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What is status quo? Why is it bad? Why would it be free just because it is funded by taxes? It is true that it does exist some limitations on what kind of comm

by tored 5y ago

What is status quo? Why is it bad? Why would it be free just because it is funded by taxes? It is true that it does exist some limitations on what kind of commercial interest the government can execute. Some by law (in Sweden for what a Kommun (city) can do, can't own property abroad), and some by agreement with other states (e.g. EU). Some of these limitations are necessary because there is a huge risk that politicians start gambling with tax payer money on high risk enterprises, we have many examples of that is Sweden, especially on the Kommun (city) level. That is usually why subsidies are preferred, because you transfer a large part of the risk to the private sector, the drawback is of course the the government doesn't share the earnings of that private company if successful, however because the government has the right to tax it does but indirectly. In Sweden the government subsidies broadband expansion but it is private companies that does the actual digging and then other private companies runs the broadband connection. The private consumer still needs to pay some sum to connect to the house, but heavily subsidized, that way you avoid unnecessary connections. There does exist a risk that state subsidies can create corruption, tax payers buys unwanted things from private companies, that is why it is important with a structured and transparent process regarding subsidies. However there is limitation on subsidies by agreement, with the membership in EU Sweden can no loger subsidy sectors to the same extent it could do previously and that is bad. I don't think Sweden's large broadband expansion would be possible if it was state run only. It would be like the old Televerket (the previously state run telecommunication company), slow, sleepy and not interested in solving problems for the consumer. But with the government injecting capital to the private sector the broadband expansion is mostly succesful.

