6 ms·

> you can tell because of how stridently Comcast/Verizon/AT&T oppose it. How so? Whether its good or bad, ISPs would be against it. Most companies do not want

by ksk 12y ago

> you can tell because of how stridently Comcast/Verizon/AT&T oppose it. How so? Whether its good or bad, ISPs would be against it. Most companies do not want competition. (regardless of what they say) >by allowing the option of municipal networks. I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. >Really, he's calling for the FCC to prevent rent-seeking You can prevent rent-seeking by repealing any "sponsored" laws that protect their monopoly.

jfb 12y ago
The problem is that you have an asymmetry in resources between e.g. local officials who might want to stand up a fiber network and a company the size of Verizon, who very badly do not want this to happen. You need countervailing size, and in the US only the federal government has it.
- ksk 12y ago
  The problem of asymmetry of resources exists in all domains that have high sunk costs. To reduce monopolies, using your logic ("you need countervailing size") the government would have to get involved in all of the other industries like shipping, oil refining, TV networks, etc. Instead, why not change the law (if needed) to prevent monopolies from happening?
  - GhotiFish 12y ago
    Friendly reminder to people of HN. Please don't downvote to disagree. Is your objective to discourage dissenting opinion? Seriously? That's not healthy for a community. ksk's comments were not out of place.
    - jfb 12y ago
      No, he's asking very good questions.
  - bduerst 12y ago
    The government already does, for regional monopolies (power, water, sewer, transportation, etc.) The problem isn't that the government should prop-up start ups in this specific industry to prevent a monopoly, but that the government should embrace communications as a regional monopoly - i.e. own the utility infrastructure and reduce costs for the entire economy. Obviously they can't nationalize the current companies, but they can start building public infrastructure.
    - ksk 12y ago
      Classification of broadband as a public utility is a related, but separate argument.
      - bduerst 12y ago
        Not when you try to extrapolate a natural monopoly to all industries with sunk costs - then it becomes a counterpoint.
  - digikata 12y ago
    Shipping and oil refining are different. If you apply capital to over come the cost barrier of entering those businesses, you can still access customers and potentially put all that capital to work generating profits. With last-mile internet, if you lay in a redundant competitive network in a neighborhood - the capital efficiency of both networks goes down, with no mechanism to make that capital work more. You're limited to the houses in the neighborhood. So in that case you have high cost barriers, and natural monopoly conditions limiting how well that capital can be used to generate return...
    - ksk 12y ago
      >you can still access customers and potentially put all that capital to work generating profits. Not so much - http://en.wikipedia.org/wiki/Vertical_integration#Oil_industry http://en.wikipedia.org/wiki/Vertical_integration#Oil_indust...
      - digikata 12y ago
        If all the gas stations in an area are owned by Exxon & priced too high, the customer drives their car elsewhere. There is a very, very high capital barrier to entering the market, but customers still hold choice. You can probably observe some region-locking effects short of monopoly by relate the cost of gas in come areas with ability to choose alternatives. e.g. Driving in the middle of nowhere, there are few gas stations and the cost of gas is high. Redundant stations aren't built in competition to one another along those stretches because the volume of traffic isn't high enough along the 'network' of the road, but within the range of the typical car, some will drive on and others will be forced the stop. So even that isn't as airtight a natural monopoly as last-mile internet.
  - rtpg 12y ago
    Because some markets will tend towards consolidation ,especially things involving networks, because the economies of scale are so important to costs. So , left to their own devices, the unregulated market would always tend to a monopoly.
