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Entire telecomm infrastructure of Iceland sold to private equity?
- dijit 4y agoI would be interested to hear the reasoning. I can't think of a time that this has been good for the population, even if you include "lower taxes" (because, honestly, that doesn't seem to happen).
- karmicthreat 4y agoNot only will it not lower taxes, people will pay even more for the service with higher increases each year. And in 10-20 years with no investment they will wonder why the telecom system is breaking.
- whimsicalism 4y agoI think it can be difficult to prove cases where it has been "good" because the counterfactual case is not there to compare with. You can find situations where the government has implemented something fairly poorly, but that isn't often evidence to say "the private sector could have done this so much better!" But on the other hand, you might find situations where there has been an enormous amount of advance/innovation driven by the private sector, but that isn't evidence to say "the same thing would have occurred with government ownership!"
- irrational 4y agoI'm sure the reasoning starts and ends with the icelandic krona. Always follow the money.
- 1-6 4y agoA better approach would have been to split the network and sell off portions of it to private equities to prevent monopolization.
- gumby 4y agoIt's a country with the population of Sunnyale. I'm not sure it could support much competition.
- deleted 4y ago[deleted]
- Handytinge 4y agoNo idea where Sunnyale is or what their population count is, but Iceland has 4 major ISPs and a bunch of smaller ones too. Competition's already proven.
- whiskeytuesday 4y agoDidn't almost all of Ma Bell end up inside the deathstar eventually anyway? [0] [0] https://www.theverge.com/2016/10/24/13389592/att-time-warner-merger-breakup-bell-system-chart https://www.theverge.com/2016/10/24/13389592/att-time-warner...
- dv_dt 4y agoFor infrastructure, especially in smaller markets, it seems like a public monopoly would be the most cost efficient - even if you contracted out periodic private operational and upgrade contracts.
- MonkeyMalarky 4y agoHow are the PE going to make their money back?
- toomuchtodo 4y agoLike a python digests its prey: by squeezing its customer base and labor.
- nwiswell 4y agoI didn't know pythons were predatory capitalists. I thought they ate small mammals.
- whatshisface 4y agoPrivate equity firms have a long track record of killing and leaving behind what they meant to eat.
- nwiswell 4y agoCarl Icahn is actually three pythons in a trenchcoat
- AaronFriel 4y agoI don't follow - on the scale of rodents to whales, I'd say we're still on the smaller side.
- formerkrogemp 4y agoWe're all in the rat races avoiding the pythons. That's too rich for me.
- geenat 4y agoPrivatising your internet utility never goes well, as we know from USA, Canada. Telecoms are extremely profitable, the "lower taxes" reasoning is complete BS - this smells bad.
- formerkrogemp 4y ago> Privatising your internet utility never goes well, as we know from USA, Canada Works out well for Rogers and Telus shareholders ;).
- b112 4y agoThese were always private companies from day 1 though. edit: see upthread, I am wrong about Telus.
- ceeplusplus 4y agoIt only fails in the US because of corruption and NIMBYism. These telecoms buy off the local city council and prevent new development of any lines. Then local residents complain about the hassle of digging trenches, having utility trucks on the block, etc. When you ban this sort of bullshit permitting process it goes extremely well. Sometimes local authority has to be sacrificed for the long term benefit that residents don't see.
- lelandfe 4y agoYeah, I'm not convinced. New York has been ardent about trying to get internet providers to do their damn job and it just simply doesn't seem to work. The companies make out like bandits and routinely flout deadlines and requirements. - Charter: https://arstechnica.com/tech-policy/2018/03/ny-says-charter-lied-about-new-broadband-threatens-to-revoke-its-franchise/ https://arstechnica.com/tech-policy/2018/03/ny-says-charter-... - Frontier: https://arstechnica.com/tech-policy/2021/05/frontier-knowingly-sold-internet-speeds-it-cant-deliver-ftc-lawsuit-says/ https://arstechnica.com/tech-policy/2021/05/frontier-knowing... - Verizon: https://arstechnica.com/tech-policy/2017/03/nyc-sues-verizon-alleges-failure-to-complete-citywide-fiber-rollout/ https://arstechnica.com/tech-policy/2017/03/nyc-sues-verizon... It just keeps going. I could provide dozens of links here. I just don't think you can make enough laws to get these companies to do the dirty work of wiring up unprofitable connections, and to stop lying about internet speeds.
- Kukumber 4y agoHistory repeats itself, that's unfortunate, but that's what they chose to do
- kristjank 4y ago
- Barrin92 4y agoI think it's okay to lease out or let private entities operate that kind of infrastructure under supervision but to sell off your national communications infrastructure, in particular to a foreign entity is absolute insanity for national security reasons alone, costs aside.
