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There's no good reason for networks or last mile infrastructure to be privately run in the first place because competition does not come about naturally. The in

There's no good reason for networks or last mile infrastructure to be privately run in the first place because competition does not come about naturally. The incentive of a private owner will always be to sit on the network and collect rents and spend as little on maintenance and infrastructural investment as possible.

erikpukinskis 9y ago
Is that because the product is 100% fungible? Electrons are electrons and there’s no such thing as “better electrons” once you hit a certain quality threshold? I’m trying to understand why your characterization doesn’t apply to, say, programming talent. Once I have stable of coders working for me, what’s my incentive to do more than the bare minimum of maintenance work for them, and just collect rent on their productivity? To me, it seems like you’re just describing capitalism: cash seeks rent.
- cptskippy 9y ago
  > To me, it seems like you’re just describing capitalism: cash seeks rent. He is and pure capitalism is the problem. When shareholders demand growth the companies are forced to cut corners and start charging more for less. Take a look at Verizon and it's copper POTS lines for a great example of capitalism in action.
  - jes 9y ago
    > He is and pure capitalism is the problem. Can you say, briefly, what you mean by "pure capitalism?" To me, pure capitalism would be laissez-faire, within the context of a rights-respecting society. > When shareholders demand growth the companies are forced to cut corners and start charging more for less. Sometimes, companies respond by innovating solutions that deliver more value at a lower price. Thoughts?
    - cptskippy 9y ago
      > Can you say, briefly, what you mean by "pure capitalism?" > To me, pure capitalism would be laissez-faire, within the context of a rights-respecting society. I mean withOUT the context of a rights-respecting society. The capitalism that we have only respects the rights of others when compelled to do so. > Sometimes, companies respond by innovating solutions that deliver more value at a lower price. Yes when there's competition or the consumable isn't a necessity. In many municipalities it's a legal requirement to have running water and/or electricity, particularly if you have children or the elderly in the house; which means not buying is not an option. Utilities are commodity service providers; Southern Company's electricity is no better than Duke Energy's. They do not have any competition because markets have been carved out and consumers do not have a choice. They mostly don't develop the delivery technology, they just purchase it from others (e.g. GE). With all that in mind, what is the motivation to innovate? So that the customer will be less angry at you as they write you the check each month? What's the motivation to reduce costs? Lower costs might drive up demand which might put additional strain on infrastructure (look at the issues in Australia) and drive up maintenance costs. Lower costs might also require additional capacity which means capital investments. The best place for a utility is to convince to you use as little as possible while charging you as much as possible in static fees each month.
  - ctdonath 9y ago
    That's monopoly in action. Given right-of-way exclusivity, there's little reason to endure the enormous costs of upgrading. Were other companies given opportunity to compete, you'd see a lot more improvements in shorter times. ...hence the explosion in wireless technologies: multiple providers can easily cover the same areas, and must compete with improving services. It's almost to the point of overtaking wired services in both data rates & cost (just get those monthly data caps up and I'll switch).
    - learc83 9y ago
      >It's almost to the point of overtaking wired services in both data rates & cost (just get those monthly data caps up and I'll switch). The data caps can't be removed. Wireless has much lower bandwidth limits overall--the spectrum would be saturated if everyone decided to move to wireless. It can't happen with current technology. Not to mention latency is much higher.
      - cptskippy 9y ago
        > Not to mention latency is much higher. One of the primary focuses of 5G is to reduce latency and LTE has reduced latency tremendously. My personal experience looking over test logs on my phone is that LTE averages ~40ms with a low of 25ms and a high of 80ms. My home internet averages ~16ms with a low of 12ms and a high of 44ms. Gaming is one of the few things where you can really tell the differences between sub 100ms latencies and so for most people wireless internet is more than sufficient.