    - ksk 12y ago
      I am not proposing getting rid of regulation. Perhaps you meant to reply to someone else.
  - shmerl 12y ago
    Isn't there Sherman act already? Why can't it be applied to ISPs? I.e. there are existing laws which can put an end to anticompetitive behavior of ISPs, but no one applies them. So why would adding more laws improve anything?
    - ksk 12y ago
      Well anti-trust law are mostly applied on case by case basis. I believe the un-official term for judging is "workable competition". I don't know whether the ISP market passes that definition.
      - shmerl 12y ago
        There are also various prohibitions about collusion. And that's a major problem with ISPs, i.e. even if there are several in the area they agree not to compete and hold prices high for example. I never saw anyone applying these laws to ISPs so far. Not sure why that is, may be government is too much in their pocket to actually apply existing law.
deleted 12y ago
[deleted]
worklogin 12y ago
Maybe private companies shouldn't run the physical infrastructure - maybe it should be a public utility. In today's society, you need gas, electric, water and internet (which has replaced phone).
digikata 12y ago
> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. But if last-mile links are a natural monopoly (or at least demonstrably low competition markets), how do we get better broadband than we have now? We have data points from other nations that seem to indicate that publicly owned or open-access last-mile links create market conditions that deliver broadband more efficiently - both in lower cost and higher bandwidth. There is still competition - it just shifts to different market boundaries.
- cpitman 12y ago
  Do other countries also have problems with their roads and bridges being in disrepair? How about their water mains, do they break and wash out streets on a regular basis? US local governments do not seem to have a good record of maintaining public infrastructure, so why would public internet be any different?
- ksk 12y ago
  Okay, so you could to break down the ISP vertical into companies that only supply service and companies that only do the last-mile infrastructure. It would allow the government to regulate the industry without being involved in the supply side of things. One other option is to opt for a consumer ownership model where the each home pays for the bit of fiber that connects them to the neighborhood hub or w/e.
  - rosser 12y ago
    And Comcast would somehow like that better?
  - jfb 12y ago
    I would be happy with either (particularly the first) but politically the chances of something like that, which almost certainly would require legislation -- and would without question require a Sherman act prosecution from a Justice Department with some actual spine -- are approximately nil.
  - digikata 12y ago
enraged_camel 12y ago
>>I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. But much of the technology and infrastructure the ISPs use today was once built by tax-payer money.
- ksk 12y ago
  A ton of scientific research is done via government grants. Should we have no for-profit companies there too? No, that would be absurd.
  - deciplex 12y ago
    We can have for-profit companies in those industries, sure, but if the taxpayer is footing the bill for some of the research, then some of the fruits of that research ought to go back to the taxpayer.
cbd1984 12y ago
> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. Why? If the Free Market Fundamentalists are correct, the for-profit company should have it all over the tax-funded service, because the company would be interested in efficiency and technological advances and so on, as opposed to just being a... welfare... thing... like the US Post Office and everything else which, per dogma, Does Not Work. > You can prevent rent-seeking by repealing any "sponsored" laws that protect their monopoly. Like the property laws which prevent others from using the wires they pay to put in, or do you think three cable companies should mean three completely separate sets of coaxial cables running everywhere in town?
- ksk 12y ago
  Why is it unfair? Because unlike companies, governments¹ can function long-term even if they don't balance budgets. ¹Modulo obvious caveats.