actually_a_dog 5y ago
Before I answer what is the status quo, I'll just ask: why wouldn't internet access be free to access if it's taxpayer funded? Remember, we were constructing hypotheticals here, and there's no reason the government needs to make a profit on something like this, any more than it makes a profit on roads and bridges [0]. Now, on to the status quo. In what follows, I'm going to consider broadband only. Dialup exists, but isn't particularly interesting because, well... it sucks. Among the problems the US has with broadband is that only 25 million out of around 330 million of us actually access the internet at broadband (25Mbps+) speeds [1]. The reasons for this are up for debate, but the most logical explanations would seem to be lack of access, lack of affordability, or a combination of both. Another problem we have is a lack of competition among broadband providers. According to [2], 83 million Americans only have a single broadband internet provider available to them. If that's, say, Comcast, a company not well known for its stellar customer service, to put it mildly [3], then your choice amounts to either deal with the devil and take whatever they offer you, or just don't have broadband. So, how did we get here? I'm not one to just reflexively say "blame the gubmint," but, in this case, it's true. There was competition in the cable industry in the mid 1990's, until the Telecommunications Act of 1996, an astoundingly complex piece of legislation, scrambled the regulatory environment that was present, ultimately allowing all the regional cable providers that existed before then to consolidate and form the giants we have today: AT&T, Comcast, Charter, and the rest. Well, great! There are lots of cable companies, so that means there's lots of competition, right? Wrong. These companies co-evolved together and created a situation where each one has lots of local monopolies [4], leading to the situation today, where, paradoxically, there are quite a few cable companies, but consumers frequently only have one to choose from. And, so, we reach the end of our journey, in which the country that literally invented the internet has extremely slow and expensive broadband internet [5]. In a broader sense, one may ask "how did we get into such a situation?" And, if I may speculate a bit, I believe it's because we have not regarded broadband internet access as a utility. Before I get into that, I want to quickly mention that since starting a broadband ISP involves huge capital costs in the form of last mile infrastructure [6] (e.g. if Comcast and AT&T want to compete in a certain area, both need to lay down their own cable infrastructure to do so, because neither one wants to share), and significant economies of scale. This leads to them being what's called "natural monopolies." And, surprise, surprise, this is exactly what I mentioned happened! Now, monopolies can tend to be bad for consumers, but, in the case of natural monopolies, competition is either impractically expensive or fairly impossible. For instance, you don't want more than 1 municipal water company, because then you need to have twice as much water pipe and twice as much purification and pumping infrastructure, and that's just plain wasteful. For something like cable/telecom, it's more that duplicating that last mile is just silly, and would generally be ridiculously expensive, so, the companies just don't do it. So, you're left with this monopoly sitting here and your consumer over there in need of some kind of protection from it, lest otherwise the water company raise the price of water to $1000/l or something, because it's decided that would be the most profitable thing to do. There are really only a couple things you can do here: * Regulate the monopoly by, for instance, limiting price increases and mandating a certain quality of service, minimum coverage areas, that they sell access to their networks for a reasonable cost, or whatever. * Or, take it over and make it a municipal utility, thus eliminating the profit motive to raise prices to ridiculous levels. But, we've done none of these things. So, I'm stuck with Comcast, and life sucks. THE END. Now, tell me, do you think we might be able to improve upon this system just a little bit, or no? ;-) --- [0]: Yes, toll roads and bridges exist, but those are generally either run by private companies, or the tolls go toward paying off bond issues taken out to fund them, not to make a profit. [1]: https://www.allconnect.com/blog/americas-broadband-divide-revealed https://www.allconnect.com/blog/americas-broadband-divide-re... [2]: https://ilsr.org/report-most-americans-have-no-real-choice-in-internet-providers/ https://ilsr.org/report-most-americans-have-no-real-choice-i... [3]: https://en.wikipedia.org/wiki/Criticism_of_Comcast#Low_customer_satisfaction https://en.wikipedia.org/wiki/Criticism_of_Comcast#Low_custo... [4]: https://www.npr.org/transcripts/899472976 https://www.npr.org/transcripts/899472976 [5]: https://www.broadbandsearch.net/blog/internet-costs-compared-worldwide https://www.broadbandsearch.net/blog/internet-costs-compared... [6]: I'm kinda ignoring satellite and cellular for now, so bear with me. [7]: https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp
- taffer 5y ago
  > why wouldn't internet access be free to access if it's taxpayer funded? For the same reason that electricity isn't free: it's a scarce resource that needs to be allocated in a sensible way. And yes, you are of course right that Internet access is a natural monopoly, but if you look at which countries are really good in this area (like Sweden, Finland or South Korea), it is never a state monopoly, but well-regulated private companies.
  - actually_a_dog 5y ago
    Free at the point of use. Funded by taxes. You left that part out. There's no reason that instead of paying $80/month to Comcast that the municipal government can't tax me, say, $600/year for broadband.
    - taffer 5y ago
      I don't understand what point you are trying to make. Why should the municipality be better at providing Internet access than any other company?
      - actually_a_dog 5y ago
        Why should they be any worse? If it's a municipal utility, you eliminate a profit motive, which naturally helps control prices and promote access.
        taffer 5y ago
        Ideally, there is some competition between multiple providers to drive innovation and efficiency, and that's what regulators are trying to achieve. So you get the best of both worlds.
        actually_a_dog 5y ago
        You did notice the bit about ISPs being a natural monopoly, though? What material difference is there between a privately owned, but well regulated monopoly, and a government owned enterprise, except the lack of profit motive on the part of the latter?

