Net Neutrality Is Not 'The Government Takeover Of The Internet' -- Or Why Republicans Should Support Reclassification
from the myths dept
One of the general rules that we try to follow here on Techdirt is to avoid anything that has to do with "partisan politics" or debates that involve "Democrats" v. "Republicans." Thankfully, many of the tech issues that we discuss don't fall neatly into one camp or the other -- issues around intellectual property, privacy, innovation and surveillance seem to have supporters and detractors on both sides of the traditional aisle. Sometimes that's because the issue is so "new" that it hasn't been twisted and distorted into a partisan fight yet. Sometimes (more frequently) it's because these issues aren't ones that get enough attention at all. Net neutrality was like that in the early days, a decade ago. It was a legitimate concern that was being raised about broadband providers potentially abusing market power. Somewhere around 2004 or 2005, however, something shifted in the debate, and it suddenly became a "partisan" issue with Democrats tending to be "for" net neutrality and Republicans tending to be against it. At this point, the debate became stupid. This often seems to happen with partisan issues. Once the "Parties" take over (and this is true of both parties), pretty much all debate on the relevant facts goes out the window, and it all becomes hyperbole and rhetoric. That has absolutely been the case with the net neutrality debate as well.So, while we don't normally dive into any kind of partisan spin on things, because the rhetoric has become absolutely ridiculous on net neutrality, it seemed worth discussing why the Republican claims that reclassification under Title II is some sort of "government takeover of the internet" or "regulating the internet" are just wrong. And we'll go one step further and point out why Republicans should actually be standing right along side their Democratic colleagues in supporting reclassification. This shouldn't be a partisan issue at all, but a bipartisan effort to make sure that the internet remains free and open for true innovation and competition (the kind of thing that both parties should agree on).
We'll start by pointing to a fantastic article from James Heaney, a self-identified conservative, who goes into great detail explaining why free marketers should support reclassification of broadband access by the FCC. He covers a lot of ground that we've discussed before, but does so in a clear and concise manner that makes it easy to read. In short, he notes that free markets and competition are great for innovation -- and that while regulation can often get in the way of those things, so can monopoly power. Further, he highlights how internet infrastructure is effectively a natural monopoly (just like we discussed... a decade ago). And, thus, it makes sense to have very limited regulation to keep the natural monopoly from getting out of control and more importantly, to stop the natural monopoly from hindering all sorts of other innovation. Heaney's argument goes into a lot more detail, including a discussion of why the FCC was crazy wrong in its 2002 decision to declare cable a Title I "information service" rather than a Title II "telecommunications service," and why now is the time for the FCC to correct that mistake. Either way, he notes, the nature of broadband -- like highways or electricity -- makes it clear that it's a natural monopoly:
That’s because – guess what! – internet service is a market where natural monopolies prevail. Just like with the electric company, most of the cables and most of the network are already purchased and deployed. Adding a new customer often means literally just flipping a switch at HQ, or – at most – laying a few yards of cable to an existing network. In the end, the more the company sells, the less it costs them. Over time, the big companies beat the small ones on cost, gobble them up… then lobby the government to freeze out potential competitors, while jacking up costs and slashing service quality,.From there, he points out that often the best way to deal with natural monopolies is through the threat of a government crackdown, rather than actual regulation. This was actually a position that we supported for a long time as well. I can't seem to find a reference to it now, but I'm pretty sure that this was the suggestion of Professor Ed Felten as well, noting that a sort of "Sword of Damocles" dangling above broadband providers' heads might be the best form of net neutrality as we learned more. However, as Heaney notes, we have learned more and that plan has now failed, thanks to the appeals court ruling in favor of Verizon (Heaney incorrectly says it's Comcast -- possibly confusing it with a different net neutrality lawsuit). And, thus, he notes, without the hovering threat, the playing field is now open for monopoly-power abuse -- which is the kind of thing that Republicans and conservatives should be against:If you have ever interacted with Comcast in any way, you already know about their “service” “quality” – the infinite wait times, the incompetent “help,” the constant upselling, the blatant lies (usually about credits they promise), the desperate measures. Since they are our local monopoly, I don’t hear too much about the other monopolists out there, but I understand Time-Warner isn’t any better. It is a fact that customers despise their ISPs on average:
What you may not realize is that they are overcharging you, too, like textbook monopolists.