        learc83 9y ago
        Those averages don't really tell you much. What matters in terms of quality is the consistency of the latency and packet loss. But even without latency issues, we don't have the technology to replace more than a tiny fraction of total wired bandwidth with wireless.
      - cesarb 9y ago
        Data caps are equivalent to an horribly designed token bucket, where the tokens are all added at once at the beginning of each month. Using a proper token bucket policer/shaper should be much better at preventing spectrum saturation.
  - driverdan 9y ago
    > He is and pure capitalism is the problem. State mandated monopolies is not pure capitalism.
    - cptskippy 9y ago
      I would argue that it is. When a business is operated for profit and individuals are incentivized by profit then tactics to capture and hold market share are going to be used. What better way to maintain your profits than to have the government preventing others from competing with you.
      - AboutTheWhisles 9y ago
        Capturing the organization that has a monopoly on violence is not capitalism.
    - erikpukinskis 9y ago
      Which monopoly are you thinking of that’s state mandated?
    - crdoconnor 9y ago
      >is not pure capitalism. Seemingly everybody has their own definition of capitalism. Everybody also thinks that right thinking people share their definition and people who don't are Just Wrong. It makes arguments about it a little pointless because six different, intelligent people are arguing about capitalism are usually arguing about six related but different things. That's why it usually makes a bit more sense to argue with language that has a tighter definition - like "monopoly".
- JackFr 9y ago
  > last mile infrastructure > programming talent Can you not see the fundamental difference between those? That one is more conducive to a competitive market and one less so?
- baddox 9y ago
  I think the usual argument is that utility companies tend to be natural monopolies due to the extremely high cost (relative to the size of the market) of installing infrastructure to every single building.
  - notriddle 9y ago
    In contrast, businesses can buy programming talent from anywhere in the world that gets Internet access. It's inevitably going to be competitive.
cptskippy 9y ago
Which is why any service or utility required to maintain the standard of living and comfort we all expect should be tightly regulated or non-profit in nature to remove the incentive to extract the most profit while providing the lease service.
rhino369 9y ago
It's all quasi-privately run in the US. They aren't expected to compete because like said it isn't natural. But governments are generally incompetent at building and maintaining power grids. In the past, investment was been encouraged by allowing these companies a set rate of return on capital investments, but allow no profit on expenses. Thus, the energy company would get 10% return on any investment. This actually lead to over-investment in infrastructure--called gold plating. You need a new power tower? Build it as expensively as possible, with all the bells and whistles. Now, there are newer forms of price regulation designed to eliminate gold plating. >The incentive of a private owner will always be to sit on the network and collect rents and spend as little on maintenance and infrastructural investment as possible. Governments have exactly the same incentives. And the results are clear. US public infrastructure is fucking terrible. Puerto Rico is one example of public energy company. Didn't do so hot.
- crdoconnor 9y ago
  >governments are generally incompetent at building and maintaining power grids. When you strip out the market discipline imposed by competition, governments are usually more efficient than equivalent private sector operations. Privately run monopolies are - similar to governments - only kept in check by democratic accountability. The difference with a privately run regulated monopoly is that that democratic accountability is one step removed. As you said, it's quasi private - because the system would collapse under the weight of unchecked rent seeking behavior if it weren't heavily regulated. >Governments have exactly the same incentives. Believing that elections and power seeking does not motivate government decision makers is an odd opinion.
  - rhino369 9y ago
    >Believing that elections and power seeking does not motivate government decision makers is an odd opinion. Only if the people want better infrastructure. They do not. People want lower prices, which means less investment.
    - crdoconnor 9y ago

