Has The Free Market Failed The US When It Comes To Broadband?
from the something-to-think-about dept
As the network neutrality debate has gone on and on, there are some aspects that are very troubling. The tech world is notorious for having what’s basically a libertarian/free market approach to the world — and applying that to the network neutrality debate gives plenty of good and convincing reasons why letting Congress regulate on this now will create problems down the road. Those are some of the reasons why I agree that legislation right now would be a dangerous move (especially as some of the laws are written). It’s tough (if not impossible) for Congress to understand how this technology will evolve — and trying to regulate it could stifle perfectly reasonable uses. At the same time, even if the laws seem reasonable, the companies in the space will likely figure out loopholes or other ways to use the regulations to their advantage. However, at the same time, it’s really troublesome to see the telcos mostly ignoring that very reasonable line of argument, preferring to trot out made up horror stories and outright lies to try to make their point. It certainly raises questions about what they’re trying to hide. If you’re right, you should be able to make your point without resorting to disingenuous arguments.
Meanwhile, what’s interesting to note is how uncomfortable some of the supporters of network neutrality legislation have appeared, noting that they usually fall into the libertarian/no-regulation-please camp, but support regulation in this case (even if they claim the regulation is designed to make the market more open). However, in the last few days, there’s been a growing push to explore whether or not the free market has failed when it comes to US broadband policy. Broadband expert Dave Burstein notes that all of the world leaders in broadband have come from highly regulated environments, leading folks like Kevin Werbach to ask “Why does unregulated competition in telecom work so well in theory, but so poorly in practice?” It certainly deserves at least some head-scratching.
As it stands now, there are two potential answers that I see. The first, is that an unregulated telecom/broadband market is fundamentally not competitive. As we’ve emphasized ad nauseum, the real issue in the network neutrality debate is the lack of real competition in the space — which is still a problem no matter what some people claim. This could be because broadband is a natural monopoly, like the highway system, where it simply does not make sense for there to be competition between different infrastructure projects. It’s wasteful and, in some cases, damaging. Instead, it makes more sense to set a single platform, and push for competition within the infrastructure. This is exactly what has happened in France, and has helped build a thriving competitive broadband market there.
A second answer, however, may be that this is a race we shouldn’t call yet. We have not hit the finish line yet, and there certainly is the potential that the infrastructure choices made within regulated environments may prove to be a legacy albatross down the road. For an example of this, just look at the race for HDTV from 15 to 20 years ago. There was a huge worry in the US that we were falling behind Japan and Europe in this technology, where their regulated approach allowed them to take a quick headstart, and achieve certain technology milestones that looked great and worried policy makers in the US. However, in the long run, the regulated approach proved problematic and inflexible, causing a lot of problems that the US avoided. To be honest, I’m still not convinced which scenario is the most fitting for US broadband policy, and can make arguments supporting either one. Hopefully, we’ll get some interesting discussions going based on this, but it does seem useful to raise the level of discussion to actual disagreement points such as this one, rather than the ridiculous “this is the end of the internet as we know it” level both official “sides” in the network neutrality debate have taken.
Comments on “Has The Free Market Failed The US When It Comes To Broadband?”
emotional
seems like the debate has become emotional. people get worried about one side beating the other or one country beating the other. while the hdtv example is a good one, what if this really is a race? since broadband impacts so many other aspects of business and commerce, you could see how the speed with which broadband is implemented in a country could impact the economy in a much greater way than something like hdtv.
regulation
I have a libertarian bent, but in this case I tend to favor regulation. It wasn’t until Johnson pushed for increased federal involvement that the backwoods of Texas got electricity. I think the governmnet will need to get involved before we will get broadband, broadband at a reasonable price or an effective response to problems with the broadband we now have.
Apples to Apples
What about the population density issue? In other countries with low population densities like the US, how is the broadband market? I’m guessing that laying out fiber/cable to spread-out suburbs is not profitable for $50/month subscriber rates, the same reason we don’t have much public transportation in most of the US.
