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In my small island community, I participated in a municipal committee whose mandate was to bring proper broadband to the island. Although two telecom duopolies
by ttul 6mo ago
In my small island community, I participated in a municipal committee whose mandate was to bring proper broadband to the island. Although two telecom duopolies already served the community, one of them had undersea fiber but zero fiber to the home (DSL remains the only option), whereas the other used a 670 Mbps wireless microwave link for backhaul and delivery via coaxial cable. And pricing? Insanely expensive for either terrible option.
Our little committee investigated all manner of options, including bringing municipal fiber across alongside a new undersea electricity cable that the power company was installing anyway. I spoke to the manager of that project and he said there was no real barrier to adding a few strands of fiber, since the undersea high voltage line already had space for it (for the power company’s own signaling).
Sadly, the municipality didn’t have any capital to invest a penny into that fiber, so one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island.
A few weeks later, the cable monopoly engaged a cable ship and began laying their own fiber. Competition works, folks. Even if you have to fake it.
- bestouff 6mo ago[flagged]
- littlestymaar 6mo ago[flagged]
- hn_throwaway_99 6mo agoAs Peter Theil literally said, "Competition is for losers."
- youainti 6mo agoThis is a perfect example of competition in microeconomics. If you've only been exposed to an introductory economics, you've missed out on a lot. This type of situation sounds like an amalgamation of a few exam questions from my first year of an econ PhD. "Cheap talk in a Bertrand market with entry costs and capacity constraints" or something. No I haven't worked it out but my intuition is that it would predict exactly what was observed: the threat of a new entrant with enough capacity risks loosing your entire business so you invest to expand your capacity to prevent that entry.
- littlestymaar 6mo agoThe problem isn't that econ PhDs don't have classes giving more nuanced views of the world, but the fact that people spend so much time with “introductory economics” that even Nobel prices will make nonsensical arguments based on those flawed concepts. It seems that spending several years working with models assuming that the earth is flat isn't being well compensated by one class on “imperfect flatness”. (I've contemplated doing an econ PhD myself before changing course, and I've been exposed to much more than econ 101).
- matheusmoreira 6mo ago> with the notable exception of people with lots of capital to wipe the competition out of the market then do a rug pull after the fact They used to be called robber barons.
- WalterBright 6mo agoIronically, during the anti-trust trial of Standard Oil, Rockefeller's market share kept slipping. His competitors figured out how to compete with him. As for Rockefeller being a "robber", the rise of Standard Oil resulted in the price of kerosene dropping 70%.
- littlestymaar 6mo agoIf technical advances make cost go down 90% but prices only goes down by 70%, someone is making tons of money at the expense of consumers. That's what happened with the telco by the way, the price is is still significantly lower than 40 years ago, but in the US it's still more expensive than it should.
- WalterBright 6mo agoMargins are not owed to customers, whether they are large or small. Supply & Demand sets the price. For example, if you buy a car for $5000 and flip it for $10,000, you don't owe your customer a discount.
- littlestymaar 6mo ago“Supply and demand” refers to the idea that under competition, prices will go down to the marginal cost of production. When a cartel sets a price it's very much not “supply and demand” who sets the price, it's the cartel…
- WalterBright 6mo agoThe cartel setting a price is still subject to the Law of Supply and Demand. The Law is not about setting a price, it is about how much sales you're going to get at a particular price point. Maximizing the price is not the same thing at all as maximizing profit. Standard Oil made more money by reducing prices, not maximizing them.
- raw_anon_1111 6mo agoThis is provably not true. You can look at computers (besides Apple), cell phones (besides Apple), TVs, any commodity item, etc
- littlestymaar 6mo agoInterestingly enough, all the examples you cited are being produced by Asian brands, where the various governments have specific policies designed to make companies actually engage in such a competition in order to take over the world markets. Now do banking, retail, real estate, insurance, healthcare, software, or any business where Asian governments are not actively subsidizing a race to the bottom competition and you'll see it how it works.
- raw_anon_1111 6mo agoSoftware is easy - look at the App Store. Every piece of software and even the console market is moving away from pay once to shady pay to win mechanics. Google and Facebook make most of their money by giving things away and selling to advertising. The biggest retail stores squeeze their suppliers and compete on prices, healthcare everywhere else except the asinine system in the US is government backed. The fast food places compete on price and “fast casual” that costs slightly more are dying
- HauntingPin 6mo ago[flagged]
- xboxnolifes 6mo ago> ...one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island. They called in a favor that put pressure on the company from public expectations.
