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Can anyone explain why free market competition has so thoroughly failed while a state utility provides such a dramatically better product? I'm not being snarky

by boppo1 3y ago

Can anyone explain why free market competition has so thoroughly failed while a state utility provides such a dramatically better product? I'm not being snarky, I'm usually a pretty strong 'let it be decided by markets' guy.

warble 3y ago
I don't see any free markets?
kevingadd 3y ago
The telecom market isn't free, that's why
delecti 3y ago
ISPs largely don't compete. They're legalized regional monopolies. There was a single cable TV provider, and they became the single cable internet provider, and so they don't need to reduce prices or improve the service offering, at least not until an alternative competitor emerges.
belthesar 3y ago
I imagine there's a handful of solid reasons for this. - Greenfield tech is simpler, and more stable. There's only 1 or 2 CPEs, a handful of distribution gear types, and a much smaller network. As a result, the support cost is much cheaper, more stable, and less prone to failure from equipment damage. These networks aren't traversing over 40, 50, 60 year old coax or 80, 90, 100 year old copper, it's fiber all the way down. - Profit as a motive for the ISP is purely to pay for the costs of the service. Wages, equipment, investment in the service. Without a need to spread dividends to investors, and those investors leading a board to shift the motive of the service provider to generate revenue as a first priority, pricing priorities can be much more simple. This also mitigates choices to stay on existing infrastructure to squeeze more money purely for the purposes of paying more dividends. Those choices will happen, but they should be to buy time for the next upgrade that is planned. - Manufactured monopolies by virtue of connection agreements (Cable provider X is allowed to have a monopoly as a service provider for a municipality so long as they provide service to N% users) have turned out to be a poor incentive to provide up to date, quality, affordable service as the service matures. New fiber providers, whether muni or independent, seem to be taking a much more sustainable approach to buildout and growth. As a result, because they are capturing the market by virtue of a better product, at a better price, whenever these ISPs onboard a new neighborhood, they have to do what they do well to retain the subscriber base, because the alternatives may not be as good, but they're not awful.
tempnow987 3y ago
Some of these solutions may not work as well in "big government" cities - they layer on so many non-core requirements the underlying product can become somewhat expensive or challenging. I had to deal with government tech support on something 10 years ago and you'd NEVER want to experience something like that - an entire office (being paid for by the government) would be offline for one silly reason or another. It was always like for x, y and z reasons only Q can do that needful thing, and Q is on a protected leave of some sort.... and cost and disruption was irrelevant. Then put in compliance with McBride Principles for Northern Ireland, required virgin redwood purchasing evaluations, sweatshop evaluations, travel restrictions, purchasing restrictions, first source hiring, purchasing procedures that were both highly complex and product quality / price only a small part of eval and extend this list 20x - all worthy things of course, but tough to get stuff done at times.
baq 3y ago
There’s no free market in infrastructure. Never has been. Oligopolies are the best you can hope to get.
- saalweachter 3y ago
  There's basically this whole category of things that function best as a monopoly. For insurance, you want the pool to be as large as possible to amortize risk over. For distribution networks, you don't want two networks covering the same area. When that happens, the most important thing is ensuring the monopoly is run well, for which strict regulations are a must. You must define a mission independent of profit seeking, requirements that must be met, and be able to hold people responsible if they fail to meet the requirements or succumb to excessive greed. After that it's largely irrelevant whether the entity providing the monopoly service is private or public.
minifyre 3y ago
My understanding (i.e., personal experience) is that many areas only have one or two providers (same with health insurance). Without competition, it's not a true free market as the companies have no incentive to improve since everyone just has to deal with their subpar product or forego it all together. Curiously, the city I'm currently living in will soon be rolling out it's own fiber and the existing providers are all scrambling to improve their infrastructure and "bribe" existing customers with free gadgets (e.g., Google home speakers, etc.) because they know that their current offerings are not competitive and that they would go out of business overnight if they stood by and did nothing in the meantime.
- ProllyInfamous 3y ago
  >Without competition, it's not a true free market as the companies have no incentive to improve since everyone just has to deal with their subpar product or forego it all together. South Park captures this best by having their cableguys rub their nipples when complaining cartoon characters ask for better service/treatment. "What're'you gonna'do 'bout'it?!" the South Park Cable Guys mockingly ask. Nothing. You'll DO NOTHING and be happy. Perhaps the beatings will end when morale improves? [avg joe gets community fiber for $60/month] "Is this socialism? Is socialism wrong?"
aranchelk 3y ago
1) It's difficult and very costly for new competitors to enter markets. 2) It's often impossible (without moving) for consumers to choose a competitive service.