So now the delay-and-harass strategy has failed. The monopolists have a blank check from the law, and they are exploiting it with tremendous rapacity (as we’ve seen in the series of Netflix stickups, which picked up the moment net neutrality collapsed). Perhaps the next most attractive option is to pull a Reagan and just break up the major ISPs into smaller companies. Unfortunately, there is no obvious legal way to do that. The Bell breakup resulted from a lot of special circumstances, some plain-as-day antitrust violations, and an 8-year court battle. Moreover, breakup would probably not solve the problem: the wee ISPs would still have local monopolies in many areas, and economics 101 would force them to immediately begin reconsolidating into new national monopolies (as the Baby Bells are doing today). In the long run, the consolidation and price gouging of natural monopolies are probably inevitable. It’s a cold, heartless law of economics: the same laws that allow the government to increase revenues by cutting taxes will eventually compel certain telecom markets to become monopolies, no matter how many times we break them up.Given that, he notes, the next best option is Title II. He notes, correctly, that the early days of the internet saw growth and investment in broadband thrive under Title II (contrary to claims to the contrary) and how the telcos today still beg to be classified under Title II for parts of their infrastructure:
To sum up, the only reason the Internet isn’t protected from monopolies today is because, in 2002, the FCC decided to experiment with not regulating the Internet. Almost immediately thereafter, the telecoms began fighting the core Internet principle of network neutrality, aiming to take control of the Internet for themselves and impose monopoly prices on consumers. All attempts to restrain them outside of Title II have failed. The Wall Street Journal regularly argues that the Internet has thrived because ISPs have never been regulated like phone companies. This is false, and the Journal should know better. Indeed, the years of the Web’s most explosive growth and development happened under the auspices of strict common carrier regulation, identical to those of phone companies. (Heck, even today, limited portions of Verizon’s high-speed fiber network, FiOS, fall under Title II!)His full piece is much longer and well worth reading, but I have one further quibble with it, which gets back to the underlying claim about all of this that Title II is somehow "regulating the internet." It's not. It's never been about that at all. Quite the opposite, in fact. It's about choosing which form of regulation internet infrastructure will be ruled by. The anti-net neutrality crew like to make this mistake (and they make it often), trying to pretend that internet infrastructure is the internet. It's not. And internet infrastructure has always been heavily regulated, often out of necessity. In order to allow a cable company or a telco to install broadband infrastructure, local cities and towns often did special deals, handing over subsidies, rights of way, pole rights, tax breaks, franchise agreements and other such things to the broadband players. The idea that internet infrastructure has ever been "a free market" is laughable. No matter what kind of infrastructure was being installed, it's always relied on some sort of deal with government in exchange for access. As such, it's entirely sensible to argue that there should be certain requirements in exchange for such public support for their network, and that includes keeping the network itself free and open to use.
The fix to the growing monopoly problem is very, very easy, and several courts have pointed to it over the past several years: simply revisit the obviously nonsensical ruling of 2002. Overturn it, and (correctly) decide this time that Internet Service Providers are “telecommunications providers”. Instantly, every ISP in America would go back to common carrier status, and net neutrality regulation wouldn’t just become easy; in many ways, neutrality is baked into Title II. The FCC would gain many tools to reduce the risk of natural monopoly where it doesn’t exist, or its effects where it does. The market would be saved, the consumer freed from the tyranny of monopoly.