Re: Apples to Apples
This comment from dorpus is a telecom troll. Nonetheless, let me take a moment to dispell it with facts, and then suddenly its gone.
Europe, like the US, is a federal democracy made up of many member states (50 in the US, 25 in the EU) These states vary considerably in their deomgraphic and geographic makeup. There are dense states like the Netherlands, Germany, the UK, Delaware, New Jersey and Ohio. And there are very sparsely populated states like Wyoming, the Dakota, Utah, Maine, Finland, Sweden, and Portugal.
The ‘density’ article stems from a paper written three years ago by an FCC employee at the behest of then Chairman Michael Powell, to make the case that Europe’s higher broadband penetration was due to ‘higher density’. The claims made in the paper were entirely false.
Sweden was listed as ‘dense’ country; it is the least dense country in the EU. Norway is not in the EU, it is even less dense than Sweden, and still has higher broaddband penetration than anywhere in the US. Germany, one of the densist states, also has the lowest penetration.
And the analogy breaks apart in the other direction; dense parts of the US like Delaware, New Jersey, Pennsylvania, Illinois, Chicgo, NYC, and the Wisconsin-Minnesota corridor are some of the least served areas in the US. The best served areas in the US: well, they happen to be some of the least dense areas, like the I-5 corridor from Seattle to the Cascades down to the Mexican border, Colorado, New Mexico, southern Texas, and New England. thedifference has to do with the particular regional Bell company or dominant cable company in the area.
The denseness argument is telecom trolling. Know it when you see it.
Uncle Mike
YEAH! to #3 ..those overpopulated-pay-for-cheap-broadband-that’s-faster-than-mine BASTAGES
Unregulated?
I’m not sure you can say the telcos and the cable industry are unregulated – don’t both owe their oligarchies to heavy regulation keeping down upstarts?
Also, I read your links – they’re not pointing as strongly to a free market failure as you suggest. Their biggest talking point is how china (with its 1.31 billion plus citizens) will soon have more broadband users than the United states (pop. 295 million). They then talk about how almost all China’s broadband is dsl, but the companies providing the dsl are getting raped by wireless technology. This STRONGLY suggests that a lot of the investment being forcibly pushed through here is misplaced. After all, if some Wi-Max type technology DOES end up taking over, those dsl investments are wealth down the drain.
Re: Correct-- Telecos are not the result of a free mar
It’s interesting when the government steps in, creates a monopoly or oligarchy and then we turn around and blame “capitalists” or the “free market”. Everything from the railroads to the phone companies to the cable company are held up as failures of “free markets” when they should properly be labeled failures of government intervention.
The problem isn't with the free market
The problem is with government giving special treatment to the telco companies, which is what has granted them, over time, the monopoly like power they have.
Mises.org has a story which explains this very well. I’ll quote from the article found here http://www.mises.org/story/2139:
“The only reason AT&T (formerly SBC), BellSouth, Cox Communications, and other incumbents have the large user bases they currently do is because they were granted geographic monopolies for communications. They were legally insulated from outside competition for much of the past century. And, by and large, this protected status still continues unabated, shielded by the current FCC regulatory regime.”
The article mentions how in the movie “The Aviator” Senator Owen Brewster opposed competition in international flights saying it was in the national interest to support one provider (and you can bet he was “buddies” in some respect with the one provider he wanted to support). This argument has been used a lot in the past to support government mandated monopolies to keep out competition.
Again, quoting from the mises.org article: “Vladimir Lenin called these resources the “commanding heights” of the national economy — too important to be left to the whims of the private sector.”
Also, in case you think the current telecom regime or radio spectrum is a product of the free market, you’re wrong. “The FCC did not create the radio spectrum nor does it have some homesteading claim to the near-infinitesimal ranges found within it. It is, simply, a bureaucratic sophistry, which oddly enough believes it can distribute something it does not own.” (mises.org article)
To sum everything up, the answer is not more regulation, or re-regulation, or the confiscation of private property, the answer is the “abolition of State machinations involved in the telecom industry as a whole.” (mises.org article again).
