7 ms·

An ISP's job, as a private company, is to maximize shareholder value. The circuit consumers are sold is a "best-effort" connection in stark contrast to, say, a

• toomuchtodo 12y ago
  > I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Can't I want both to be socialized?
  • josh2600 12y ago
    Where do you draw the line? What shouldn't we socialize?
    • aaronblohowiak 12y ago
      Things that don't have a natural monopoly.
    • toomuchtodo 12y ago
      Excellent question. Anything that doesn't have a natural monopoly. I can say with certainty that the following should be socialized or delivered in non-profit ways: * Water * Sewer * Power * Internet * Healthcare * Fire * Police * Roads * Education (added per /u/CodeMage) Feel free to chime in if you can add anything I forgot.
      • josh2600 12y ago
        Not a bad list. Cheers. I'll note that we should have explicit public subsidies for Internet and that I would much prefer to have public networks with private operators (to my mind that's heaven for competitive markets but politically impossible in the US).
        • toomuchtodo 12y ago
          I completely agree with you. The last mile should be public, with anyone permitted to provide service to customers (similar to the old DSL/CLEC/ILEC model).
        • tacticus 12y ago
          Or you could have public last miles with openaccess requirements providing competition on the parts that can see competition.
      • CodeMage 12y ago
        Excellent list. I'd like to add education to it.
      • jjoonathan 12y ago
        I'd just like to point out that Adam Smith himself (the "Carl Marx of Capitalism") agrees with you for fire, police, and roads at the very least (I haven't read everything he wrote). If he were born today rather than in 1723 I suspect his list would look very much like yours.
        • toomuchtodo 12y ago
          I will take that as a compliment! Thank you!
      • malkia 12y ago
        Prisons Orphanages Mental institutions Defense
      • notdonspaulding 12y ago
    • TeMPOraL 12y ago
      Things that work better when they are socialized than when they are privatized. Like healthcare.
      • cookiecaper 12y ago
        Health care only works "better" when socialized if you believe that health care really should be so expensive that they have to print extra money explicitly to pay for it. There's no reason that has to be an integral property of health care. Turns out that most of the time, we don't need hospitals the size of college campuses (incidentally another thing that is completely unaffordable). The reason things cost so much is because true costs are obscured, just as they would be in a socialized system, by insurance. IMO non-catastrophic insurance should be abolished, the government should overcome the supply chain cycle ("Sorry, I have to charge $500 for this MRI because this machine cost me $4 million") by producing its own functional medical equipment and selling it at or under cost, and health providers need to get back to reality and charge face rates that real people can pay directly. And we all need to come to terms with the fact that some of the extravagance probably needs to be toned down.
        • hga 12y ago
          "Turns out that most of the time, we don't need hospitals the size of college campuses (incidentally another thing that is completely unaffordable)." However people are not willing to accept the consequences of hospitals that can't surge in catastrophes. When an EF-5 tornado hit my city 3 years ago, it took out one of our two hospital complexes. Things got ... rather intense at the other (http://stormdoctor.blogspot.com/2011/06/first-response-mode-may-22-2011-joplin.html http://stormdoctor.blogspot.com/2011/06/first-response-mode-...) but it being big, and stocked with otherwise excess inventory of all sorts of things, kept the death toll at ~160 instead of a likely 1,000 or so.
    • Iftheshoefits 12y ago
      I draw the line at things that people need in order to fully participate in society. If a good or service doesn't meet that threshold, a private market only solution is likely just fine. Otherwise there ought to be at least some socialized option available. My list would include: non-elective healthcare, food, housing (same as for food), electricity, water, local/regional transportation (e.g. for commuting to work), internet access and possibly basic internet-capable mobile phones. Basically "natural monopolies" are certainly all candidates for complete socialization.
  • tim333 12y ago
    We tried both in the UK. Conclusions, roughly, it works for health, not so well for telecoms. I think the best is some sort of hybrid.
• zacinbusiness 12y ago
  Maximizing shareholder value is less important than offering good customer service. Corporate greed is so disgusting.
  • whoopdedo 12y ago
    Except where the executives view the shareholders as their customers and the end users as the product.
    • cookiecaper 12y ago
      Which nobody does.
• hrrsn 12y ago
  > It's also very hard to prove that Verizon is throttling, versus, say, simply physically underprovisioning the connection. It doesn't matter either way, in the end the experience is the same.
• cmelbye 12y ago
  > I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Is it really the same people arguing for that? First and foremost, the telecom industry is nothing like the healthcare industry, and they shouldn't be reasoned about in the same way. Common carrier status has precise laws and legal meaning surrounding it. Please don't confuse it with socialized medicine.
  • cookiecaper 12y ago
    Agreed, it's not necessarily an issue of full socialization. The government can issue rules that ISPs must abide without taking them over completely.