And that's really what net neutrality is all about. It's not about "regulating the internet," but making sure that the big broadband players don't "regulate" the internet themselves, by setting up toll booths and other limitations, allowing them to pick the winners and losers. It's about blocking monopolistic powers from putting in place systems to extract monopoly rents that harm the public and limit innovation and consumer surplus. Net neutrality frees the internet from such monopolistic regulations by putting common carrier rules at the infrastructure level to make sure that there's true competition and freedom at the service level. And that makes total sense, because you don't want competition of natural monopolies, you want to make sure natural monopolies don't block competition.
Given that Republicans like to claim that they're pro-innovation, pro-business and pro-competition, they should absolutely be in favor of net neutrality as well because it creates the environment where there will be real competition and innovation at the service level. The argument that they're using against it is to pretend that Title II regulates "the internet" when it really just changes the existing style of regulation for internet infrastructure, preventing a few monopolistic powers from squeezing monopoly rents from everyone else. Normally stopping monopolies is supposed to be a key tenant of conservative economics. It honestly seems like the only reason that isn't the case here is because big broadband lobbyists have carefully spun this tale (and heavily funded some campaigns) to pretend that what they're trying to stop is "regulation of the internet."
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: conservatives, economics, government takeover of the internet, infrastructure, monopolies, natural monopoly, net neutrality, reclassification, regulations, republicans, title ii
Reader Comments
Subscribe: RSS
View by: Time | Thread
However, Comcast's counterpoint has a lot of zeros at the end of it.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re: wtf indeed
http://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
RayGun was simply in the white house at the time, had little to do with it.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Democrats were against Title II before they were for it
The letter is available here:
http://cbit.org/wp-content/uploads/2014/06/Senate-Letter.pdf
[ link to this | view in chronology ]
Re: Democrats were against Title II before they were for it
Yes. And we live in a very different world than in 1998.
It was competitive thanks to the fact that ISP service was all BUILT ON TOP OF TITLE II infrastructure telephone lines.
That's now gone.
Nice revisionism though.
[ link to this | view in chronology ]
Re: Re: Democrats were against Title II before they were for it
And I agree the telcom infrastructure has always been Title II (but not the cable infrastructure).
[ link to this | view in chronology ]
Re: Re: Re: Democrats were against Title II before they were for it
It now goes through cables line which are not title II.
This isn't complex...what don't you get?
[ link to this | view in chronology ]
Re: Re: Re: Re: Democrats were against Title II before they were for it
True, but what does that have to do with the letter from Dems asking the FCC to not apply Title II to broadband?
[ link to this | view in chronology ]
Re: Re: Re: Democrats were against Title II before they were for it
[ link to this | view in chronology ]
Re: Re: Re: Re: Democrats were against Title II before they were for it
[ link to this | view in chronology ]
No one is against net neutrality
Net neutrality left the rails because the debate addresses a theoretical solution to a theoretical problem. There exists no one with actual FCC experience (required to file form 499) in favor of expanding FCC authority to IP networks. The enthusiasm comes from folks who embrace a theory of regulatory virtue that does not exist. Free Press offered a comprehensive list of the actual problems attributable to net neutrality in the last decade. They found 12 among trillions of economic and social transactions associated with IP networks.
The present transition to all-IP networks changes the incentives for all players in the communication ecosystem. Pointing to behaviors associated with networks in the last century does not tell us anything about the new world.
The desire to give the FCC authority over IP networks reflects anxiety about the future and not the past. This is a fear based rationale. Anyone with actual experience dealing with the FCC will tell you the cure is much worse than the disease.
[ link to this | view in chronology ]
Re: No one is against net neutrality
[ link to this | view in chronology ]
Re: Re: No one is against net neutrality
[ link to this | view in chronology ]
Re: Re: Re: No one is against net neutrality
I suspect once NN proponents are successful in applying Title II to ISPs, they will oppose every ISP request for forbearance.
[ link to this | view in chronology ]
Re: No one is against net neutrality
The problem is not theoretical. It's actual.
"expanding FCC authority to IP networks"
This is a bit pedantic, but while the internet is an IP network, not all IP networks are the internet. This is not about regulation of IP networks, but of internet access.
"The enthusiasm comes from folks who embrace a theory of regulatory virtue that does not exist."