I highly recommend you read the Mises.org article mentioned. It really can shed some light on things you may believe to be the truth.
A true “free market” WOULD answer all of our problems with this issue. What you have to remember is that many industries try to act as though they support the free market…when in fact they support it as long as they’re the only ones participating, and competition is driven out via government support. That is NOT a free market.
Re: The problem isn't with the free market
A true “free market” WOULD answer all of our problems with this issue. What you have to remember is that many industries try to act as though they support the free market…when in fact they support it as long as they’re the only ones participating, and competition is driven out via government support. That is NOT a free market.
While I’ll grant you that the US is not a true free market, that really doesn’t apply to the post here. The point is in comparing the US (which is MUCH more deregulated) to other countries that have much more successful broadband programs, you’ll note that all of the successful countries are much, much, much more regulated.
So, your argument doesn’t make much sense, to be honest (and the Mises piece has its own problems). What is clear is that regulation has done very well for a bunch of countries. Could a total free market do better? Perhaps. Could the regulation come back to haunt those countries? Perhaps. But the fact that the US still is regulated isn’t really an issue here. On a relative basis, it’s much less regulated… and much less successful.
Laid Lines
The reason that the telcos and the cable companies have a “monopoly” here in the US is becuase the company that laid the line owns the lines, therefore for anyone to use them they must “rent” them. This creates a high barrier of entry, meaning it is extremely expensive for startups to get going.
Is this a bad thing? I don’t think so, it will just push for a better/different solution. This is the reason that I think Wi-Max will be very effective and very competitive, the barrier to entries will be a lot lower b/c you don’t have to dig up the world to put down lines.
I am opposed to regulation that has too many unforeseen side affects. This is still a relatively new technology and to pass regulation on it now, would be immature. Not a sermon, just a thought.
Re: Laid Lines
No, it’s because potential competitors are prevented by threat of government force from laying competing lines.
Population density & broadband
“What about the population density issue? In other countries with low population densities like the US, how is the broadband market?”
Well, I’m from Finland so let’s compare:
population density:
US: 31
FI: 15.5
Broadband subscribers per 100 inhabitants:
US: 16.8
FI: 22.5
http://en.wikipedia.org/wiki/Broadband_Internet_access_worldwide
http://en.wikipedia.org/wiki/List_of_countries_by_population_density
Basically you can get a basic full rate ADSL anywhere. In towns you have more options from 24M/3M ADSL2+ to 100Mbps Ethernet.
I’m a student so I only pay 10€/month for 100Mbps access.
Re: Population density & broadband
I’m assuming that population density was computed by dividing the population by total land area?
What proportion of Finns live in densely populated areas? What are the broadband adoption rates among Finns in areas with population densities equivalent to US suburbs?
I say this because Japan appears to have a relatively low population density, but most of Japan is very mountainous, so most of the population lives in extremely dense cities.
Re: Population density & broadband
I’m assuming that population density was computed by dividing the population by total land area?
What proportion of Finns live in densely populated areas? What are the broadband adoption rates among Finns in areas with population densities equivalent to US suburbs?
I say this because Japan appears to have a relatively low population density, but most of Japan is very mountainous, so most of the population lives in extremely dense cities.
Re: Population density & broadband
Your country also has high personal and business tax rates, which is why broadband is cheap – everyone and every business is subsidizing it.
http://www.worldwide-tax.com/finland/finland_tax.asp
Re: Re: Population density & broadband
“Your country also has high personal and business tax rates, which is why broadband is cheap – everyone and every business is subsidizing it.”
Well, of course, the funding has to come from somewhere. On the other hand, a 100Mbps line in the US would probably cost me more than I lose in taxes total here and taxes are used on so many other things as well.
Re: Re: Re: Population density & broadband
Well, of course, the funding has to come from somewhere. On the other hand, a 100Mbps line in the US would probably cost me more than I lose in taxes total here and taxes are used on so many other things as well.
Of course you’re a student. I didn’t have to pay much in taxes as a student either. Once in the “real” world, taxes take an incredible bite.
