4 ms·

If we let the free markets work we wouldn't even be discussing net neutrality. ISP monopolies and duopolies are the cause of this problem. If there was competit

If we let the free markets work we wouldn't even be discussing net neutrality. ISP monopolies and duopolies are the cause of this problem. If there was competition consumers would choose the ISP that gives them proper, fast access to the services they use (eg Netflix).

bakhy 13y ago
this is a natural tendency of the truly free market, this conglomeration. regulation is required to prevent it. free market != competitive market.
- mwfunk 13y ago
  To be fair (and probably pedantic :), natural monopolies don't happen in any free market given enough time. It's more like, certain very specific markets (such as ISPs and desktop operating systems, apparently) have built-in dynamics that lead to natural monopolies. Most markets aren't like this and can remain competitive without regulation. My desktop OS example requires some clarification- there were plenty of things Microsoft did in the '80s and '90s where they exploited their position in the market to increase market share. Per-processor licensing fees are a prime example of that- a PC vendor that wanted to license a Microsoft OS would have to pay a licensing fee for every computer they sold, regardless of whether or not that computer had an MS OS on it. However, one could argue that this was a consequence of MS already having a monopoly (50% market share can be considered a monopoly in some markets), and they were exploiting that monopoly to become even more deeply entrenched. I honestly think that the desktop OS market in the pre-web days had very strong tendencies towards a natural monopoly regardless of whether or not any given player in that market was engaging in unfair business practices to achieve that monopoly. Any time discussion about competing products revolves around which product is ultimately going to "win", there is an implicit assumption that the market those products compete in tends towards natural monopolies. It may not be true, but the people participating in those discussions think so even if they're not fully aware of it.
  - bakhy 13y ago
    I agree that some markets have a greater tendency for forming natural monopolies. I think the reason for the desktop OS monopoly tendency lies in the fact that developing software and drivers for multiple operating systems is expensive. This, and the desire to have marketable skills, drives developers to one OS. And also, applications you do your work in were typically incompatible between platforms, thus creating a drive for users as well to band together on one OS... Some markets have a huge tendency for natural monopolies, perhaps mostly due to this cost of switching (or sitting in two or more chairs, so to speak). But even in a market where you can easily switch one supplier for another, there often remains a helpful factor for grouping - everything costs less in large quantities ;) And many administrative costs can be reduced. Not to mention that perfect competition would, strictly mathematically speaking, drive profits towards zero...
  - twic 13y ago
    > Most markets aren't like this and can remain competitive without regulation. It's clear that some markets are like this, and some aren't. It's not at all clear to me that most markets aren't. In fact, i believe the opposite - most markets are like this. I believe that in most markets, economies of scale, cost of entry, and the coercive power of large participants outweigh the incremental efficiencies of new innovators. If there is any logic or data which supports the contrary position, i would be interested to hear it.
rhino369 13y ago
It's just not practical to dig up an entire cities worth of streets to lay a second transmission line. You are legally allowed to compete with the cable co and telephone co. But it's rarely attempted because it's not profitable. They already have a network, building one is very expensive. Competition is actually our problem. In countries with only 1 telecom choice, the government regulates it. It often lets ISPs pay to rent the transmission line that the telecom owns.^1 Instead America lets the cable company compete against the telephone company and we get two poor choices. If you want nationwide fiber? Give ATT and Verizon their monopoly on ISP lastmile networks, but force them to lease your line to indie ISPs. Just calling for more competition sounds like a good idea, but it won't work. ^1you can actually do this now for DSL in America.
- deleted 13y ago
  [deleted]
skywhopper 13y ago
Yes, local governments are complicit in the ISP monopolies, but only government regulation (or ownership) will be able to force companies to share the existing last-mile infrastructure, which is the only way competition can truly exist.
mwfunk 13y ago
This is the result of free markets. Some markets can be completely free and still result in monopolies. Some markets have natural tendencies towards monopolies, and will inevitably become dominated by monopolies unless (ironically) regulations artificially create conditions under which competition can exist. In the case of ISPs, the most pragmatic resolution is not to artificially create a free market but to classify them as utilities. This is an acknowledgement that they exist in a market which tends towards regional natural monopolies, and allows them to enjoy those monopolies, but prevents them from exploiting their status too much (for example, by using their natural monopoly in one market to affect another market). I don't even know who their hypothetical competition would be- my understanding (which could be wrong) is that there is nothing preventing such competition, it's just very difficult to go up against an entrenched incumbent. Google Fiber is great, but if that was Google's only business they wouldn't last very long. The only counterexamples I can think of are the legal battles where ISPs have effectively shut down attempts to establish municipal broadband, which is terrible, but I don't think that's the kind of competition you're referring to.

