicon valley because of the regulatory burden of convincing local governments to let them install fiber. Let that sink in. Google, who has enough cash to pay for nearly half of the entire Comcast company, was not able to rollout fiber to the area because of government regulations. Why do you think they started in Kansas City of all places? It wasn't because they thought that was the strongest market for fiber in the country. It was because they actually convinced the government to let them bring fiber to peoples' homes. >Government intervention akin to local loop unbundling would be necessary to create a freely competitive market where one will not naturally develop. While this would make it even cheaper to get into the market, there is no proof that a market wouldn't develop if the government wasn't already intervening to make it so difficult to build networks.
    - wtallis 10y ago
      > While this would make it even cheaper to get into the market, there is no proof that a market wouldn't develop if the government wasn't already intervening to make it so difficult to build networks. Local governments aren't completely undemocratic. If the local government is hesitant to let corporations start digging up the streets and yards, it's likely that the residents are similarly hesitant to invite that sort of disruption. How many people are actually eager to have a second gigabit-capable cable buried through their yard? Whether or not the federal government intervenes, there will always be barriers to an upstart ISP. Yes, with all local restrictions usurped, a company as large as Google can certainly deploy new infrastructure to select markets where there's sufficient demand for a more reasonable alternative to the incumbent ISP. But that's still a far cry from a functioning competitive market. Who would fund construction of a third set of cables, or the sixth? Even with local restrictions removed, how much capital does it take to build a competitive ISP from scratch (keeping in mind that Google wasn't quite starting from scratch)? In the most pedantic sense, there's obviously no proof that a functioning competitive marketplace would develop, but we are talking about a real natural monopoly, and that means something. Building last-mile infrastructure is very expensive. Each new competitor faces much worse prospects for recouping their initial investment, much more resentment from their prospective customers, and the incumbent(s) can always undercut you at the drop of a hat. Given the choice, the customers would vastly prefer a local loop unbundling solution—it doesn't have the high costs of building redundant infrastructure, it doesn't make a mess of the town, and it leads to the same end result of diverse choices for services.
      - hueving 10y ago
        >how much capital does it take to build a competitive ISP from scratch (keeping in mind that Google wasn't quite starting from scratch)? It's significant, but it's often done in cities that don't have this regulation problem (see most high-density cities around the world with sane access to cabling tunnels). Or, if you take it to the extreme the other direction, look at all of the municipal fiber projects that end up working out. If a municipality can pay for it, certainly a company would be able to as well. Laying fiber requires labor, but many of the service tunnels already exist so the only digging required is the last bit from the street to the customer's house. There is an entire industry designed to help finance capital-intensive projects. Just because you can't do something with a text editor and a compiler in your basement doesn't mean it can't be done. >but we are talking about a real natural monopoly No we aren't. Trying to build up an ISP is 95% lobbying local governments. It's only 'natural' in the sense that it's a government created monopoly. >much more resentment from their prospective customers You wouldn't be pulling fiber to peoples' homes if they weren't already signing up (see the google fiber rollout mechanism). >Given the choice, the customers would vastly prefer a local loop unbundling solution Not if it means the best they can get is 5 mbps over cables that were laid to homes 20 years ago. If your city is filled with a bunch of NIMBYS, they are just as likely to vote down a bond or whatever it takes to raise money to lay in new fiber.

by redler 10y ago

hueving 10y ago

>We could get there by degrees in an aggressively unfettered market. Don't you mean the heavily regulated market we have now that prevents new ISPs from easily servicing customers? The entire reason ISPs can behave like this is because customers realistically have no alternatives. Look at how Comcast behaved in markets where Google Fiber showed up. They often increased bandwidth and reduced prices effective immediately to try to keep customers. An 'unfettered market' would be one where an ISP doesn't have to spend years negotiating with city councils just to get the privilege to put fiber in utility tunnels where local cable companies already have it.

wtallis 10y ago
Your "unfettered market" would still leave incumbents with the massive advantages conferred by their natural monopoly; it just lessens the artificial barriers to competition on top of that. Your "unfettered market" would not be a healthy competitive market. Government intervention akin to local loop unbundling would be necessary to create a freely competitive market where one will not naturally develop.
- hueving 10y ago
  Google Fiber gave up on silicon valley because of the regulatory burden of convincing local governments to let them install fiber. Let that sink in. Google, who has enough cash to pay for nearly half of the entire Comcast company, was not able to rollout fiber to the area because of government regulations. Why do you think they started in Kansas City of all places? It wasn't because they thought that was the strongest market for fiber in the country. It was because they actually convinced the government to let them bring fiber to peoples' homes. >Government intervention akin to local loop unbundling would be necessary to create a freely competitive market where one will not naturally develop. While this would make it even cheaper to get into the market, there is no proof that a market wouldn't develop if the government wasn't already intervening to make it so difficult to build networks.
  - wtallis 10y ago
    > While this would make it even cheaper to get into the market, there is no proof that a market wouldn't develop if the government wasn't already intervening to make it so difficult to build networks. Local governments aren't completely undemocratic. If the local government is hesitant to let corporations start digging up the streets and yards, it's likely that the residents are similarly hesitant to invite that sort of disruption. How many people are actually eager to have a second gigabit-capable cable buried through their yard? Whether or not the federal government intervenes, there will always be barriers to an upstart ISP. Yes, with all local restrictions usurped, a company as large as Google can certainly deploy new infrastructure to select markets where there's sufficient demand for a more reasonable alternative to the incumbent ISP. But that's still a far cry from a functioning competitive market. Who would fund construction of a third set of cables, or the sixth? Even with local restrictions removed, how much capital does it take to build a competitive ISP from scratch (keeping in mind that Google wasn't quite starting from scratch)? In the most pedantic sense, there's obviously no proof that a functioning competitive marketplace would develop, but we are talking about a real natural monopoly, and that means something. Building last-mile infrastructure is very expensive. Each new competitor faces much worse prospects for recouping their initial investment, much more resentment from their prospective customers, and the incumbent(s) can always undercut you at the drop of a hat. Given the choice, the customers would vastly prefer a local loop unbundling solution—it doesn't have the high costs of building redundant infrastructure, it doesn't make a mess of the town, and it leads to the same end result of diverse choices for services.
    - hueving 10y ago
      >how much capital does it take to build a competitive ISP from scratch (keeping in mind that Google wasn't quite starting from scratch)? It's significant, but it's often done in cities that don't have this regulation problem (see most high-density cities around the world with sane access to cabling tunnels). Or, if you take it to the extreme the other direction, look at all of the municipal fiber projects that end up working out. If a municipality can pay for it, certainly a company would be able to as well. Laying fiber requires labor, but many of the service tunnels already exist so the only digging required is the last bit from the street to the customer's house. There is an entire industry designed to help finance capital-intensive projects. Just because you can't do something with a text editor and a compiler in your basement doesn't mean it can't be done. >but we are talking about a real natural monopoly No we aren't. Trying to build up an ISP is 95% lobbying local governments. It's only 'natural' in the sense that it's a government created monopoly. >much more resentment from their prospective customers You wouldn't be pulling fiber to peoples' homes if they weren't already signing up (see the google fiber rollout mechanism). >Given the choice, the customers would vastly prefer a local loop unbundling solution Not if it means the best they can get is 5 mbps over cables that were laid to homes 20 years ago. If your city is filled with a bunch of NIMBYS, they are just as likely to vote down a bond or whatever it takes to raise money to lay in new fiber.