I would rather have the choice of whether I want broadband or not. I don’t want the government forcing me to pay for it (via taxes).
I don’t want the government forcing me to pay for cable television. I want the choice to opt out.
Name the company, and if the government has not forced me to use them by creating a monopoly or oligarchy, I can boycott them. I cannot boycott the government. Choice is why the government should not be involved.
Re: Re: Re:2 Population density & broadband
to #30:
Hmmm… interesting idea…
Actually the tax, as all taxes, would be all pooled together, then the government pays it out as it sees fit. I don’t know what country you’re in but in the U.S. we have no say as to how our tax dollars are spent really. We cannot dictate to government what money is spent where; the government decides.
The broadband medium would just be there for use, sort of like a freeway. You simply don’t opt out of the use of the freeway… you either use it or you don’t. If you can live life by driving only surface streets, it’s your choice. So too with broadband if you have no use for telephone, email, or internet… you simply wouldn’t use it but the fact is that the rest of the country, from businesses to families, would use it. The whole “common good” idea.
Re: Re: Re:2 Population density & broadband
Agreed. Choice is the fundamental difference between US and European policy. Not that Europeans are lacking in choices, but the Euro governments tend to take more money from the citizens (via taxes) and spend them on “softer” expenses such as broadband infrastructure, unemployment benefits, healthcare, etc. That’s distinctly European.
In the US we favor a lot less regulation and spending on those sorts of items. That’s distinctly American (US).
There really is no market reason why you should get broadband cheaper because you’re a student… I mean it’s nice and all, but it doesn’t help the market grow.
I would suggest that if we go the deregulated route (as I personally think we should) we’ll have something like a cell phone infrastructure over the course of time. Not physically, but structurally. You’ll have loads of redundancy between the companies, companies leasing the nodes of one another (e.g. physical lines), and crappy service in rural areas… but it’ll be cheap… and it’ll make market sense. If there is a demand, it will be filled because a demand exists. It won’t have to wait five years because a bureaucrat (that knows nothing about business) made an incorrect decision. If/when there are problems they will be dealt with efficiently and intelligently by the companies themselves, not inefficiently and retardedly by the governments.
Granted, this is my own American view, and I’m not sure if there’s a right or wrong answer to this… it’s just a matter of culture and preference.
(If you want a good magazine related to all this international economic stuff, I’d highly recommend The Economist)
Re: Re: Re:2 Population density & broadband
“Of course you’re a student. I didn’t have to pay much in taxes as a student either. Once in the “real” world, taxes take an incredible bite.”
I work summers and pay taxes accordingly…
“I would rather have the choice of whether I want broadband or not. I don’t want the government forcing me to pay for it (via taxes).”
It’s not that simple. You couldn’t get a (real) broadband even if you wanted one, so you don’t have a choice. It’s just not profitable except in extremely densely populated areas. On the other hand, after the state has helped funding the infra, it is profitable for the ISPs to provide a service…
All I’m saying is that I’m glad I’ve had the possibility to use a fast line for years now and I don’t think it would have happened without government intervention.
What we need...
is an actual free market. The current status of the broadband market is far from free. If it was the telcos would let the competition come in and instead of crying for government intervention they would just beef up their own product to beat out said competition.
It’s painfully obvious that the telcos have the government to thank for their dominance in the broadband market. And we all know that dominance is maintained by the money and other favors they “give” to keep them happy. This is why I’ve never liked lobbying in the first place. Sure it makes politicians aware of issues but it also basically puts a politician’s support up for the highest bidder.
The only surefire way to turn broadband into the free market the telcos want us to believe it is is to get the government out of the telcos back pocket (or wallet to be more presice).
So i ask, how can we get government regulation on something that the government already makes a killing off of in its current status? Why would they want to regulate something that is so profitable to them?
Population density & broadband
“What proportion of Finns live in densely populated areas? What are the broadband adoption rates among Finns in areas with population densities equivalent to US suburbs?