bakhy 13y ago

this is a natural tendency of the truly free market, this conglomeration. regulation is required to prevent it. free market != competitive market.

mwfunk 13y ago
To be fair (and probably pedantic :), natural monopolies don't happen in any free market given enough time. It's more like, certain very specific markets (such as ISPs and desktop operating systems, apparently) have built-in dynamics that lead to natural monopolies. Most markets aren't like this and can remain competitive without regulation. My desktop OS example requires some clarification- there were plenty of things Microsoft did in the '80s and '90s where they exploited their position in the market to increase market share. Per-processor licensing fees are a prime example of that- a PC vendor that wanted to license a Microsoft OS would have to pay a licensing fee for every computer they sold, regardless of whether or not that computer had an MS OS on it. However, one could argue that this was a consequence of MS already having a monopoly (50% market share can be considered a monopoly in some markets), and they were exploiting that monopoly to become even more deeply entrenched. I honestly think that the desktop OS market in the pre-web days had very strong tendencies towards a natural monopoly regardless of whether or not any given player in that market was engaging in unfair business practices to achieve that monopoly. Any time discussion about competing products revolves around which product is ultimately going to "win", there is an implicit assumption that the market those products compete in tends towards natural monopolies. It may not be true, but the people participating in those discussions think so even if they're not fully aware of it.
- bakhy 13y ago
  I agree that some markets have a greater tendency for forming natural monopolies. I think the reason for the desktop OS monopoly tendency lies in the fact that developing software and drivers for multiple operating systems is expensive. This, and the desire to have marketable skills, drives developers to one OS. And also, applications you do your work in were typically incompatible between platforms, thus creating a drive for users as well to band together on one OS... Some markets have a huge tendency for natural monopolies, perhaps mostly due to this cost of switching (or sitting in two or more chairs, so to speak). But even in a market where you can easily switch one supplier for another, there often remains a helpful factor for grouping - everything costs less in large quantities ;) And many administrative costs can be reduced. Not to mention that perfect competition would, strictly mathematically speaking, drive profits towards zero...
- twic 13y ago
  > Most markets aren't like this and can remain competitive without regulation. It's clear that some markets are like this, and some aren't. It's not at all clear to me that most markets aren't. In fact, i believe the opposite - most markets are like this. I believe that in most markets, economies of scale, cost of entry, and the coercive power of large participants outweigh the incremental efficiencies of new innovators. If there is any logic or data which supports the contrary position, i would be interested to hear it.

rhino369 13y ago

It's just not practical to dig up an entire cities worth of streets to lay a second transmission line. You are legally allowed to compete with the cable co and telephone co. But it's rarely attempted because it's not profitable. They already have a network, building one is very expensive. Competition is actually our problem. In countries with only 1 telecom choice, the government regulates it. It often lets ISPs pay to rent the transmission line that the telecom owns.^1 Instead America lets the cable company compete against the telephone company and we get two poor choices. If you want nationwide fiber? Give ATT and Verizon their monopoly on ISP lastmile networks, but force them to lease your line to indie ISPs. Just calling for more competition sounds like a good idea, but it won't work. ^1you can actually do this now for DSL in America.

deleted 13y ago
[deleted]

skywhopper 13y ago

Yes, local governments are complicit in the ISP monopolies, but only government regulation (or ownership) will be able to force companies to share the existing last-mile infrastructure, which is the only way competition can truly exist.

mwfunk 13y ago

This is the result of free markets. Some markets can be completely free and still result in monopolies. Some markets have natural tendencies towards monopolies, and will inevitably become dominated by monopolies unless (ironically) regulations artificially create conditions under which competition can exist. In the case of ISPs, the most pragmatic resolution is not to artificially create a free market but to classify them as utilities. This is an acknowledgement that they exist in a market which tends towards regional natural monopolies, and allows them to enjoy those monopolies, but prevents them from exploiting their status too much (for example, by using their natural monopoly in one market to affect another market). I don't even know who their hypothetical competition would be- my understanding (which could be wrong) is that there is nothing preventing such competition, it's just very difficult to go up against an entrenched incumbent. Google Fiber is great, but if that was Google's only business they wouldn't last very long. The only counterexamples I can think of are the legal battles where ISPs have effectively shut down attempts to establish municipal broadband, which is terrible, but I don't think that's the kind of competition you're referring to.