Incorrect. The "enthusiasm" comes from people seeing a way that the current problem can be solved within our lifetimes. There are no effective alternative solutions being presented.
"Anyone with actual experience dealing with the FCC will tell you the cure is much worse than the disease."
I have actual experience dealing with the FCC and I don't agree with this sentiment. The disease is pretty bad, and as painful as it can be to deal with the FCC, it looks to be the lesser of evils at the moment.
[ link to this | view in chronology ]
Re: No one is against net neutrality
Not at all true. AT&T and Verizon have repeatedly said that they would like to do paid prioritization. Verizon's own filing with the FCC in this last comment period is fairly explicit.
It's not theoretical. It's real.
The desire to give the FCC authority over IP networks reflects anxiety about the future and not the past. This is a fear based rationale. Anyone with actual experience dealing with the FCC will tell you the cure is much worse than the disease.
You know that, as in the past, I'd been wary about net neutrality regulations, but over the past decade, the situation has changed. I'm against Title II for any services *on top* of the basic infrastructure -- but Title II for the core infrastructure makes sense.
[ link to this | view in chronology ]
Re: Re: No one is against net neutrality
Wow, this is pretty impressive coming from a guy who pushes innovation all over the place.
Title II for infrastructure could have the horrible result of locking us into the current technology, and make it harder (if not impossible) for innovation in the field. Essentially, if you dictate that all last mile must be municipal or utility grade service, then you risk them locking into a current technology and not moving forward.
Can you imagine the fight 10 years from now when terrabit connectivity is easy and cheap, and the utility companies are still using DSL that maxes at about 50 meg?
For that matter, a much more simple situation: Are you willing to tell Google Fiber to shut down, give their assets to the utility last mile provider, and go back to just being an ISP?
While I am a big supporter of the idea of last mile utility in general, I can also see the drawbacks. A rush to Title II this stuff without a real plan going forward would mean the US would likely slip even further behind as red tape and government worker types get involved.
[ link to this | view in chronology ]
Re: Re: Re: No one is against net neutrality
[ link to this | view in chronology ]
T-Bit Data Rates are a False Argument. (to "Whatever," #42)
In terms of efficient video compression, T-bit data rates are ludicrously high. The whole principle of efficient video compression is that you find a level of representation at which bits of image are stable for at least several seconds; you save that representation; and then you transform it during playback. This is similar in principle to redrawing characters from bytecodes and scalable fonts. That said, a megabit is a lot. If each bit means something, it is hard to see how a viewer could take in information at that rate. The movie industry favors a very low signal/noise ratio, because the movie industry wants films to be too bulky to travel over the internet.
However, I anticipate that video compression will become better over time, and that video files will shrink.
Imagine that there was a man who hated the public post office, because he believed, correctly, that the public post office is vital to democracy, and this man hated democracy. So this man demanded that all written matter be carved on giant stone tablets, weighing a thousand pounds each, with a view to making it impossible for a postman to carry around a bag of different written matter, addressed to various and sundry people. Well, the old arguments are going forward again in new frameworks.
"Whatever" is simply reproaching the postman for not being able to deliver something which weighs twelve thousand pounds.
[ link to this | view in chronology ]
Re: Re: Re: No one is against net neutrality
So, not much different than now, then. The current infrastructure is at least 10 years behind as it is. The current players have a strong disincentive to upgrade (or, in many cases, even adequately maintain) the pipes, and they tend not to. The effects you fear are in play right now.
[ link to this | view in chronology ]
Re: No one is against net neutrality
Except when they are.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
Anyone want a government owned and controlled by the CEO of Comcast representing only the interests of Comcast stockholders?
[ link to this | view in chronology ]
Re: Re:
This, a million times. It's amazing how hard it is for people to understand this point. Government is inevitable, whether it's corporate, democratic, representative, whatever. The only question is how much influence we'll have over whatever the government consists of.
The "privatize everything" crowd are really arguing for a larger government than we have now, but one that is more expensive and less responsive to the people than we have even now.