- HauntingPin 6mo agoYes. What do you think happens in a competitive marketplace? Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console. That's literally competition. The details of how the "public pressure" came to be don't matter, because the monopoly didn't know about that. All they knew was there was a potential competitor, so they behaved according to that information. That's how it works.
- karlgkk 6mo agoFrankly, I think you're trying to poke holes in a straightforward concept. And now you've dug your heels in and you're trying to justify it. But... let's ignore opinions and interpretations... > Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console This is completely inaccurate in every way possible. You even have the order of events backwards (Nintendo and Sony partnered first). There is in no way in which even the most charitable interpretation of this statement could bear out. Just about the only correct part is that you have some (but not all!) of the relevant parties involved. If you're wrong about such a well documented, cut and dry matter of historical record, then what else are you wrong about? :)
- drfloyd51 6mo agoThat isn’t actually refuting his original argument. Just proving his example false. Then you beg the question with a bit of a straw man fallacy thrown in.
- wat10000 6mo agoIn other words, competition works, and lack of competition leaves you vulnerable.
- hahahacorn 6mo ago[flagged]
- jayd16 6mo agoI don't know. I feel like "price fixing until maybe there was a hint of competition" is pretty far from frictionless sphere, supply and demand economics. Competition was possible but was not working. A fake news brief is the supposed solution. That's not really competition actually lowering prices. That's the price fixing regime blinking for an unsubstantiated reason. It would be a different story if the friend's fiber laying company actually saw an opportunity and pursued it, but they didn't.
- hahahacorn 6mo agoISPs and other extremely capital intensive industries with a relatively fixed demand are always going to be warped markets. Nobody thinks they’re a spherical cow. Despite that, the single mechanism that works so well in a competitive market, the threat of competition, (this time) worked just the same in a 2 person market where you would expect the inefficiencies of a price fixing regime and for all decisions and investments to have to pass through (and have funds allocated to) an army of lawyers, politicians and special interest groups. That is objectively what happened and reframing it into a negative light is a choice grounded in emotion and not analysis. Have you ever taken an economics course? Nobody finishes a basic micro/macro course without an introduction to game theory. Game theory is the EXACT reason that N=2,3,4 markets struggle with competition and provide insights into the regulation and “rules” needed for markets with very low suppler cardinality. You thinking that anyone else expects a local ISP market to function efficiently and competitively is a failure of your own understanding, not of the system.
- bestouff 6mo ago[flagged]
- joe_the_user 6mo agoIt seems incorrect to call this competition. I'm glad you got your broadband but what happened sounds much more like American politics than ordinary market processes. And in this political environment, corporations can engage in a variety of other tactics than placating a squeaky wheel - they can outlaw competition, buy off officials, pay for shrill media hit pieces and so-forth.
- HauntingPin 6mo agoIt's clearly competition. The incumbent company saw a potential competitor and acted upon it. That's literally what happens when there's competition. It doesn't matter that the competitor didn't actually exist if the incumbent behaved as if it did exist. I'm never sure what the point of comments like this is. "It seems incorrect". But it isn't. You just don't want to admit that competition is good and necessary.
- postsantum 6mo agoNo, it's called market manipulation. OP's action caused spending at the expense of the companies. Not going to "won't someone think of the shareholders", but calling competition is misleading
- joe_the_user 6mo agoOK, I should have said "economic competition" though I imagined that it was implied. If you just say "competition", you can point at the efforts of ten people to gain a seat on the politbureau as a clear case of this.
- hnthrow0287345 6mo agoIf they ever find out they've been duped, they'll certainly go out of their way to make something worse down the line at the expense of the people. These are the kind of short-sighted tactics that competition and capitalism breeds that belongs in luxury markets, not utilities or essentials.
- Hikikomori 6mo agoLocal municipality power companies put fiber in the ground whenever they put power. The result is fiber almost everywhere at very low cost. Even along rail and major roads.
- ttul 6mo agoAbsolutely. Once you’re laying anything at all in the ground, tossing down a fiber costs nothing.
- zx8080 6mo agoEither side of the spectre lies enshittification: - more competition comes with margin squeezing and cheapest source for service or goods - less competition brings the monopoly, the dream of any capitalist (owner, not user). Either way comes enshittification, and there's no middle balance, it drifts towards one of the sides always.
- jimbooonooo 6mo agowe still had luxury goods without monopolies, so I think I'll take more competition please.
- WalterBright 6mo agoDuring the Soviet Union years, tourists to it knew that the thing to do was pack blue jeans in their luggage, which were highly desirable under communism. Wearing blue jeans in the USSR was a mark of status.
- lava_pidgeon 6mo agoThis German supermarket system has strong compettion , low margins but it is cheap and reliably good quality what most German wish. So I disagree.