• mantrax5 12y ago
  > An ISP's job, as a private company, is to maximize shareholder value. You lost me there. "There is only one valid definition of a business purpose: to create a customer." ~Peter Drucker (whose writings contributed to the philosophical and practical foundations of the modern business corporation) “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.” ~Jack Welch (former very successful CEO of GE)
  • josh2600 12y ago
    That's true except in markets where saturation has been achieved. In a market with 80-100%+ saturation, the per subscriber revenue does not increase year over year. In these cases, creating a customer doesn't actually increase shareholder value because there aren't enough customers that can be created to combat the atrophy of existing revenue. Jack Welch was hugely successful in creating and competing in new markets specifically because competing in saturated markets is not profitable. Those models are great for industries in the 0-80% saturation growth period, but aren't really applicable to high saturation markets.
    • cookiecaper 12y ago
      The issue is that value doesn't necessarily mean money. In terms of money, is Apple really the most profitable company in the world? We know that it's not, so why do they have the highest market cap? Because people value their shares for more than just the present dollar value. People want to be part of Apple regardless of its profitability. The negative shareholder value argument depends on a summary characterization of all investors as people who only care about money. Not all investors are like that. You can create shareholder value out of anything that your shareholders value, which is not to say that "shareholder value" should even be a serious metric. It's just a narrative that anti-corporate people have drummed up.
  • gorhill 12y ago
• DrJokepu 12y ago
  Oh no, not the "maximising shareholder value" argument again! This argument has three fundamental problems. First, it is difficult to tell what would "maximise shareholder value". Second, it misses the fact that something that could "maximise shareholder value" on short term could very well minimise "shareholder value" on long term (or the other way around). Third, and this is the biggest one, people involved in a private company (employees, directors, shareholders) often have an agenda that goes beyond simply making more money. That's because they are human beings.
  • josh2600 12y ago
    1) Agreed. 2) Agreed. 3) All of the big Telcos are public, but your point stands. To be explicit, I wholeheartedly agree with you about humans making pseudo-random decisions. I'm trying to explain the dynamics of the Telco position, from their vantage point because I think it helps the discussion to view things from other angles.
    • wtallis 12y ago
      The telcos are publicly traded, but not publicly owned in the sense of being government-owned and regulated. And that's one of the bigger problems here - the last-mile physical infrastructure should probably be publicly owned.
• couradical 12y ago
  I think the issue is more that the ISPs are demanding payment at both ends of the tunnel. They charge you and I for transit (best-effort though it may be) and then when a bulk of their customers traffic turns to a popular network, attempt to charge that network to upgrade their port speed. (something which is customarily handled for free between peered carriers since both are charging their customers) Think of it this way - it's as if I pay UPS to send packages and then they request fees from the cities they deliver to, or they only deliver 100 packages a day to the municipality. That would be insane, and laughed out of court, but that's what Comcast/Verizon are doing. Also, intentionally physically underprovisioning the connection is throttling, plain and simple. You are limiting the amount of traffic that can traverse that network boundary to 10G/40G/Whatever your port speed is. What difference does it make if I do it in software or simply refuse to bind more ports to the team?
• mr_luc 12y ago
  I just wanted to call out where you say that it's "hard to prove" that ISPs are purposefully degrading service. Hard to prove in a court of law, perhaps, but the speeds of access to the businesses being extorted can tell a pretty convincing story. This chart: http://appledailyreport.com/backend/wp-content/uploads/2014/05/Netflix-Comcast-Deal.jpg http://appledailyreport.com/backend/wp-content/uploads/2014/... paints a nice picture of how ISPs want to extort businesses that are in more profitable lines of work: notice how speeds change from before Comcast started trying to extort from Netflix, to during the negotiations, and after Netflix payed their protection money. Level3's article also called this out: the ISPs are purposefully, physically, underprovisioning their connections, because it gives them leverage over companies like Netflix. As to why the internet is different: the internet is not like healthcare. Socialized or not-socialized medicine is obviously not that big of a deal to the future of a nation; both the US and Britain were economically competitive while having very different systems. In contrast, the Internet obviously matters a great deal to the future. And if various players (hollywood; last-mile ISPs) can manage to appoint themselves gatekeepers and engage in rent-seeking behavior on the internet (in the United States, at any rate), well, HN is acutely aware of what that will mean for the future of innovation, and the future of nations as well.
  • josh2600 12y ago
    Sorry I was speaking from a court of law viewpoint. It's really obvious if you look at the network charts but it would be really hard to get those into a court for a lot of reasons. I understand that it would be a negative impactor on the future of nations and innovation; I'm asking if that's enough to actually drive change. My sense is that, historically, with respect to ISP behavior, over time they get what they want. I'm not saying this is right, I'm simply noticing a trend, just as many have noted that less-private social networks win over more privacy focused businesses.
  • hga 12y ago
    At the bottom of this you can find a description of how Netflix at the moment is detecting these problems: http://blog.streamingmedia.com/2014/06/netflixs-network-congestion-message-rolling-networks-just-verizon.html http://blog.streamingmedia.com/2014/06/netflixs-network-cong... Sounds sufficiently sophisticated.
• marincounty 12y ago
  As to the shareholder--Max/profits argument I use my ISP as an example. I own shares of stock. I will never by a share of Comcast stock for these reasons: I hate the company. I have hated the company since it's inception. I believe it should be split up by the federal government-- it's a monopoly in my house. Comcast employees hate Comcast. Comcast got much worse when they found out they could overcharge/lie for accesses to the Internet. Many investors don't invest in companies they Hate.