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The mobile sector is a great example of a natural monopoly: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly In thi

by badsock 12y ago

The mobile sector is a great example of a natural monopoly: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly In this case, competition is the problem not the solution. It makes no sense to build out massive cellular networks in triplicate. Connectivity could be provided much more efficiently at the municipal level, like water. Certainly, my experience with city water has been orders of magnitude more pleasant that with mobile providers, many times cheaper and more reliable, and I really don't see one as being harder to provide than the other.

ams6110 12y ago
Why does it make sense to build out massive supermarket chains in triplicate?
- badsock 12y ago
  The capital costs of supermarkets are much, much lower relative to their operating costs. However, using that context: contrast supermarkets with the roads that are used by both their suppliers and their consumers, and you have another good example of a capital-intesive infrastructure where redundancy is inefficient and therefore is better supplied by government.
rlpb 12y ago
> In this case, competition is the problem not the solution. It makes no sense to build out massive cellular networks in triplicate. I agree with you, but I also think that it makes no sense to grant access to the airwaves at the same time as granting a monopoly to all services that might be performed over those airwaves. I think that this effectively extends the monopoly into other areas that are not natural. In the UK, the incumbent telecoms company (BT) is required by the regulator to provide access to its lines to companies that compete with them. The (regulatory) agreed pricing is relatively close to BT's own cost structure (95 percentile billing, etc). This is just for the part that is the natural monopoly - primarily the last mile. The competition provide their own Internet backhaul, and sometimes the links to the exchanges too. I think this works remarkably well - the market has real competition in providing all of the other parts of Internet service (customer service, peering quality, how different ISPs end up managing their bandwidth, etc). With no history, I think it might be even better to limit companies granted rights to the natural monopoly area to only providing services to other businesses for access only. For example: a company granted access to cellphone frequencies might only be permitted to provide transit to other companies, rather than to retail customers directly. I think that by replacing the irrational retail customers with more rational businesses, we'd get better efficiency, real competition and prices closer to real cost.

by badsock 12y ago

ams6110 12y ago

Why does it make sense to build out massive supermarket chains in triplicate?

badsock 12y ago
The capital costs of supermarkets are much, much lower relative to their operating costs. However, using that context: contrast supermarkets with the roads that are used by both their suppliers and their consumers, and you have another good example of a capital-intesive infrastructure where redundancy is inefficient and therefore is better supplied by government.

rlpb 12y ago

> In this case, competition is the problem not the solution. It makes no sense to build out massive cellular networks in triplicate. I agree with you, but I also think that it makes no sense to grant access to the airwaves at the same time as granting a monopoly to all services that might be performed over those airwaves. I think that this effectively extends the monopoly into other areas that are not natural. In the UK, the incumbent telecoms company (BT) is required by the regulator to provide access to its lines to companies that compete with them. The (regulatory) agreed pricing is relatively close to BT's own cost structure (95 percentile billing, etc). This is just for the part that is the natural monopoly - primarily the last mile. The competition provide their own Internet backhaul, and sometimes the links to the exchanges too. I think this works remarkably well - the market has real competition in providing all of the other parts of Internet service (customer service, peering quality, how different ISPs end up managing their bandwidth, etc). With no history, I think it might be even better to limit companies granted rights to the natural monopoly area to only providing services to other businesses for access only. For example: a company granted access to cellphone frequencies might only be permitted to provide transit to other companies, rather than to retail customers directly. I think that by replacing the irrational retail customers with more rational businesses, we'd get better efficiency, real competition and prices closer to real cost.