by tored 5y ago

actually_a_dog 5y ago

Before I answer what is the status quo, I'll just ask: why wouldn't internet access be free to access if it's taxpayer funded? Remember, we were constructing hypotheticals here, and there's no reason the government needs to make a profit on something like this, any more than it makes a profit on roads and bridges [0]. Now, on to the status quo. In what follows, I'm going to consider broadband only. Dialup exists, but isn't particularly interesting because, well... it sucks. Among the problems the US has with broadband is that only 25 million out of around 330 million of us actually access the internet at broadband (25Mbps+) speeds [1]. The reasons for this are up for debate, but the most logical explanations would seem to be lack of access, lack of affordability, or a combination of both. Another problem we have is a lack of competition among broadband providers. According to [2], 83 million Americans only have a single broadband internet provider available to them. If that's, say, Comcast, a company not well known for its stellar customer service, to put it mildly [3], then your choice amounts to either deal with the devil and take whatever they offer you, or just don't have broadband. So, how did we get here? I'm not one to just reflexively say "blame the gubmint," but, in this case, it's true. There was competition in the cable industry in the mid 1990's, until the Telecommunications Act of 1996, an astoundingly complex piece of legislation, scrambled the regulatory environment that was present, ultimately allowing all the regional cable providers that existed before then to consolidate and form the giants we have today: AT&T, Comcast, Charter, and the rest. Well, great! There are lots of cable companies, so that means there's lots of competition, right? Wrong. These companies co-evolved together and created a situation where each one has lots of local monopolies [4], leading to the situation today, where, paradoxically, there are quite a few cable companies, but consumers frequently only have one to choose from. And, so, we reach the end of our journey, in which the country that literally invented the internet has extremely slow and expensive broadband internet [5]. In a broader sense, one may ask "how did we get into such a situation?" And, if I may speculate a bit, I believe it's because we have not regarded broadband internet access as a utility. Before I get into that, I want to quickly mention that since starting a broadband ISP involves huge capital costs in the form of last mile infrastructure [6] (e.g. if Comcast and AT&T want to compete in a certain area, both need to lay down their own cable infrastructure to do so, because neither one wants to share), and significant economies of scale. This leads to them being what's called "natural monopolies." And, surprise, surprise, this is exactly what I mentioned happened! Now, monopolies can tend to be bad for consumers, but, in the case of natural monopolies, competition is either impractically expensive or fairly impossible. For instance, you don't want more than 1 municipal water company, because then you need to have twice as much water pipe and twice as much purification and pumping infrastructure, and that's just plain wasteful. For something like cable/telecom, it's more that duplicating that last mile is just silly, and would generally be ridiculously expensive, so, the companies just don't do it. So, you're left with this monopoly sitting here and your consumer over there in need of some kind of protection from it, lest otherwise the water company raise the price of water to $1000/l or something, because it's decided that would be the most profitable thing to do. There are really only a couple things you can do here: * Regulate the monopoly by, for instance, limiting price increases and mandating a certain quality of service, minimum coverage areas, that they sell access to their networks for a reasonable cost, or whatever. * Or, take it over and make it a municipal utility, thus eliminating the profit motive to raise prices to ridiculous levels. But, we've done none of these things. So, I'm stuck with Comcast, and life sucks. THE END. Now, tell me, do you think we might be able to improve upon this system just a little bit, or no? ;-) --- [0]: Yes, toll roads and bridges exist, but those are generally either run by private companies, or the tolls go toward paying off bond issues taken out to fund them, not to make a profit. [1]: https://www.allconnect.com/blog/americas-broadband-divide-revealed https://www.allconnect.com/blog/americas-broadband-divide-re... [2]: https://ilsr.org/report-most-americans-have-no-real-choice-in-internet-providers/ https://ilsr.org/report-most-americans-have-no-real-choice-i... [3]: https://en.wikipedia.org/wiki/Criticism_of_Comcast#Low_customer_satisfaction https://en.wikipedia.org/wiki/Criticism_of_Comcast#Low_custo... [4]: https://www.npr.org/transcripts/899472976 https://www.npr.org/transcripts/899472976 [5]: https://www.broadbandsearch.net/blog/internet-costs-compared-worldwide https://www.broadbandsearch.net/blog/internet-costs-compared... [6]: I'm kinda ignoring satellite and cellular for now, so bear with me. [7]: https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp

taffer 5y ago
> why wouldn't internet access be free to access if it's taxpayer funded? For the same reason that electricity isn't free: it's a scarce resource that needs to be allocated in a sensible way. And yes, you are of course right that Internet access is a natural monopoly, but if you look at which countries are really good in this area (like Sweden, Finland or South Korea), it is never a state monopoly, but well-regulated private companies.
- actually_a_dog 5y ago
  Free at the point of use. Funded by taxes. You left that part out. There's no reason that instead of paying $80/month to Comcast that the municipal government can't tax me, say, $600/year for broadband.
  - taffer 5y ago
    I don't understand what point you are trying to make. Why should the municipality be better at providing Internet access than any other company?
    - actually_a_dog 5y ago
      Why should they be any worse? If it's a municipal utility, you eliminate a profit motive, which naturally helps control prices and promote access.
      - taffer 5y ago
        Ideally, there is some competition between multiple providers to drive innovation and efficiency, and that's what regulators are trying to achieve. So you get the best of both worlds.
        actually_a_dog 5y ago
        You did notice the bit about ISPs being a natural monopoly, though? What material difference is there between a privately owned, but well regulated monopoly, and a government owned enterprise, except the lack of profit motive on the part of the latter?