  - lsiebert 12y ago
    The vast majority of local municipalities have to balance their budget. And their options for credit are vastly more constrained. And they have essential services that can not go unfunded. A private company that thinks it can be profitable can go to a bank. A city will probably have to have a bond on the ballot. And a city can't really get out of things like road repair, law enforcement, etc (they can subcontract, but they still have to provide service) whereas a private company can sell of or shut down any unprofitable aspect of it's business. So on the surface, comcast or whomever has a lot more leeway then a city. The issue is, a service like last mile broadband is not incredibly profitable, for a telecom. But if a city can do it, or have a local company do it and it doesn't cost too much (they can waive fees for running cable, or whatever) then it may pay for itself, at least in part, because not only do they benefit from whatever they collect in fees, but broadband can increase local tax revenue (a house with 1000mb/s internet is worth more then a house with 2mb internet).
  - dsrguru 12y ago
    I think the parent is asking/claiming that public options are almost universally less desirable than the product of self-interest in the presence of competition, so their main effect is just to ensure that the private would-be monopolies need to actually provide a good service. In domains like Internet infrastructure and health insurance which are empirically pretty terrible when there's no public option, I think there's a lot to be said for that argument. Is it "fair" for a monopoly to have to compete against an organization that has nearly infinite resources but terribly inefficient operating ability? I don't know. Maybe yes, maybe no. Is it fair to huge ISPs to impose net neutrality on them? Maybe yes, maybe no. But it's no less fair for them than not having net neutrality would be for companies who want to use that infrastructure. It's certainly no less fair than life would be for a child who can't afford access to health care in a black market-like total laissez-faire economic system. I'd prefer to live in an imperfect implementation of capitalism that tries to regulate out negative externalities when possible (despite often failing) and provide as much fairness for as many people as possible, to one that provides so much "fairness" to certain corporations that they can make the game unfair for everyone else, people and companies alike.
rnovak 12y ago
I don't think it's unfair at all to ask a multi-billion dollar company that doesn't compete with anyone to compete with someone. Comcast alone reported a $1,900,000,000 PROFIT in the first 3 months of 2014. To paraphrase Sam Waterston: "What can you buy for $2 billion that you can't still buy for $1.2 billion?"
- tanderson92 12y ago
  It's amusing and ironic that your username ends with 'novak' given to whom Waterston was speaking!
  - rnovak 12y ago
    edit: Yeah, it's always kind of depressing when the family name is shared with the antagonist of the story
    - deleted 12y ago
      [deleted]
Retra 12y ago
Those for-profit companies have been at it for a while, and it's clear they don't provide acceptable services. Maybe they should have thought about this situation a little earlier? Then none of this would be necessary, nor even considered. Regardless, this issue is a municipal government's decision-making. If a municipal government doesn't like how their ISPs are acting, they should be able to do something about it. There's no reason for it to be _illegal_, even if it is a bad idea in some places: the local government should be able to do what they think is best for them. Also, if ISP's have so little trouble making obscene profits, there should be little risk of the government failing to do the same.
mullingitover 12y ago
> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. Those for-profit companies have been granted extremely valuable rights-of-way by the municipal governments without needing to negotiate individually with each and every landowner whose property they cross with their lines. Their networks wouldn't be nearly as valuable if they had to negotiate and potentially (gasp!) share revenue with landowners.