I say this because Japan appears to have a relatively low population density, but most of Japan is very mountainous, so most of the population lives in extremely dense cities.”
Those are good questions, unfortunately I can’t provide any facts about that.
What I can tell you is that unlike Japan, we have absolutely no mountains, nor big cities. My educated guess is that the population is somewhat spread out, although the majority lives in the south.
In Finland, the former telco monopolies were forced to rent out their lines for competitive prices, which has created a lot of competition in the broadband market. Toady, there are many ISPs to choose from.
In Sweden they went even further and the state funded the fibre optics inrastructure everywhere.
Re: Population density & broadband
“What proportion of Finns live in densely populated areas?
…
What I can tell you is that unlike Japan, we have absolutely no mountains, nor big cities
The U.S. has an extremely uneven distribution of population. The extremes being the eastern and western sea coasts (NY City being THE extreme) to Alaska on the other (with the mid contential being comparatively sparse).
While a significant portion of the U.S. population lives in dense areas, the significant amount of the land mass is in sparse areas.
Government interference in the U.S. (including mandating or threatening to mandate the “rent to your competition”) has stiffled the “last mile” infrastructure development. Who wants to invest heavily only to be forced to give access to the competition?
Big Huge Dave and others are on the ball...
There is nothing “natural” about the monopoly that exists today. It goes back to the early 20th century when the telcos’ predecessors–the phone companies, particularly Bell–were cut a deal by Congress: wire our country for telephony and in return you can have a monopoly to recoup your investment. The long-term problem then became Bells’ overwhelming power in the market, which necessitated the legislative breakup of Bell into the Baby Bells.
That precedent was used for broadband as well. The public, particularly businesses, wanted broadband and wanted it as fast as possible. Members of Congress looked around in the mid 90’s and thought to themselves a) Who has the expertise? (telcos), b) Whom do I know personally that can help me craft legislation (lobbyists), and c) How can we “incentivize” these companies to do the work (legislated monopoly).
Now we’re in the same pickle. The telcos are entrenched, they have multibillion dollar interests to defend, and many senators and reps owe their seats in part to telco campaign contributions.
The lesson, as I see it, isn’t to argue about free market vs. regulation; it’s to discuss how patient we’re willing to be for the free market to develop the kind of technology that doesn’t necessitate government intervention on behalf of industry. Every intervention–probably even net neutrality legislation–comes with long-term complications.
Problems with the Monopoly
There are problems with the cable & telco monopolies in place today.
While you do make a good point about pushing for new technology, there is one inherent problem with a lack of competition. There’s nothing to push the providers out of mediocrity.
In the county in which I live, we have one cable provider… and only one, due to an agreement signed with the local municipality that said no other cable provider could offer services w/i our area. As a result, we have absolutely shitty cable. There’s no reason for them to do any better than they do. It’s not like dissatisfied customers will go elsewhere to get better service.
I know you can go to something like DirecTV, but who wants to pay $50/month for cable broadband and $howevermuch for Dish? Plus the extra equipment, contracts, etc.
And our DSL sucks because we have one or two providers in the area. And by “area”, I mean “state”. While one provider may have better DSL, their phone service sucks.
My point is, with proper competition, there’d be less of the “choosing the lesser of two evils” status that we currently have.
I believe Sanguine Dream said it best: “The only surefire way to turn broadband into the free market the telcos want us to believe it is is to get the government out of the telcos back pocket (or wallet to be more presice). “
We don’t need the government to regulate for us, we just need them to stop regulating against us.
Re: Problems with the Monopoly
amen
A couple of thoughts...
While in public the telcos are opposed to net neutrality legislation, in reality they can weather it. The telcos have been over regulated for decades, so who better to work the system? If net neutrality legislation comes close to being passed, I’m sure the telcos will evenutally ‘relent’ but on the condition that ‘costs’ related to net neutrality be passed on to internet customers. The FCC will impose a “Universal Net Neutrality Fee”. The telcos have whole departments that are dedicated to working the system.