erikpukinskis 9y ago

Is that because the product is 100% fungible? Electrons are electrons and there’s no such thing as “better electrons” once you hit a certain quality threshold? I’m trying to understand why your characterization doesn’t apply to, say, programming talent. Once I have stable of coders working for me, what’s my incentive to do more than the bare minimum of maintenance work for them, and just collect rent on their productivity? To me, it seems like you’re just describing capitalism: cash seeks rent.

cptskippy 9y ago
> To me, it seems like you’re just describing capitalism: cash seeks rent. He is and pure capitalism is the problem. When shareholders demand growth the companies are forced to cut corners and start charging more for less. Take a look at Verizon and it's copper POTS lines for a great example of capitalism in action.
- jes 9y ago
  > He is and pure capitalism is the problem. Can you say, briefly, what you mean by "pure capitalism?" To me, pure capitalism would be laissez-faire, within the context of a rights-respecting society. > When shareholders demand growth the companies are forced to cut corners and start charging more for less. Sometimes, companies respond by innovating solutions that deliver more value at a lower price. Thoughts?
  - cptskippy 9y ago
    > Can you say, briefly, what you mean by "pure capitalism?" > To me, pure capitalism would be laissez-faire, within the context of a rights-respecting society. I mean withOUT the context of a rights-respecting society. The capitalism that we have only respects the rights of others when compelled to do so. > Sometimes, companies respond by innovating solutions that deliver more value at a lower price. Yes when there's competition or the consumable isn't a necessity. In many municipalities it's a legal requirement to have running water and/or electricity, particularly if you have children or the elderly in the house; which means not buying is not an option. Utilities are commodity service providers; Southern Company's electricity is no better than Duke Energy's. They do not have any competition because markets have been carved out and consumers do not have a choice. They mostly don't develop the delivery technology, they just purchase it from others (e.g. GE). With all that in mind, what is the motivation to innovate? So that the customer will be less angry at you as they write you the check each month? What's the motivation to reduce costs? Lower costs might drive up demand which might put additional strain on infrastructure (look at the issues in Australia) and drive up maintenance costs. Lower costs might also require additional capacity which means capital investments. The best place for a utility is to convince to you use as little as possible while charging you as much as possible in static fees each month.
- ctdonath 9y ago
  That's monopoly in action. Given right-of-way exclusivity, there's little reason to endure the enormous costs of upgrading. Were other companies given opportunity to compete, you'd see a lot more improvements in shorter times. ...hence the explosion in wireless technologies: multiple providers can easily cover the same areas, and must compete with improving services. It's almost to the point of overtaking wired services in both data rates & cost (just get those monthly data caps up and I'll switch).
  - learc83 9y ago
    >It's almost to the point of overtaking wired services in both data rates & cost (just get those monthly data caps up and I'll switch). The data caps can't be removed. Wireless has much lower bandwidth limits overall--the spectrum would be saturated if everyone decided to move to wireless. It can't happen with current technology. Not to mention latency is much higher.
    - cptskippy 9y ago
      > Not to mention latency is much higher. One of the primary focuses of 5G is to reduce latency and LTE has reduced latency tremendously. My personal experience looking over test logs on my phone is that LTE averages ~40ms with a low of 25ms and a high of 80ms. My home internet averages ~16ms with a low of 12ms and a high of 44ms. Gaming is one of the few things where you can really tell the differences between sub 100ms latencies and so for most people wireless internet is more than sufficient.
      - learc83 9y ago
        Those averages don't really tell you much. What matters in terms of quality is the consistency of the latency and packet loss. But even without latency issues, we don't have the technology to replace more than a tiny fraction of total wired bandwidth with wireless.
    - cesarb 9y ago
      Data caps are equivalent to an horribly designed token bucket, where the tokens are all added at once at the beginning of each month. Using a proper token bucket policer/shaper should be much better at preventing spectrum saturation.
- driverdan 9y ago
  > He is and pure capitalism is the problem. State mandated monopolies is not pure capitalism.
  - cptskippy 9y ago
    I would argue that it is. When a business is operated for profit and individuals are incentivized by profit then tactics to capture and hold market share are going to be used. What better way to maintain your profits than to have the government preventing others from competing with you.
    - AboutTheWhisles 9y ago
      Capturing the organization that has a monopoly on violence is not capitalism.
  - erikpukinskis 9y ago
    Which monopoly are you thinking of that’s state mandated?
  - crdoconnor 9y ago
    >is not pure capitalism. Seemingly everybody has their own definition of capitalism. Everybody also thinks that right thinking people share their definition and people who don't are Just Wrong. It makes arguments about it a little pointless because six different, intelligent people are arguing about capitalism are usually arguing about six related but different things. That's why it usually makes a bit more sense to argue with language that has a tighter definition - like "monopoly".
JackFr 9y ago
> last mile infrastructure > programming talent Can you not see the fundamental difference between those? That one is more conducive to a competitive market and one less so?
baddox 9y ago
I think the usual argument is that utility companies tend to be natural monopolies due to the extremely high cost (relative to the size of the market) of installing infrastructure to every single building.
- notriddle 9y ago
  In contrast, businesses can buy programming talent from anywhere in the world that gets Internet access. It's inevitably going to be competitive.

cptskippy 9y ago

Which is why any service or utility required to maintain the standard of living and comfort we all expect should be tightly regulated or non-profit in nature to remove the incentive to extract the most profit while providing the lease service.

rhino369 9y ago

It's all quasi-privately run in the US. They aren't expected to compete because like said it isn't natural. But governments are generally incompetent at building and maintaining power grids. In the past, investment was been encouraged by allowing these companies a set rate of return on capital investments, but allow no profit on expenses. Thus, the energy company would get 10% return on any investment. This actually lead to over-investment in infrastructure--called gold plating. You need a new power tower? Build it as expensively as possible, with all the bells and whistles. Now, there are newer forms of price regulation designed to eliminate gold plating. >The incentive of a private owner will always be to sit on the network and collect rents and spend as little on maintenance and infrastructural investment as possible. Governments have exactly the same incentives. And the results are clear. US public infrastructure is fucking terrible. Puerto Rico is one example of public energy company. Didn't do so hot.

crdoconnor 9y ago
>governments are generally incompetent at building and maintaining power grids. When you strip out the market discipline imposed by competition, governments are usually more efficient than equivalent private sector operations. Privately run monopolies are - similar to governments - only kept in check by democratic accountability. The difference with a privately run regulated monopoly is that that democratic accountability is one step removed. As you said, it's quasi private - because the system would collapse under the weight of unchecked rent seeking behavior if it weren't heavily regulated. >Governments have exactly the same incentives. Believing that elections and power seeking does not motivate government decision makers is an odd opinion.
- rhino369 9y ago
  >Believing that elections and power seeking does not motivate government decision makers is an odd opinion. Only if the people want better infrastructure. They do not. People want lower prices, which means less investment.
  - crdoconnor 9y ago