by ksk 12y ago

jfb 12y ago

The problem is that you have an asymmetry in resources between e.g. local officials who might want to stand up a fiber network and a company the size of Verizon, who very badly do not want this to happen. You need countervailing size, and in the US only the federal government has it.

ksk 12y ago
The problem of asymmetry of resources exists in all domains that have high sunk costs. To reduce monopolies, using your logic ("you need countervailing size") the government would have to get involved in all of the other industries like shipping, oil refining, TV networks, etc. Instead, why not change the law (if needed) to prevent monopolies from happening?
- GhotiFish 12y ago
  Friendly reminder to people of HN. Please don't downvote to disagree. Is your objective to discourage dissenting opinion? Seriously? That's not healthy for a community. ksk's comments were not out of place.
  - jfb 12y ago
    No, he's asking very good questions.
- bduerst 12y ago
  The government already does, for regional monopolies (power, water, sewer, transportation, etc.) The problem isn't that the government should prop-up start ups in this specific industry to prevent a monopoly, but that the government should embrace communications as a regional monopoly - i.e. own the utility infrastructure and reduce costs for the entire economy. Obviously they can't nationalize the current companies, but they can start building public infrastructure.
  - ksk 12y ago
    Classification of broadband as a public utility is a related, but separate argument.
    - bduerst 12y ago
      Not when you try to extrapolate a natural monopoly to all industries with sunk costs - then it becomes a counterpoint.
- digikata 12y ago
  Shipping and oil refining are different. If you apply capital to over come the cost barrier of entering those businesses, you can still access customers and potentially put all that capital to work generating profits. With last-mile internet, if you lay in a redundant competitive network in a neighborhood - the capital efficiency of both networks goes down, with no mechanism to make that capital work more. You're limited to the houses in the neighborhood. So in that case you have high cost barriers, and natural monopoly conditions limiting how well that capital can be used to generate return...
  - ksk 12y ago
    >you can still access customers and potentially put all that capital to work generating profits. Not so much - http://en.wikipedia.org/wiki/Vertical_integration#Oil_industry http://en.wikipedia.org/wiki/Vertical_integration#Oil_indust...
    - digikata 12y ago
      If all the gas stations in an area are owned by Exxon & priced too high, the customer drives their car elsewhere. There is a very, very high capital barrier to entering the market, but customers still hold choice. You can probably observe some region-locking effects short of monopoly by relate the cost of gas in come areas with ability to choose alternatives. e.g. Driving in the middle of nowhere, there are few gas stations and the cost of gas is high. Redundant stations aren't built in competition to one another along those stretches because the volume of traffic isn't high enough along the 'network' of the road, but within the range of the typical car, some will drive on and others will be forced the stop. So even that isn't as airtight a natural monopoly as last-mile internet.
- rtpg 12y ago
  Because some markets will tend towards consolidation ,especially things involving networks, because the economies of scale are so important to costs. So , left to their own devices, the unregulated market would always tend to a monopoly.
  - ksk 12y ago
    I am not proposing getting rid of regulation. Perhaps you meant to reply to someone else.
- shmerl 12y ago
  Isn't there Sherman act already? Why can't it be applied to ISPs? I.e. there are existing laws which can put an end to anticompetitive behavior of ISPs, but no one applies them. So why would adding more laws improve anything?
  - ksk 12y ago
    Well anti-trust law are mostly applied on case by case basis. I believe the un-official term for judging is "workable competition". I don't know whether the ISP market passes that definition.
    - shmerl 12y ago
      There are also various prohibitions about collusion. And that's a major problem with ISPs, i.e. even if there are several in the area they agree not to compete and hold prices high for example. I never saw anyone applying these laws to ISPs so far. Not sure why that is, may be government is too much in their pocket to actually apply existing law.

deleted 12y ago

[deleted]

worklogin 12y ago

Maybe private companies shouldn't run the physical infrastructure - maybe it should be a public utility. In today's society, you need gas, electric, water and internet (which has replaced phone).

digikata 12y ago

> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. But if last-mile links are a natural monopoly (or at least demonstrably low competition markets), how do we get better broadband than we have now? We have data points from other nations that seem to indicate that publicly owned or open-access last-mile links create market conditions that deliver broadband more efficiently - both in lower cost and higher bandwidth. There is still competition - it just shifts to different market boundaries.

cpitman 12y ago
Do other countries also have problems with their roads and bridges being in disrepair? How about their water mains, do they break and wash out streets on a regular basis? US local governments do not seem to have a good record of maintaining public infrastructure, so why would public internet be any different?
ksk 12y ago
Okay, so you could to break down the ISP vertical into companies that only supply service and companies that only do the last-mile infrastructure. It would allow the government to regulate the industry without being involved in the supply side of things. One other option is to opt for a consumer ownership model where the each home pays for the bit of fiber that connects them to the neighborhood hub or w/e.
- rosser 12y ago
  And Comcast would somehow like that better?
- jfb 12y ago
  I would be happy with either (particularly the first) but politically the chances of something like that, which almost certainly would require legislation -- and would without question require a Sherman act prosecution from a Justice Department with some actual spine -- are approximately nil.
- digikata 12y ago

enraged_camel 12y ago

>>I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. But much of the technology and infrastructure the ISPs use today was once built by tax-payer money.

ksk 12y ago
A ton of scientific research is done via government grants. Should we have no for-profit companies there too? No, that would be absurd.
- deciplex 12y ago
  We can have for-profit companies in those industries, sure, but if the taxpayer is footing the bill for some of the research, then some of the fruits of that research ought to go back to the taxpayer.