[ link to this | view in chronology ]
Monopolies
- The telcos do their damnedest to ensure that the state PUC/PSC doesn't allow anyone else to bring telco-style lines out to customers
- The cable companies do their damnedest to ensure that the local municipalities franchise-authorities continue to renew their monopoly agreements every six years or so.
If Google Fiber, Sonic.net, and Community Fiber Networks are showing anything, it's that there is NOT some fictitious "natural monopoly".
PEOPLE ARE TRYING TO COMPETE AND BEING LIMITED IN THEIR ABILITY TO DO SO BY THE LEGAL SYSTEM.
Go back and re-read that sentence, because it's important.
It will certainly take a period of "regulated competition" (competitive-wholesale-access, etc.) to undo decades of statutory monopoly, but *that* is where attention needs to be focused.
[ link to this | view in chronology ]
Re: Monopolies
One of the good things that would result from Title II is that it would encourage a differentiation between those two things.
[ link to this | view in chronology ]
Re: Monopolies
Not ISPs, but the infrastructure. You're confusing the two as if they're the same. They're often the same, but they don't need to be.
I'd be fine with service providers separate from the infrastructure providers not being classified as such, but the core infrastructure is a natural monopoly.
[ link to this | view in chronology ]
Re: Re: Monopolies
You're ignoring the point that there have been NUMEROUS people trying to compete against existing installed-plant -- with their own outside-plant -- and the legal system has been used to hinder their ability to do so.
If it was a natural monopoly, nobody else would want to do that. But there's plenty of people trying to do so.
[ link to this | view in chronology ]
Re: Re: Re: Monopolies
If the connection point was open, and I could choose my provider, from all exiting providers (not just the current providers), instead of the 'regulated' limitation of provider choice, there would be no monopoly. This limits the regulation to the infrastructure, not the ISP's themselves.
After that, my concern is that some, if not all, ISP's are also content providers, and tend to favor THEIR content over others content. For me, this is as big a problem as the lack of connection choice. It is an attempt to create another monopoly, a term that should remain relegated to the board game and not exist in a free society.
[ link to this | view in chronology ]
Re: Monopolies
I don't know if being an ISP requires a license either from the FCC or state PUC (I doubt it), which by definition means it cannot be a statutory monopoly.
[ link to this | view in chronology ]
Yes, I am aware of privacy concerns for such a setup. I'd probably have an arrangement where today's telcos act more as hardware hookups and they can compete. Consumers can choose which hookup service (that sounds dirty, haha) they want to use
[ link to this | view in chronology ]
Re:
That may not be a bad idea to some degree, but taking a private operation and nationalizing it does not remove the monopoly nature, it just gives the government control over the monopoly. While it is easy to think of the internet infrastructure like roadways, think about the condition of your local roadways, the government response times to doing maintenance and repair, and the higher costs government control over the roadways had led to. Nationalization could easily make the problems of a monopoly company worse.
In addition, it is scary to think about the government having a monopoly over the primary form of mass communication. The founding fathers of the US specifically required that the government kept out of the communication business. Handing them total control over the infrastructure could easily lead to it being abused to support political ends.
[ link to this | view in chronology ]
Re: Re:
Except that Title II isn't making a monopoly, it's mitigating the effects of one. Aside from that point, though, the people who have been pushing to privatize everything have given us plenty of examples of the differences between the government holding the monopoly and private companies holding it. In the vast majority of cases I've seen, the government does this much better than private businesses.
"it is scary to think about the government having a monopoly over the primary form of mass communication."
Indeed it is. But, first, that's not what's being discussed. Second, the government has always had a monopoly over the primary form of mass communication, from when it was the postal system through radio, television, even the telephones. An advantage to the government having this over private companies is that the government has to at least pay lip service to the constitution, and the government is at least somewhat responsive to the needs and desires of the people. Private companies do neither.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
I'm not a conservative; I'm a libertarian. But I'll try to answer.
