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TamaraB
Question The Current Paradigm
Premium Member
join:2000-11-08
Da Bronx
·Verizon FiOS
Ubiquiti NSM5
Synology RT2600ac
Apple AirPort Extreme (2013)

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TamaraB to biotech

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to biotech

Re: Competition in my area? None.

Competition is the key. Classify ISPs as public utilities, and problem solved!

We are rapidly approaching the point where Internet access is required in order to function properly in our society. So much of our government and business is already becoming only accessible via the Internet, that it needs to be reclassified as a public utility.

Here in NY, we can choose which Electric and natural gas company we purchase from. The electricity and gas is carried by the wires and pipes originally installed by Con Edison. Somehow, I can purchase power and gas from a number of competing utility companies. I get knocks on my door from ESCO sales people offering me better electric rates all the time.

If Internet access was treated like any other utility, and one could buy access from any provider, then competition would increase exponentially overnight, and it wouldn't matter how big an ISP got, they would have to compete with a huge number of companies.

I should be able to purchase access from any ISP in the country, no matter who put the wires under the public streets here, in the same way other utilities are regulated. It would be an easy fix!

bbeesley
join:2003-08-07
Richardson, TX

1 recommendation

bbeesley

Member

said by TamaraB:

Competition is the key. Classify ISPs as public utilities, and problem solved!

Not to argue your point about whether ISPs should be classified as utilities but...

your first two sentences are antithetical

Real competition encourages innovation and lowers price.

Public utilities are generally heavily regulated, often monopolies, and as a result lack either true innovation or competitive pricing.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

said by bbeesley:

Real competition encourages innovation and lowers price.

Public utilities are generally heavily regulated, often monopolies, and as a result lack either true innovation or competitive pricing.

That's true but without real competition we essentially have a monopoly. If they want to behave like a monopoly then they should be treated like one.

TamaraB
Question The Current Paradigm
Premium Member
join:2000-11-08
Da Bronx
·Verizon FiOS
Ubiquiti NSM5
Synology RT2600ac
Apple AirPort Extreme (2013)

TamaraB

Premium Member

I was making a correlation between electric "monopolies" and ISP "monopolies". We have competition now with electric and gas where before we had none. The same can be accomplished with the Internet, where we currently have no competition. If I want Internet, I have Cablevision ONLY. A couple of miles from here, folks have TWC ONLY.


Qumahlin
Never Enough Time
MVM
join:2001-10-05
united state

Qumahlin to TamaraB

MVM

to TamaraB
Difference being there is finite bandwidth on those lines. This is nothing like an electric line. While I do think internet access should become a public utility at some point, I don't think its something that can be opened in the fashion you described without a major degradation to services across all providers on whichever pipe is being shared.
BlueC
join:2009-11-26
Minneapolis, MN

BlueC to CXM_Splicer

Member

to CXM_Splicer
said by CXM_Splicer:

That's true but without real competition we essentially have a monopoly. If they want to behave like a monopoly then they should be treated like one.

Well now, that doesn't really solve anything. It reinforces a monopoly.

Regulation will only make it tougher to compete.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

said by BlueC:

said by CXM_Splicer:

That's true but without real competition we essentially have a monopoly. If they want to behave like a monopoly then they should be treated like one.

Well now, that doesn't really solve anything. It reinforces a monopoly.

Regulation will only make it tougher to compete.

Hahaha, so in other words, we shouldn't regulate them for agreeing not to compete because it will make it harder for them to compete? You are joking, right?

Personally, I think their corporations should be dismantled so it will be easier for them to do business.
BlueC
join:2009-11-26
Minneapolis, MN

BlueC

Member

said by CXM_Splicer:

Hahaha, so in other words, we shouldn't regulate them for agreeing not to compete because it will make it harder for them to compete? You are joking, right?

Personally, I think their corporations should be dismantled so it will be easier for them to do business.

I'm simply saying regulation would not solve the problem, it'd actually make things worse.

I'm not saying we should do nothing, but regulating these entities would make things worse than it is now. I'd rather we keep things as-is if the alternative were to regulate ISPs.

This is just one idea that doesn't make a whole lot of sense. There should always be effort to explore alternatives.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

said by BlueC:

I'm simply saying regulation would not solve the problem, it'd actually make things worse.

How do you think it will make things worse than they are now?
BlueC
join:2009-11-26
Minneapolis, MN

BlueC

Member

said by CXM_Splicer:

How do you think it will make things worse than they are now?

By making it tougher for independent ISPs to compete. Some of the most innovative entities out there are smaller companies. Introduce regulatory requirements and you will push them out of the market, guaranteed. There is still a fighting chance for smaller providers to accomplish things on the internet-side of the business. TV is pretty much dead in a lot of areas, no room for growth.

Regulations = $$$$. You need more legal resources, and there are generally more requirements for being within compliance. The larger providers can influence politicians to put terms in there to make it more difficult for smaller providers to compete. It happens all the time.