by boppo1 3y ago

warble 3y ago

I don't see any free markets?

kevingadd 3y ago

The telecom market isn't free, that's why

delecti 3y ago

ISPs largely don't compete. They're legalized regional monopolies. There was a single cable TV provider, and they became the single cable internet provider, and so they don't need to reduce prices or improve the service offering, at least not until an alternative competitor emerges.

belthesar 3y ago

I imagine there's a handful of solid reasons for this. - Greenfield tech is simpler, and more stable. There's only 1 or 2 CPEs, a handful of distribution gear types, and a much smaller network. As a result, the support cost is much cheaper, more stable, and less prone to failure from equipment damage. These networks aren't traversing over 40, 50, 60 year old coax or 80, 90, 100 year old copper, it's fiber all the way down. - Profit as a motive for the ISP is purely to pay for the costs of the service. Wages, equipment, investment in the service. Without a need to spread dividends to investors, and those investors leading a board to shift the motive of the service provider to generate revenue as a first priority, pricing priorities can be much more simple. This also mitigates choices to stay on existing infrastructure to squeeze more money purely for the purposes of paying more dividends. Those choices will happen, but they should be to buy time for the next upgrade that is planned. - Manufactured monopolies by virtue of connection agreements (Cable provider X is allowed to have a monopoly as a service provider for a municipality so long as they provide service to N% users) have turned out to be a poor incentive to provide up to date, quality, affordable service as the service matures. New fiber providers, whether muni or independent, seem to be taking a much more sustainable approach to buildout and growth. As a result, because they are capturing the market by virtue of a better product, at a better price, whenever these ISPs onboard a new neighborhood, they have to do what they do well to retain the subscriber base, because the alternatives may not be as good, but they're not awful.

tempnow987 3y ago

Some of these solutions may not work as well in "big government" cities - they layer on so many non-core requirements the underlying product can become somewhat expensive or challenging. I had to deal with government tech support on something 10 years ago and you'd NEVER want to experience something like that - an entire office (being paid for by the government) would be offline for one silly reason or another. It was always like for x, y and z reasons only Q can do that needful thing, and Q is on a protected leave of some sort.... and cost and disruption was irrelevant. Then put in compliance with McBride Principles for Northern Ireland, required virgin redwood purchasing evaluations, sweatshop evaluations, travel restrictions, purchasing restrictions, first source hiring, purchasing procedures that were both highly complex and product quality / price only a small part of eval and extend this list 20x - all worthy things of course, but tough to get stuff done at times.

baq 3y ago

There’s no free market in infrastructure. Never has been. Oligopolies are the best you can hope to get.

saalweachter 3y ago
There's basically this whole category of things that function best as a monopoly. For insurance, you want the pool to be as large as possible to amortize risk over. For distribution networks, you don't want two networks covering the same area. When that happens, the most important thing is ensuring the monopoly is run well, for which strict regulations are a must. You must define a mission independent of profit seeking, requirements that must be met, and be able to hold people responsible if they fail to meet the requirements or succumb to excessive greed. After that it's largely irrelevant whether the entity providing the monopoly service is private or public.

minifyre 3y ago

My understanding (i.e., personal experience) is that many areas only have one or two providers (same with health insurance). Without competition, it's not a true free market as the companies have no incentive to improve since everyone just has to deal with their subpar product or forego it all together. Curiously, the city I'm currently living in will soon be rolling out it's own fiber and the existing providers are all scrambling to improve their infrastructure and "bribe" existing customers with free gadgets (e.g., Google home speakers, etc.) because they know that their current offerings are not competitive and that they would go out of business overnight if they stood by and did nothing in the meantime.

ProllyInfamous 3y ago
>Without competition, it's not a true free market as the companies have no incentive to improve since everyone just has to deal with their subpar product or forego it all together. South Park captures this best by having their cableguys rub their nipples when complaining cartoon characters ask for better service/treatment. "What're'you gonna'do 'bout'it?!" the South Park Cable Guys mockingly ask. Nothing. You'll DO NOTHING and be happy. Perhaps the beatings will end when morale improves? [avg joe gets community fiber for $60/month] "Is this socialism? Is socialism wrong?"

aranchelk 3y ago

1) It's difficult and very costly for new competitors to enter markets. 2) It's often impossible (without moving) for consumers to choose a competitive service.