(1) I reject the premise that the market for ISP infrastructure tends towards a natural monopoly. Last-mile monopolies are creatures of regulation, not market failures.
(2) Even if I accept the premise for the sake of argument, I do not believe in mythological creatures like unicorns, pixies, and benevolent technocrats. You cannot possibly convince me that handing ownership of ISP infrastructure to same corrupt, incompetent people who've made a complete hash of their existing set of governmental responsibilities would result in a net improvement from Comcast's douchebaggery.
[ link to this | view in chronology ]
Re: Re:
Well, then there's no point in discussing it with you.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re:
It's funny you mention flat-earthers and creationists in defending your stance here too, given you're showing the same level of close-mindedness as they tend to, a refusal to even consider evidence contrary to your already decided opinion on the subject.
Someone who truly believed in the truth of their stance would welcome a challenge to it, would welcome contrary evidence to be presented, because if your stance if really true, then the back and forth, the presentation of differing opinions and evidence will ultimately vindicate the 'correct' side.
[ link to this | view in chronology ]
Re: Re: Re:
No. It's an admission that life is too short to argue with fools.
We are talking about the idea that municipal bureaucrats, cut from the same crooked timber of humanity as Comcast executives, would do a significantly better job than Comcast executives. The idea that a government monopolist ISP would be cheaper, more innovative, more accountable to customers, and just generally all-around better than a corporate monopolist ISP. The argument in support of this proposition is that government is theoretically accountable to voters and theoretically constrained by law in ways that corporations aren't.
There are lots of people willing to spend their time detailing why that argument is silly and wrong, and explain in excruciating (and frequently heartbreaking) detail how, in the reality we all experience every day, government-owned commons are administered every bit as corruptly and incompetently as the wire-line oligarchies despite all of the democratic accountability and legal constraints. They do God's work. But I'm not one of them. I consider the argument settled, in much the same way I consider the 'debate' over what really happened on 9/11 settled. If some truly extraordinary piece of evidence comes to light I'll re-evaluate, but until then I decline to waste my time arguing with Truthers, and I decline to waste my time arguing with people who believe in benevolent technocrats.
[ link to this | view in chronology ]
Re: Logical failures
I believe that's called "begging the question".
Who says municipal bureaucrats are drawn from the same pool of humanity as Comcast execs? Well, you do, clearly, but I don't know why you think that. Are all people evil bastards? If so, we're kind of screwed regardless. If not, then clearly a possible solution is "find the guys who aren't assholes and put them in charge". You may argue that we can't plausibly do that, but you need to put at least a little effort into it.
But even more than that:
Who says that it's a person's inherent nature that determines how well they perform, rather than the incentives given to them? Comcast execs are driven to maximize profit; the more profit, the bigger their bonuses. Of course they don't care about quality of service when it doesn't affect the bottom line. That's not because they're inherently evil (although they might be), it's just a natural consequence of how we as a society have decided to compensate them.
Bureaucrats don't earn a bonus by screwing over citizens. They get a bonus (or a promotion) by doing a good job. That means making citizens happy, or at least minimizing the complaints. And while it's true that some government workers are there because they actually want to serve their community, you don't need to accept that for this argument to work. As long as the bureaucrats are at worst neutral with respect to screwing the customer (citizen), they're a lot better than a monopoly executive.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Wasted argument
So rather than "takeover" being a concern it is the excuse that Republicans have invented for doing what the plutocrats want.
[ link to this | view in chronology ]
That's blasphemy, infidel! You don't save the God the Market, God the Market saves you! Market'akbar!
[ link to this | view in chronology ]
Isn't meat inspection the government takeover of meat?
Airline pilots have to have the ability to routinely take off and land airplanes without incident. Is that the government take over of airlines?
Microwave ovens have to be shielded enough to not cook things outside of the microwave oven in the process of heating a dinner. Is that government takeover of the appliance industry?
Telephones have to be usable without emitting enough light or electromagnetic energy to cause health risk. Is that government takeover of the phone companies?