- solarkraft 4y agoHas privatizing public infrastructure EVER gone well? Is there any indication this will be different from all the many, many, many failed privatizations? What were they thinking (really, what was the discourse over there? Doesn't Iceland usually tend to do reasonable things?)?
- deleted 4y ago[deleted]
- capableweb 4y agoI'd really want to know the same. Also, in similar vein, is there any examples of making something that was private before into public infrastructure, with good success?
- brianwawok 4y agoToll roads in the US for both cases. There were some crazy routes to get from A to B. Toll roads cut an hour or more off some popular routes. And in reverse, some states have bought out some toll roads, after they were deemed not profitable.
- Aeolun 4y agoI think the problem with the reverse (private -> public) is that it usually happens after the company has been mismanaged for so long it’s ready to go bankrupt.
- pram 4y agoMost commuter rail in the US fits that bill, doesn’t it? Amtrak, Septa etc
- 6510 4y agono
- gsk22 4y agoWhich question in the parent are you even responding to?
- beambot 4y agoI'd be less worried about this and more worried about regulatory capture of spectrum (e.g. for mesh WiFi and satellite internet providers).
- deleted 4y ago[deleted]
- teruakohatu 4y agoIt probably should not have been done (why ever sell an asset like that) but it didn't go terribly in New Zealand. The sale stipulated that the government would regulate the wholesale price of copper and that the copper lines, and later the exchanges, could be accessed by competing telcos. Years later the government, no longer owner of any copper lines, set up a fibre network. The fibre network is owned 50% by central government and 50% by private or local government owned corporations and its pricing is highly regulated. 87% of the population can now get a 4000/4000mbs connection for 117 USD/month.
- dhsysusbsjsi 4y agoNZ is a great success story. Compared to Australia who privatised Telecom copper (now called Telstra), who let the copper rot and were also forced to allow access which caused 3rd party retailers and consumers large problems with poor access. Then the government announced a full fibre to the home network which started being built. Just before the large upwards curve in rollout, the government changed, and bought the rotting copper infrastructure back off Telstra (plus some cable) at astronomical prices. So now we have slow, expensive internet and the taxpayer has spent more than it would have cost to rollout the fibre, and it’s years later.
- postingawayonhn 4y ago> The fibre network is owned 50% by central government and 50% by private or local government owned corporations Does the government actually have an ownership stake? I just thought they provided some grants and debt financing?
- teruakohatu 4y agoThere are many fibre companies, each with a monopoly in a geographic area. For the largest Chorus the government own non-voting shares and gave them a loan, and for the others I believe the government had a 50% stake originally. That all might have changes over the years.
- everfrustrated 4y ago
- viccuad 4y agoInfrastructure is a natural monopoly [1]. The cost to enter the market is unfavourable, and the incumbent has all the margins. Privatizing it is always a bad move for the citizens, and a good move for the private company. At worst, countries should keep one publicly owned company that owns the infrastructure and rents it to others, and also keeps the playing field leveled with low prices for the customers (this is the case in some countries but not all..). [1]: https://en.m.wikipedia.org/wiki/Natural_monopoly https://en.m.wikipedia.org/wiki/Natural_monopoly
- mikkergp 4y agoWhy are politicians so eager to do this? Is it because politicians get bribes, or because they represent the investors some how?
- moralestapia 4y agoYes.
- Invictus0 4y agoThey get short term funds for their agenda.
- danielmarkbruce 4y agoBecause they get a truckload of money to spend. There is also the reasonable argument that government run entities are wasteful. So, it's not a simple thing.
- Gustomaximus 4y agoI've thought a good policy would be govt asset sale profit gets held in trust for ~12 years. This way it cant be a balance the budget act, and the cash might benifit your opponent 3 election cycles down the track. It probably wont stop overselling of assets but would definitely take away a short term incentive.
- 4y ago
- dhsysusbsjsi 4y agoImho anything that is a natural monopoly (where it makes zero sense to build two of them), that requires a regulator to stop citizens being taken to the cleaners, should be owned by the state. Even if run “inefficiently” (you can find examples of both, this is not clear), it is typically better for the people.
- nickff 4y agoIt makes very little sense to build two of anything which has an economy of scale, if you ignore the incentive effects. That is a big 'if'.
- dhsysusbsjsi 4y agoYeah it makes sense to build 4 car factories and compete on quality/cost/safety which benefits the consumer. But having 2 electricity distribution networks, water pipes, sewerage, is simply a waste. Even privatising the land titles registration office is dumb as it is a natural monopoly and would require regulation to stop the $50 title change from becoming $50,000.