As to the whole regulated versus unregulated market argument, no one asks how much better off France, Japan, Korea and China are because they are supposed ‘world leaders’ in broadband. Any new major internet companies taking off in France, Japan or Korea (I’m leaving China out because it is a unique case)? If word-leading broadband service is a supposed indicator of a successful thriving internet sector, then why are the majority of successful internet companies located in the US? Just some food for thought.
I’m wary of any discussion that includes China. This is a brand new market. The Chinese are not upgrading or evolving from some established internet network – they are building a brand new network using the best technology available. In 20 or 30 years, China could be in the same position as the US is currently is.
Re: A couple of thoughts...
I’m not so sure that’s relevant.
1) There are many many reasons and factors that would influence how many internet services are introduced in other countries. Culture, legislation (regarding running a business), demand… all these things would factor in long before you start talking about whether the populace has a good competition in broadband.
2) Where are you getting the idea that having a world-leading broadband service would be an indicator of a thriving internet sector?
In the US, the internet is there… and we can get there… we just don’t like having to get there according to the telco’s and the cable provider’s terms. Giving customers (what we would call) fair access to broadband would not cause an increase in internet use… it would just make for more satisfied use.
Regulation AND free market.
Utilities have an unfair advantage. They should own only the pipe. All services should come from someone else. Each utility can own only one pipe to a given house.
Telco own only twisted pair. Only CLEC can provide voice, data, etc.
Telco cannot a twisted pair and a fiber to the same house.
Electricity companies only own the grid, not the production.
Those separations would require regulation to define the boundaries, especially between the telco and the service provider. It did not work with the ILEC-CLEC scheme because they were competing. Remove the competition. Replace it with a customer-supplier relation. Business will be smooth.
Regulation AND free market.
Utilities have an unfair advantage. They should own only the pipe. All services should come from someone else. Each utility can own only one pipe to a given house.
Telco own only twisted pair. Only CLEC can provide voice, data, etc.
Telco cannot a twisted pair and a fiber to the same house.
Electricity companies only own the grid, not the production.
Those separations would require regulation to define the boundaries, especially between the telco and the service provider. It did not work with the ILEC-CLEC scheme because they were competing. Remove the competition. Replace it with a customer-supplier relation. Business will be smooth.
No, the free market will work fine.
Once the internet becomes a restrictive, policed, politically correct bore… people will quit using it.
Like – how often do you surf government sites for information or fun? Umm.. if you’re like me, very rarely. And corporate sites? OMG, only when I *have* to.
Re: Re:
Regulating the infrastructure development doesn’t have anything to do with the content…
Re: Re: Re:
You’re right it shouldn’t but who among us would trust the government to only regulate the infrastructure of the internet? Imagine if all of a sudden the vids on YouTube had to meet some government approval criteria.
internet companies in the US
If word-leading broadband service is a supposed indicator of a successful thriving internet sector, then why are the majority of successful internet companies located in the US?”
because anyone in the world who is really good at internet/software development has already been recruited by an american company.
MS, google, cisco, you name it, all bring people to the states from other countries.
if anything, this should make the US’s lag in the broadband market all the more laughable
British East India Company Example
Clearly we should follow the model set up by Britain when it established the East India company.
Let politicians and friends of politicians setup their own company with a monopoly- the company will be hugely successfull- and will conquer some sub-continent against the will of the government.
We need a few more sub-continents conquering!
Fuck all that!
Fuck all that!
Governement intervention no matter how small will be far worse than no intervention. Governement cannot run anything efficiently, not even itself. For example: we are in a war that the government all along told us they knew what they were doing….after executing the war, they tell us wait…we don’t know what we’re doing but we’ll go to war anyway (just to save face really).
In addition, I disagree that broadband is like our freeway infrastucture…it’s not. The freeways are maintained and operated by our tax system. Broadband is maintained and operated by profit. If the government controlled broadband (the infrastructure) and maintained it through our tax dollar then yeah it would be like the freeway system. Instead what we have is an ill-conceived, hybrid relationship between telcos and governement that is a tug-of-war between business and government. This just doesn’t exist for the freeway systems.
