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I'm torn. Do these state bodies (Chattanooga power utility) have a state mandated monopoly or protection? Do they use those protected profits to build a network

I'm torn. Do these state bodies (Chattanooga power utility) have a state mandated monopoly or protection? Do they use those protected profits to build a network which they then sell to consumers? I would be upset if my competitor had that advantage and I didn't (note I'm wondering not certain that that's the case here)

lostcolony 12y ago
No. Chattanooga has a slight competitive advantage because they needed the network in place for running a smart grid anyway, so it made sense to just roll out fiber at the same time as they rolled out electric lines, and become an ISP. Of course, I say that tongue in cheek, because there was no real competition in the area; all the big ISP players were indicating they had no plans to fully cover Chattanooga any time soon (they did, of course, immediately start lobbying against EPB). The incumbent ISPs, on the other hand, have (well, had) state mandated protection against non-profit municipal ISPs, -and- had a huge amount of governmental funding to roll out broadband initially (using the 90s definition) giving them, effectively, a huge leg up against any would be competitors.
snsr 12y ago
Competitive advantage or not, there is absolutely no reason municipalities or states should be prevented from running fiber throughout their own communities.
deleted 12y ago
[deleted]
AnthonyMouse 12y ago
> Do they use those protected profits to build a network which they then sell to consumers? I don't understand this argument at all. Having access to capital isn't an "unfair advantage" -- it's a hard prerequisite to building a network. Nobody can do it without that. And sources of money are never unfair. If somebody has easier access to capital than you, that isn't an "unfair" advantage, it's a completely reasonable advantage. It isn't unreasonable for large entities to invest in things they want to just because they have more money than you. The only way it would be unfair is if they were operating below cost in the long term, which has nothing to do with where they get the money and which they aren't doing and have no reason to do.
- jusben1369 12y ago
  Hmmm. Let's say people in your state love bananas and the average price of a banana is $1 with a profit of 20 cents. And your friend who is married to the daughter of the governor suddenly has an exclusive license to sell bananas in your state. What do you think will happen to the price of bananas and subsequently what do you think happens to profits your friend starts accruing? Ok, so far so good you don't really care because you don't like bananas. You are your 10 friends sell apples and you all compete hard against each other and sell an Apple for between 95 cents and $1.05 cents. One day your friend thinks the Apple business looks interesting. He's raised the price of bananas to $1.20 and is now making 40 cents a banana. Now he starts selling Apples. At 70 cents each. 10 cents below cost. He's losing 10 cents on every apple but he doesn't care because he makes 40 cents on every banana he's selling. Naturally in 9 months you and your 10 friends are out of business. You can't sell Apples at a loss. Once you leave he raises the price of Apples to $1.10. Feel tempted to jump back in? No way, he'll just drop them to 70 cents each for a while and crush you a second time. All of this happens because your friend has an unfair advantage in terms of his access to capital. Power utilities (and cable and internet too) are great examples of law mandated monopolies who generate protected profits. Taking that protected revenue stream to subsidize your entrance into a competitive marketplace isn't fair.
  - gonzo 12y ago
    As if VZW didn't have access to cheap money. RBABs, anyone?
    - jusben1369 12y ago
      Yes but cheap money is very different to protected money.
  - AnthonyMouse 12y ago
    You're talking about antitrust, which is ugly and complicated, and you're making several mistakes. But this is the fundamental one: > All of this happens because your friend has an unfair advantage in terms of his access to capital. It really has nothing to do with that at all. A dollar is a dollar. If it takes a billion dollars to sell below cost for long enough that all your competitors to leave the market permanently, it doesn't make any difference where you got the money. Which is why the thing you're describing is illegal regardless of the source of the money. The banana monopolist is not allowed to do it and neither is Warren Buffet or Bank of America or anybody else.

lostcolony 12y ago

No. Chattanooga has a slight competitive advantage because they needed the network in place for running a smart grid anyway, so it made sense to just roll out fiber at the same time as they rolled out electric lines, and become an ISP. Of course, I say that tongue in cheek, because there was no real competition in the area; all the big ISP players were indicating they had no plans to fully cover Chattanooga any time soon (they did, of course, immediately start lobbying against EPB). The incumbent ISPs, on the other hand, have (well, had) state mandated protection against non-profit municipal ISPs, -and- had a huge amount of governmental funding to roll out broadband initially (using the 90s definition) giving them, effectively, a huge leg up against any would be competitors.

snsr 12y ago

Competitive advantage or not, there is absolutely no reason municipalities or states should be prevented from running fiber throughout their own communities.

deleted 12y ago

[deleted]

AnthonyMouse 12y ago

> Do they use those protected profits to build a network which they then sell to consumers? I don't understand this argument at all. Having access to capital isn't an "unfair advantage" -- it's a hard prerequisite to building a network. Nobody can do it without that. And sources of money are never unfair. If somebody has easier access to capital than you, that isn't an "unfair" advantage, it's a completely reasonable advantage. It isn't unreasonable for large entities to invest in things they want to just because they have more money than you. The only way it would be unfair is if they were operating below cost in the long term, which has nothing to do with where they get the money and which they aren't doing and have no reason to do.

jusben1369 12y ago
Hmmm. Let's say people in your state love bananas and the average price of a banana is $1 with a profit of 20 cents. And your friend who is married to the daughter of the governor suddenly has an exclusive license to sell bananas in your state. What do you think will happen to the price of bananas and subsequently what do you think happens to profits your friend starts accruing? Ok, so far so good you don't really care because you don't like bananas. You are your 10 friends sell apples and you all compete hard against each other and sell an Apple for between 95 cents and $1.05 cents. One day your friend thinks the Apple business looks interesting. He's raised the price of bananas to $1.20 and is now making 40 cents a banana. Now he starts selling Apples. At 70 cents each. 10 cents below cost. He's losing 10 cents on every apple but he doesn't care because he makes 40 cents on every banana he's selling. Naturally in 9 months you and your 10 friends are out of business. You can't sell Apples at a loss. Once you leave he raises the price of Apples to $1.10. Feel tempted to jump back in? No way, he'll just drop them to 70 cents each for a while and crush you a second time. All of this happens because your friend has an unfair advantage in terms of his access to capital. Power utilities (and cable and internet too) are great examples of law mandated monopolies who generate protected profits. Taking that protected revenue stream to subsidize your entrance into a competitive marketplace isn't fair.
- gonzo 12y ago
  As if VZW didn't have access to cheap money. RBABs, anyone?
  - jusben1369 12y ago
    Yes but cheap money is very different to protected money.
- AnthonyMouse 12y ago
  You're talking about antitrust, which is ugly and complicated, and you're making several mistakes. But this is the fundamental one: > All of this happens because your friend has an unfair advantage in terms of his access to capital. It really has nothing to do with that at all. A dollar is a dollar. If it takes a billion dollars to sell below cost for long enough that all your competitors to leave the market permanently, it doesn't make any difference where you got the money. Which is why the thing you're describing is illegal regardless of the source of the money. The banana monopolist is not allowed to do it and neither is Warren Buffet or Bank of America or anybody else.