- jrochkind1 4y ago> Telecoms isn’t the winner‑take‑all game it used to be. Now it is much more about experimenting and collaborating; having Míla as the owner of the 5G network is going to help that process. When I hear "private equity", I think "strip it to the bone to profit off an existing captive customer base without making additional investment", I don't think "experimenting and collaborating". I guess Iceland will find out!
- oyas 4y agoIt seems like the deal is off since Ardian is unwilling to close due to demands by the The Competition Authority of Iceland. https://www.visir.is/g/20222288293d/hluta-brefa-verd-simans-laekkad-mikid-eftir-tidindi-gaer-dagsins https://www.visir.is/g/20222288293d/hluta-brefa-verd-simans-...
- westpfelia 4y agoAs someone who is interested in moving to Iceland in the next year or so, WOOOOOOOOO
- aaaaaaaaata 4y agoHow's your Icelandic?
- openfuture 4y agoNice, good news. The competition authority was revamped post financial crysis and has some good people at the helm.
- jaimex2 4y agoWe did this in Australia years ago. The result was well... were 61 billion in so far creating a new national broadband network because the privatised company has a monopoly and had no incentive to upgrade anything.
- Gustomaximus 4y agoMy understanding is there were 3 big failings in this for Australia. 1) Selling Telstra. The whole issue never would have happened if the govt still owned. Thanks Mr Howard 2) Forcing local Labor requirement in the tender. This was Labor union movement trying to spread money with the roll-out but made Testra drop out as until this they were always guaranteed to win. Thanks Mr Rudd 3) The 'we dont need fibre well use mixed technology'. That's were it truly became a waste of money and potential. Thanks Abbott & Turnbull. Such a failure for Australia. And as someone now using Starlink, so glad Musk came along and saved us bad internet people.
- jaimex2 4y agoThe cruel irony will come when Telstra buy NBN when it goes up for sale using the money it received for the copper network. And then we'll do it all over again in the 2030s.
- joisig 4y agoThe purchase has not yet gone through, Ardian are saying they cannot continue without changes to the agreement, I believe this is due to some requirements by the anti-monopoly authorities [0]. Míla is the company being sold, it was spun out of the national monopoly a long time ago to provide base layer services to all operators equally but was initially (and still mostly, I'm hazy on the details) owned by the old monopoly. The old monopoly has also been privatized a long time ago but has significant competition. I agree selling the infrastructure part to PE is almost 100% guaranteed to give bad results for the nation. It's like people never stopped to look at what the typical PE playbook is. But I guess it's harder to stop when everything is privatized already and in the hands of very many shareholders, each of them acting in their own short-term best interest. Source: I'm Icelandic. [0] (in Icelandic) https://www.mbl.is/vidskipti/frettir/2022/07/17/ardian_saettir_sig_ekki_vid_kaupsamninginn/ https://www.mbl.is/vidskipti/frettir/2022/07/17/ardian_saett...
- gtvwill 4y agoErf bad luck people of Iceland. Remember folks cost + shareholder profit will never be less than cost alone. Privatisation will never make things cheaper.
- missedthecue 4y agoIn my experience, it's not true that both state and private players require the same amount of OpEx to run a concern. Usually state run organisations run projects at costs well in excess of what is actually required. Therefore, it is possible to privatize, realize a profit, and lower prices. I was tangentially involved with the privatization of a copper mine in South America. Within just a few years of it being sold off to private buyers, it was consistently profitable for the first time, extraction was up ~350%, and costs were down 40%. This was the Cerro Verde mine in Peru.
- dv_dt 4y agoAren’t competitors in a small land network by definition wasted equipment Capex if they’re actually completing. And if they’re not actually competing it is a waste by balkanization.
- gtvwill 4y agoMeanwhile come to aus where we have sold out energy infrastructure and our Comms infrastructure to private enterprises. All prices have done is go up, service quality has either stagnated or declined. The examples of private industry doing it better with a better result for the society around them rather than just we made heaps big profits is actually slim af pickings. Private industry has way more examples of jacking prices and screwing people over than it does of doing good.
- moralestapia 4y agoThis happened in Mexico around the 90s (IIRC) in a deal that was heavily criticized within the country. The guy who acquired it later became the richest man in México (also worldwide for a few years). So yeah, these are lucrative deals.
- hulitu 4y agoAnd in a lot of EU countries. Same result.
- Aeolun 4y agoYeah, I can’t see any way this will go wrong…
- gonesilent 4y agoNSA just buying up whole telecoms.....