Finally, Broadband technology changes yearly, freeway technology has been pretty much static since its conception by Adolph Hitler way back when. Can you imagine the government trying to sort out the technology, standards, pricing, and regulations? Shit, they tried that with the military and what we ended up with were $50,000 ashtrays…anyone remember that one? Hell take a look at the confusing state of our tax system alone!
Trust me, once the government really starts to regulate anything regarding the internet, it will never be the same. They will turn it into a monster that delivers very little, costs a fortune, and will never fulfill any utopian promises.
Re: Fuck all that!
Whoops! Another telco troll, here everybody. Kinda creepy, isn’t it? No one would actually say the things that Lay Person is saying, would they?
Uncle Mike
Re: Fuck all that!
Trust you? Do you have anything with which to back up these claims?
Look, I agree that government regulation is severely lacking in most cases. But you need to understand that very few people actually listen to you when you make broad generalizations and unconditionally-inclusive statements. It’s not that black-and-white. Sorry.
And I hate to tell you this, but they do regulate parts of the internet. It’s called laws against child pornography, laws against slander/libel, laws regarding access to pornography, laws against copyright infringement, and let?s not forget cracking. I haven’t seen the city that is the internet laid to waste due to these regulations. Have you?
You need to remember what the internet is… it’s a medium for the transmission of information and the facilitation of commerce. The only thing that will “destroy the internet” is the censorship of that information or the blocking of that commerce. Censorship won’t get too far before the people rise against that censorship. And since the government is largely influenced by big business, they won’t allow the government to step in and disrupt their sales.
Finally, I don’t want to sound like a forum-snob, but if you’re going to discuss these things with us, most of us would prefer that you don’t just hop in and start anti-government grandstanding. No one cares to hear your “down with the government, man” protest speech here. To everyone else: if I’m wrong and you don’t want me to include you in that last statement, feel free to correct me.
I think we have a common theme running here
That anytime government is involved making legislation that benefits corporations there will be less competition, fewer choices for consumers, and less than desirable products/services from that corporation (because they don’t have to compete, just like government services).
You just need to re-read the article above “Problems with the Monopoly by Gabriel Tane”. His comments on how his country only allows one cable provider shows the extreme end, which we haven’t quite hit in this country, but it could happen.
Frank says it best and most succinctly when he stated, in comment 26, “Everything from the railroads to the phone companies to the cable company are held up as failures of “free markets” when they should properly be labeled failures of government intervention.” Beautifully said, and 100% true.
Re: I think we have a common theme running here
Uhhhh….
I’m pretty sure Gabriel IS in this country and that his COUNTY designed their provision with only one cable company.
What Free Market?
The problem is that it is _not_ a free market when the incumbents are granted government protection. The government is the problem. The corporations are just doing soulless, profit driven corporations are expected to do.
Re: What Free Market?
Yeah, reword it thusly:
“Has the Government Failed the Free Market When…”
Tied to Backbone
Wi-Max and other “options” are all mentioned as possible alternatives but think about this. Even wireless ISPs are tied back to a land-line provider. I for instance have a wireless ISP but the connection from their servers is through Verizon. The same goes for the information I want to access online, even if there was an independent wireless network across the country the antenna would be tied to a land line which is owned by you know who… I’m not choosing a side or disagreeing with any points but the upsetting fact is we are tied to the telco’s one way or another. I hope someone figures out a way so we won’t be. But the cost and time involved of setting up the equipment routers, switches, servers etc… is something I can’t imagine someone could just do.
Wi-Fi
I also wouldn’t count much on Wi-Fi. It has it uses but what comes to connection stability, response time and bandwidth, it is never going to substitute for fibre.
What?
Free market broadband? Since when in the last 50 years has a telecommunications corporation been anything except stringently regulated? Your initial assertion is false therefore anything you derive from it cannot be proven. Don’t insult our intelligence.