Some regulation is kinda critical.
[ link to this | view in chronology ]
What Is A Natural Monopoly
The restaurant industry is an example of what is not a natural monopoly. Take a restaurant district, say a business district, or the area around a college campus. You might find that there are a hundred restaurants, each with a capacity of twenty diners, or an aggregate capacity of two thousand. There might be, oh, five percent slack capacity at lunchtime. Customers go to one restaurant, look in the door, see that it is crowded, and go on to the next restaurant. If one restaurant starts giving away lunch, that is, employing predatory pricing, the waiting line backs up to the point of forming a deterrent to entry, long before there is a significant effect on the business of other restaurants. By the same token, if one restaurant decided to jack up its prices, other restaurants will be the immediate beneficiaries of diverted business, and they are fairly unlikely to copy the price increase. Under these circumstances, massive competition is perfectly compatible with economic efficiency.
What makes a traditional public utility a natural monopoly is that effective (tenfold) competition implies building ten times as much plant as is actually needed, and with that much over-building, it is rational for competitors to give away their product, because doing so costs no more than letting their plant lie unused. This kind of competition did develop in long-distance telecommunications in the 1990's, and it led to a number of fraudulent bankruptcies, eg. MCI WorldCom. This wave of bankruptcies occurred because too many businessmen had misunderstood the technology, and failed to grasp the implications of packet-switching and wavelength-division-multiplexing. They thought there was a demand for thousands of optical fibers, when only one optical fiber would suffice. Barring that sort of misapprehension, businessmen will not continue to invest in entering a market when they see the signs of hyper-competition. No one is rushing to build new competing city water and sewage lines, because, in the first instance, the new entrant would have to charge less that the municipal water authority's low rates.
In local telecommunications service, I think it would be fair to say that the telephone and cable companies blundered into competition with each other, due to unforeseen uses of existing plant. People discovered that a U-Verse-type cabinet could get twenty or thirty megabits out of a final subscriber loop, already in the ground, which had hitherto been thought to be only capable of voice-grade communication. The companies are trying to negotiate their way out of competition, under a deal in which the telephone company owns cellphones, and the cable company owns landlines.
[ link to this | view in chronology ]
Proof
'Lower taxes but raise revenue' line.
[ link to this | view in chronology ]
"Net Neutrality" is Newspeak
Too bad the Regressive Left doesn't believe in things like privacy or free speech.
[ link to this | view in chronology ]
Re: "Net Neutrality" is Newspeak
Like the right believes in privacy or free speech? Hasn't the Trump administration been looking to litigate against anyone who expresses criticism or dissent?
As for privacy, both sides have been looking to mandate crippled encryption. Privacy has no champions in Washington. It's a good thing for the rest of the world (and for terrorists) that strong encryption exists that doesn't depend on American software.
In the meantime the GOP congress just stripped federal regulations to prevent ISPs from deep-scanning your packets for fun and profit.
And net neutrality has no bearing on privacy OR free speech, except that without it, your ISP can choose what speech you can access.
[ link to this | view in chronology ]
Just like the "affordable care act" gave free healthcare to everyone in America.
[ link to this | view in chronology ]
A MORE perfect union.
The ACA wasn't meant to give everyone free healthcare. It was meant to reform the healthcare rules so that patients received better healthcare and so that more Americans had health insurance. That is a far reach from promising free care for everyone.
In this case the government is regulating a market that suffers from lack of competition. Comcast internet service is super shitty, and they take customers for granted, which they can because they have a regional monopoly. Outside of major cities they have almost no competition.
So as long as they have control over the internet market like a water or power company, they should be regulated like one. If you want to call if the government seizing control you can, but they're doing it for my benefit, and for the benefit of all the other shlubs like me who don't get to choose my internet provider.
That is part of what the government is supposed to do.
In contrast the EU is setting up the infrastructure to give free high-speed WiFi to everyone, starting from the urban areas outward, while we get charged egregiously by the megabit.
[ link to this | view in chronology ]