cbd1984 12y ago

> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. Why? If the Free Market Fundamentalists are correct, the for-profit company should have it all over the tax-funded service, because the company would be interested in efficiency and technological advances and so on, as opposed to just being a... welfare... thing... like the US Post Office and everything else which, per dogma, Does Not Work. > You can prevent rent-seeking by repealing any "sponsored" laws that protect their monopoly. Like the property laws which prevent others from using the wires they pay to put in, or do you think three cable companies should mean three completely separate sets of coaxial cables running everywhere in town?

ksk 12y ago
Why is it unfair? Because unlike companies, governments¹ can function long-term even if they don't balance budgets. ¹Modulo obvious caveats.
- lsiebert 12y ago
  The vast majority of local municipalities have to balance their budget. And their options for credit are vastly more constrained. And they have essential services that can not go unfunded. A private company that thinks it can be profitable can go to a bank. A city will probably have to have a bond on the ballot. And a city can't really get out of things like road repair, law enforcement, etc (they can subcontract, but they still have to provide service) whereas a private company can sell of or shut down any unprofitable aspect of it's business. So on the surface, comcast or whomever has a lot more leeway then a city. The issue is, a service like last mile broadband is not incredibly profitable, for a telecom. But if a city can do it, or have a local company do it and it doesn't cost too much (they can waive fees for running cable, or whatever) then it may pay for itself, at least in part, because not only do they benefit from whatever they collect in fees, but broadband can increase local tax revenue (a house with 1000mb/s internet is worth more then a house with 2mb internet).
- dsrguru 12y ago
  I think the parent is asking/claiming that public options are almost universally less desirable than the product of self-interest in the presence of competition, so their main effect is just to ensure that the private would-be monopolies need to actually provide a good service. In domains like Internet infrastructure and health insurance which are empirically pretty terrible when there's no public option, I think there's a lot to be said for that argument. Is it "fair" for a monopoly to have to compete against an organization that has nearly infinite resources but terribly inefficient operating ability? I don't know. Maybe yes, maybe no. Is it fair to huge ISPs to impose net neutrality on them? Maybe yes, maybe no. But it's no less fair for them than not having net neutrality would be for companies who want to use that infrastructure. It's certainly no less fair than life would be for a child who can't afford access to health care in a black market-like total laissez-faire economic system. I'd prefer to live in an imperfect implementation of capitalism that tries to regulate out negative externalities when possible (despite often failing) and provide as much fairness for as many people as possible, to one that provides so much "fairness" to certain corporations that they can make the game unfair for everyone else, people and companies alike.

rnovak 12y ago

I don't think it's unfair at all to ask a multi-billion dollar company that doesn't compete with anyone to compete with someone. Comcast alone reported a $1,900,000,000 PROFIT in the first 3 months of 2014. To paraphrase Sam Waterston: "What can you buy for $2 billion that you can't still buy for $1.2 billion?"

tanderson92 12y ago
It's amusing and ironic that your username ends with 'novak' given to whom Waterston was speaking!
- rnovak 12y ago
  edit: Yeah, it's always kind of depressing when the family name is shared with the antagonist of the story
  - deleted 12y ago
    [deleted]

Retra 12y ago

Those for-profit companies have been at it for a while, and it's clear they don't provide acceptable services. Maybe they should have thought about this situation a little earlier? Then none of this would be necessary, nor even considered. Regardless, this issue is a municipal government's decision-making. If a municipal government doesn't like how their ISPs are acting, they should be able to do something about it. There's no reason for it to be _illegal_, even if it is a bad idea in some places: the local government should be able to do what they think is best for them. Also, if ISP's have so little trouble making obscene profits, there should be little risk of the government failing to do the same.

mullingitover 12y ago

> I personally think its rather unfair to ask a for-profit company to compete against a tax funded service. Those for-profit companies have been granted extremely valuable rights-of-way by the municipal governments without needing to negotiate individually with each and every landowner whose property they cross with their lines. Their networks wouldn't be nearly as valuable if they had to negotiate and potentially (gasp!) share revenue with landowners.