- sophrosyne42 6mo agoFalse dilemma
- toofy 6mo agothis is a great example of where the government should step in and say “welp, you took too long, we’re now funding municiple fiber and we’ll give it to everyone cheap. sorry.” i truly do believe competition can often drivr things forward but we have countless examples where executives get comfortable and decide their best course of action for profits is to do little to nothing. if a community has been screaming for fiber internet for years and the service companies cry “oh it’s just too expensive” when we know that isn’t true, then the people who pay the taxes should say “ok, apparently you’re not up to the job, you and/or your business model is clearly a failure, we’ll do it and provide it cheaper than you would have anyway.” maybe this would force the competition we know can often work. if they can’t figure out a way to do it without subsidies, then we’ll do it ourselves. you can call it “spooky government” all you want, but that’s just another term for “us” something to the effect of: ok, this thing has become integral to society. ceos, you have 5 years to compete and prove that you’re up to the task by delivering A, B, and C for $N. can’t do it? not up to it? no worries, thanks for trying.
- zeroCalories 6mo ago[flagged]
- delusional 6mo agoThis is a fundamental problem of value creation and value extraction. Just because the ISP's can't extract the value of adding the additional fiber capacity doesn't mean it doesn't confer that value to the customers. We live in an age of value extraction, what's colloquially known as "enshittification", that can't go on forever. Somebody has to create the value that is being extracted. It's the old Marx quote: "From each according to his ability, to each according to his need". Except you know, the opposite.
- zeroCalories 6mo agoI have a lot of ability. I'm not gonna flex it for others without pay that gives me significantly higher living standards than the average person. Are you going to force me to work?
- laurencerowe 6mo agoI wish there was a way to achieve that same outcome in my internet backwater of San Francisco. Nearby blocks have symmetrical GB fibre from Sonic but we only have shity 30MB up from Comcast.
- fragmede 6mo agoWhat speed can you get from Monkeybrains?
- laurencerowe 6mo agoI believe they only offer up to 100mbps. Having 1Gb down from Comcast is definitely useful at times. I just wish I could get more than 30Mb up.
- direwolf20 6mo agoSounds like you do know a way: Buy a spool of fiber and lay one from your house to the nearby block. Make it public knowledge that you're doing this and sharing internet with your neighbours (even if you're not). The incumbent will quickly upgrade your area.
- inemesitaffia 6mo agoROW?
- direwolf20 6mo agoIt's easier to ask forgiveness than permission, especially if nobody notices.
- franga2000 6mo agoA few years ago I learned that the only thing keeping me on 20/2 ADLS was a few 100 meters of already built but empty cable channel. I easily could buy that much fibre, borrow a fibre splicer and cable puller, patch it up to a relative in one of the already wired buildings and share their gigabit link with my entire apartment building. Half of my building was on the ISP that owned the empty channel, so moving to a competitor would've directly hurt their bottom line. Except that opening the manholes is a crime, using the ISP's channels would be at least a civil cause of action, laying such infra requires a municipal permit... The ISP was not worried about such "competition". Now try doing this in the US, the land of endless red tape, NIMBYs and HOAs. And without having an already dug cable channel. Sure, that's going to scare the probably multi-billion-$ incumbent ISP...
- throw0101d 6mo ago> Sadly, the municipality didn’t have any capital to invest a penny into that fiber […] Would borrowing money (issuing a bond) be an option in cases like this? Pay it off over the course a decade (two/three?), and make the payments part of the fee put to users?
- ttul 6mo agoYes, they could have borrowed money. It requires a referendum, but I believe it would have passed. Alas, many small community politicians are retired folks (who else has time when you’re getting paid $500/mo) and in my case, they just didn’t get how crucial this stuff is.
- wisemanwillhear 6mo agoI think this demonstrates that while there are many factors at play, including difference in geography as many have pointed out, the main factor is priority. American's generally have different priorities, sometimes that just prioritizing our personal comfort by not having to fight against the current "system". So, even if we would love to have better internet, other things are more important. I'm one of those people. My cellular based rural internet would be considered poor by most people on Hacker News, but it's good enough for us. I have no motivation to pay for faster. I only rarely download large file and have always been willing to let them download in the background and come back hours later. If I'm going to campaign for something I currently have far bigger priorities.
- autoexec 6mo ago> Competition works, folks. Even if you have to fake it. Sometimes it works in ways you don't expect though https://arstechnica.com/uncategorized/2008/07/telco-wont-install-fiber-sues-to-keep-city-from-doing-it/ https://arstechnica.com/uncategorized/2008/07/telco-wont-ins...