Look at one of the most heavily regulated services out there, TV. How's that been working? Why don't we have IPTV available everywhere? Oh that's right, franchise agreements. A lot of cities that require that you service ALL homes within a certain distance. While I'm not in favor of cherry-picking, it's also virtually impossible for someone (without a substantial amount of capital) to enter a market and survive. Hence the limited competition on video services today (live TV, not on-demand streaming).
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

So where are these smaller companies? The big guys have been colluding to raise prices and yet the smaller companies have not stepped up with a cheaper product. Every WISP I have ever priced has been significantly higher than the non-competing mega companies.

How do you propose to bring competition back into the equation?
BlueC
join:2009-11-26
Minneapolis, MN

BlueC

Member

There are smaller ISPs in isolated instances around the US that offer great service. It's isolated because they are small providers, they don't have the same penetration as an MSO like Comcast or an incumbent telco such as AT&T.

I'm talking wireline, not wireless. Plenty of ISPs that have run fiber themselves to neighborhoods and offered great service (e.g. 100mbps/100mbps $50/mo).
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

So we should allow two or three mega-corps to price fix for the sake of a few little isolated companies? Sorry, no. The whole principal of the free market is that these companies should be popping up to fill the void left by the lack of competition... so why isn't that happening?

I suppose one possibility would be to remove restrictions on how many wireline companies can string up fiber around the local communities. What do you think peoples' back yards would look like with 30 or 40 different wireline companies stringing fiber/copper through them and demanding access, breaking the fence, leaving garbage every other day? Ironically, the smaller companies would cherry-pick even more with limited capital for expansion so the same people would be left in the dark.

There are physical problems/restrictions for the wireline business that prevent the free market from operating properly. When companies collude to restrict the market even further the only way to fix that (that I know of) is through regulations. Do you have a better way to increase competition?

bbeesley
join:2003-08-07
Richardson, TX

bbeesley to CXM_Splicer

Member

to CXM_Splicer
said by CXM_Splicer:

How do you think it will make things worse than they are now?

Because regulations aren't balanced. They are created from the pressure from special interest groups on regulators to "do what is best for the special interest"

Consumers want cheap Internet - response, regulators put in place regulations to drive down the cost to consumers for Internet but don't address the need to fund continued innovation...bad result, companies no longer have a reason to innovate because it ins't profitable to do so and we all end up with cheap DSL speeds

Corporations want to maximize profits - response, regulators take a laissez-faire attitude and give big companies cheap access to rights of way and tax incentives to provide service but don't address the issue that because the barrier to entry is costly in a market, only one or two companies can actually make a profit in a single area....response, prices go up because natural monopolies rise up as the more successful companies absorb smaller ones.

Regulation is a knee-jerk response and doesn't have balance necessary to make it work for everyone.
bbeesley

bbeesley to CXM_Splicer

Member

to CXM_Splicer
said by CXM_Splicer:

so why isn't that happening?

because the cost of building out the fiber - even if the access to the poles was unrestricted and free - is high enough that you need to have a large number of customers to offset that investment...usually 50% of the market or better.

the bottom line is that the regulators understand that because of the heavy investment needed to build out the facilities only one or two companies can be profitable and return tax revenue. Once you start dividing up the market among three or more, then everybody looses because they don't have enough customers to all pay off their investment and show a profit

this is why the large cable-co's don't move in an compete against each other...the accountants won't allow it.
existenz
join:2014-02-12

existenz

Member

said by bbeesley:

said by CXM_Splicer:

so why isn't that happening?

because the cost of building out the fiber - even if the access to the poles was unrestricted and free - is high enough that you need to have a large number of customers to offset that investment...usually 50% of the market or better.

Google Fiber cut red tape bureaucracy and arranged agreements in KC that reduces cost to deploy fiber. TWC and ATT now have those benefits and both are expanding fiber rollouts in KC. All 3 can't have more than 50% market share.

bbeesley
join:2003-08-07
Richardson, TX

1 edit

bbeesley

Member

said by existenz:

All 3 can't have more than 50% market share.

I went to school a long time ago so I am not familiar with the new math they are teaching these days so please help me understand how a total market potential of 100% divided among three operators allows all three to have more than 50% share?

edit
said by existenz:

Um, yeah. I said they "can't"

my bad....I should have put in <sarcasm> markups
existenz
join:2014-02-12

existenz

Member

Um, yeah. I said they "can't", yet all 3 are rolling out fiber in same market anyway, even in same hoods. You were implying an ISP may not do fiber rollout unless able to get over 50% share.

saw a cat
@sbcglobal.net

saw a cat to TamaraB

Anon

to TamaraB
I think the difference between power and ISPs is that where the major costs are - for an ISP, the majority of the cost is in the physical network, while for a power company it is more evenly split between generation and distribution.

If i heavily regulate the network side, we have to pick a winner network type and provide some rate of return to get them to continue to invest in a faster network. If you spli off the sales, internet connection, and customer service people, I am not sure how much cost saving that additional competition would lead to.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer to bbeesley

Premium Member

to bbeesley
The problems you are bringing up are due to corruption and poor regulation rather than something inherent to regulation itself. You also ignore the question of how to bring competition back into the equation when the corporations choose to remove or limit it.

bbeesley
join:2003-08-07
Richardson, TX

bbeesley

Member

said by CXM_Splicer:

something inherent to regulation itself.