A result of the broadband monopolies is that they have a comodity called darkfiber. When a company lays fiber optic cable, it lays atleast double of what it expects to use. The spare cable remains dark (unused) until the company either decides that it’s profitable to upgrade services or they lease the lines to external companies. The point is that if the companies had competition they’d utilize the darkfiber for their customers.
As said before
The title reads “Has The Free Market Failed The US When It Comes To Broadband?, when it should read “Has The CONTROLLED Market Failed The US When It Comes To Broadband?
The logic used in this article is puzzling, given that in one phrase the author talks about the “lack of real competition” and in the next phrase he uses “Why does unregulated competition in telecom work so well in theory, but so poorly in practice?.” If their is a lack of real competition in theory we would have a regulated or controlled market. If this is the case which is stated early on in this article why does the author insinuate that their is a “Free Market”?
Simple Formula
freemarket = competition (Good for the consumer)
Controlled Market = no competition (Bad for the consumer)
Broadband. The very word conjures up websites that are global in nature. Any type of control can only slow it down. (as stated qv. mises.org blah blah blah)
And any failures are definitely due to the extremely weak leadership that this country has been plagued with for decades.
The question itself is a reason why new leadership is past due, and all the hoora will be seen later on as a lesson in the workings of small minds.
We’re all hopping around the issues a bit here, so let’s bring it back in to the subject at hand.
Competition. That’s generally considered the life-blood of a “free market”
And competition is what the broadband market lacks. This deficiency is due to regulatory decisions in the past. Now, it can be argued that those decisions were made with good intention. The government (at whatever level and municipality) decided to give a wonderful incentive to Telco’s for them to lay the groundwork for our modern network.
Now that decision is biting us in the ass.
So, what do we do about it? It’s obvious that things need to change. We’ve seen in the past where old decisions didn’t apply to modern times and things were changed. Like that recently-deceased Universal fee on phones (sorry, didn’t follow that one too closely). Why can’t we come to the same conclusion here? And by “we”, I of course mean “the government” that’s supposed to be run by us, the people.
The reason things won’t change is this: The government is strongly swayed (if not controlled by) lobbyists. Lobbyists are controlled by those with the most money. Telco’s pockets are filled by those monopolies we’d like to see gone. It’s like trying to use water to plug a hole in a dam. They got more water than we do.
Is it hopeless? I don’t think so. Things will reach a point where tolerance will be exhausted. At that point, the Telco’s very existence will be threatened by customers who will no longer take it. You have to think in the same color (green) that the Telco’s do. If you make them see that keeping their current monopolies will actually hurt their income, they’ll be forced to change.
Now, to do that, we’d need to have an alternative outside of the current system. So, if anyone knows of a company who’s not part of the problem, let’s send some business their way. Unfortunately, there is no such alternative at this time. Hence my statements about the problems with monopolies.
Again… is it hopless? No. Is it likely to change any time soon? No.
And yes Big Huge Dave, I do live in the US and yes, it has gotten that bad.
#48
Damnit… that one was mine. I don’t know how I missed getting my name on it.
Gettin’ old, I guess.
#42
Anybody else remember when Level3, Global Crossing, and Qwest were running miles and miles of dark fiber back in the dot-boom days?
Qwest is the only monopoly telco of the three. Global Crossing was, IIRC, an IXC that had worldwide ambitions… it went bankrupt within the past couple of years. I forget who bought it–probably a Chinese firm. Level3 was owned by a privately-held company, spun off of Peter Kiewit & Sons, a general contractor out of Omaha…I believe they had ties to Warren Buffett (a very rich guy who is one of Bill Gates’s buddies).
IMHO, the reason the US is behind on true high-speed residential broadband is the endless whining by the monopoly telcos…”we haven’t recouped the cost of our crumbling, aged, decrepit copper plant yet”. Yeah, right. That’s the excuse they’re using to fight net neutrality.
I’ll become Empress of Japan before we get 100Mbps residential broadband from cable/telco for $25/mo in the US. I think that our (as in “we, the consumer”) best bet is going to be WiMax, 802.11n, or similar technologies provided by municipal or community WISPs.