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I'll assume that your comments about socialism aren't simply trolling and respond that even in a broadly capitalist system, network infrastructure is effectivel
by RyanMcGreal 17y ago
I'll assume that your comments about socialism aren't simply trolling and respond that even in a broadly capitalist system, network infrastructure is effectively a natural monopoly.
Due to physical property issues, it needs public rights-of-way for deployment and maintenance. Also, fixed infrastructure costs are very high and only become cost effective with widespread buy-in and positive network externalities.
It makes no economic sense to build two or more parallel networks side-by-side, with each capturing only a fraction of the potential customers.
As a result, an unregulated telco in a natural monopoly has no competition and minimal market incentives to innovate and improve service. Consumers cannot "simply choose another supplier" because other suppliers wouldn't be crazy enough to sink the necessary huge capital investment into a competing service.
In general, the options to deal with this situation are:
* Public ownership and/or administration.
* Regulated monopoly with mandatory service quality benchmarks and profit reinvestment requirements.
* Introduce competition by forcing telcos to offer wholesale service to resellers.
* Introduce competition through public investment in parallel facilities.
* Introduce competition by allowing network service providers to leverage their networks to offer different services (e.g. cablecos offering telephony, telcos offering streaming video).