Actually, they are the very nature of the fact that regulatory authorities often lack a full and broad understanding of what they are regulating, and that they are heavily influenced by groups wishing to have the regulation provide them benefit

In your example, you are upset because the regulation provides benefit to the big ISPs at the cost of being arguably punitive to the consumer....because the regulatory authority was influenced by those companies, the regulation ended up favoring them.

Where the regulatory authority does the opposite and cedes to the consumer groups, the regulation often ends up being punitive to the companies, impacting their profits and historically slowing innovation.

Several years ago, I argued - successfully - in my Master's Telecom Regulation class that because of these outside influences seeking their own benefit, regulation could never be balanced and would always end up having an often unexpected consequences.

So, I believe that in light of regulation usually being feckless and often punitive in unexpected ways to everyone involved, it is best if we just err on the side of having less of it.
said by CXM_Splicer:

You also ignore the question of how to bring competition back into the equation

Actually, the concept of "bringing competition" seems to be counter intuitive to me. Any company competing to bring a return on their investment is going to act in their own interest. If they are successful, then arguably they will eventually become dominant...but it is important to note that they did so by initially taking risk and ultimately doing something better.

I find it troubling when we would suggest that we take away from one company with the intent that it will somehow be "fair" to others. I certainly wouldn't want the government to take a room from my house and give it to someone who couldn't afford a place to stay in the interest of making things more "fair"....in regard to the idea that big companies are "removing competition"

We already have strong laws against uncompetive practices (Sherman Act, Robinson-Patman Act, etc) so I don't think further regulation would be helpful but perhaps enforcement would.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

From your reasoning, I would assume that you don't see any problem at all with a monopolistic situation or lack of competition leading to a similar outcome. After all, that is exactly what would bring the best return on their investment. In fact, since you see regulations as necessarily unbalanced, I would assume you would also be for the elimination of the Sherman Act, Robinson-Patman Act, etc. If not, please explain why these regulations are ok but others create an imbalance.

I wholeheartedly disagree with your position. Companies have amply demonstrated that they will toe the line of legality in order to maximize their profits and I am all for pushing that line back when they take advantage. I am not terribly concerned with seeming 'fair' to them as they have no concern of being fair to their customers. If regulations hurt their bottom line then perhaps they should not force the hand of the regulators? Just a thought.

Your analogy to taking a room in your house is not even close to the mark. To the best of my knowledge, no one is proposing taking property from Comcast nor is your house a monopolistic situation where everyone is forced to rent from either you or your friend. If that were the case, I would definitely recommend rent control regulations. Taking your property away would not be the proper response but limiting your ability to control and/or profit from the situation would be.

The problem with the insistence of 'free market principals' (a/k/a less regulation) is that there is a physical limitation to how many wireline companies can service an area. That limitation automatically creates the same imbalance you claim results from regulation. Regulations should be an attempt to correct that imbalance. The primary driver I see in holding back innovation is not regulation but the very attempt of them to maximize profits. Why buy a new cow if there is still milk in this one's teat? The only time companies show innovation is if they have an analysis showing it will increase their bottom line; it has very little to do with regulation. Are you aware that cell phone technology was rolled out by the bells during their time of heaviest regulation?

I still see you focusing on the corruption/special interest aspect of regulation. I am glad you see that this is a direct result of the companies themselves altering the situation to maximize their profitability. When they throw money at the problem, of course you will have defective regulations. Personally, I don't think the baby should be thrown out with the bathwater... fix the regulations, don't eliminate them. Is it your opinion that Comcast is breaking consumer regulations that better enforcement would correct? I would be all for much higher financial penalties but, ultimately, I feel we need stronger regulations.

bbeesley
join:2003-08-07
Richardson, TX

bbeesley

Member

said by CXM_Splicer:

you don't see any problem at all with a monopolistic situation or lack of competition leading to a similar outcome.

Actually, I do...the issue I have is the solutions being offered won't actually solve the problem and will likely result in us being worse off.
CXM_Splicer
Looking at the bigger picture
Premium Member
join:2011-08-11
NYC

CXM_Splicer

Premium Member

The specific proposal (to classify ISPs as 'Utilities') may or may not help the situation. I would say that they should be held to minimum service requirements, repair times, QOS measures, etc. but I agree not all utility regulations would be good nor required of ISPs. In the more immediate situation, I would recommend against allowing Comcast and TW to merge. We the people (who grant their corporate charters) would not benefit from such a merger.

bbeesley
join:2003-08-07
Richardson, TX

1 recommendation

bbeesley

Member

said by CXM_Splicer:

they should be held to minimum service requirements, repair times, QOS measures, etc.

I agree with you on this...I think we just disagree on what the most effective mechanism for accomplishing the enforcement.

I don't have a really good answer on how to make this happen, I just don't trust government at any level to do it effectively and not just make it worse.