It's interesting how pure competition and "rational self-interest" got us the likes of Comcast and Cox and Verizon and all these other awful, awful companies. They quickly locked up the market, injected their own lobbyists into Washington, and then were content to provide a poor service for a lot of money.
What is shaking them out of their complacency now is not "the market" or "competition" as it's usually understood. It's a very large company, with tons of cash, led by someone (Larry Page) with goals beyond pure financial gains and rock-bottom self-interest.
Perhaps it's time to go back to the drawing board, and figure out what's wrong with these purely mechanistic models of society and the markets. It seems like it's time to ask ourselves if a dose of self-less-ness is perhaps required to make the whole system work better. Not a very large dose, mind you, but just a little bit; anything over the current level of zero, really.
It takes a lot of money to break into a captured market, which is why it takes a large company to do it. Google entering the ISP market has done more to shake up and spur on the incumbents in the past couple of years than anything regulators have done. And furthermore, you can be assured that their doing so is absolutely self-interested; Google isn't building fiber for the betterment of humanity, they're building it to improve the delivery of their services which make them money.
Verizon wants to wire up the yuppie neighborhoods here in Baltimore with FiOS. That'd be major competition for Comcast, because those yuppies subscribing to triple play are where all the money comes form. The city won't let them do it, because they demand Verizon wire up all the poor neighborhoods too (which cost just as much to service but won't turn a profit).
Is the theory that Comcast has regulatory-captured the Baltimore city government, forcing them to impose this requirement? Because I've seen absolutely zero evidence for that proposition.
When Google goes into cities, they demand exemption from regulation. The regulations they get exemption from are not ones that give benefits to incumbents. They are liberal public policy choices: you have to wire up poor neighborhoods if you want to wire up rich ones, you have to kick in money to support public access TV, you have to get permits and your fiber cabinets can't be too big, etc.
It's strange how cities force companies to wire this way. It's as if they forced a luxury brand, Hermès, say, to open a store in the most shit-hole, criminal part of town in order to gain the right to open a store in the yuppie part of town.
So the question is whether Comcast has to meet the same standard of building out their network in poor neighborhoods as Verizon does.
This is a classic case where government should be laying fiber to cover the last mile and selling access at cost to any ISP that wants it. The equipment on either end can be the ISP's equipment, a fiber is a fiber. Except for cuts, there's nearly no maintenance required.
And just by the fact that there are three horrible equally sized companys there we allready know that they are not able to change because if they could, they would allready be winning over market share there.
Also its easy for one of these providers to sell of there own fibers to many providers on top of itself so they dont have to figure out all the costumer managment and things like that.
There are many, many option outthere but the are currenly very hard to take (because of old and new regulation).
Everything from a truly huge company building a huge new net for the hole country in order to provit from economy of scale to small local companys that take offer specialised communitys and then spread from there.
In principle letting government lay down the fiber sound like a fine idea that can work, but juging by other technical project governemnt do I have my doutes.
Let's say I launch a startup fiber ISP that serves a small area, planning to use the profit from that area to expand to cover the entire country, and to show investors there's money to be made so they'll loan me money for the expansion. I invest a bunch of cash digging up the roads to lay new cables.
All the national incumbents have to do is drop their prices and increase their performance - which they can easily subsidize with profits from the vast majority of the country where my startup isn't operating, and economies of scale.
Now I've spent a load of money digging up the roads to launch a service that is lower performance and more expensive than my subsidized competitors. My planned expansion never goes ahead, and my initial investors lose their capital.
Far better to spend my time on a photo sharing app, where you only need nine employees to start a company you can sell to facebook for a billion dollars :)
In the real market people take advantage of oppertunities, large companies are not always so flexible and dynamic for example, companies can survive in small market, more companies may join.Maybe for some other reason all the streets have to be opened and you can somehow get your cable in for cheap. Maybe you have a groupes of special costumers that require special networks and you can give them a discount because you wanted to do that anyway.
The are for example universtiy networks in some country that are connected by glass outside of the internet. Now if you can find a costumer like that you can lay some internet glass as well.
Or how about a big company that did something diffrent joining the game (google in this case), they will not be underpriced so easly.
A small company could survive in a single place or town, and if they can do it other might be able to do it as well.
There are a millions of possible ways that your mechanical view does not take into account, and that why we have markets. Im not smart enougth to figure out a good solution, you are not smart enougth but somebody might come up with something. There were many great and powerful countrys that crashed in a suprisingly short time because of these sorts of things.
If we can get away from "regulatory capture" we have change to see these effects. For what is worth in Switzerland a new company is laying down massiv amount of fiber right now and the competition has yet to dynamiclly rearange themself to this new challange. Also even if it fails, its not at all clear that once prices went down, they will go up again. Just because the new competition is gone, does not mean a company wants to take the marketing hit of rising the price again. People might switch to the equally bad competition just because they are angrey at a company raising prices on them.
It's not the bullet that kills the victim, it's the assassin that pulls the trigger.
I've always had the impression that it's more a matter of timescales. Places do what's best for them in the next year, not the next 50yrs. If companies thought further ahead and building long term plans and potential would be a reason to spend capital, then I think we'd see a very different market, in many markets.
This doesn't paint an accurate picture. Google isn't deploying Fiber out of any notion of selflessness. This is a competitive play, and a very good one at that.
You say selfless ideals, I say this is exactly how "the market" and "competition" are commonly understood to function -- in the absence of corruption, regulatory capture and state granted monopolies.
Absolutely it is, yes. You're just not looking beyond that level.
Consider the extreme: in a single second, there aren't any discernible market pressures in the ISP industry, and it would be weird to expect it.
Which is mainly to say that it is important to talk about how quickly you want competition and market forces to come into play (not just that you want them to) when talking about why and how to change "the system".
Ergo, it was not a free market and it was not laissez-faire capitalism.
In a free market, i.e. laissez-faire capitalism, anybody is free to do whatever they want as long as they don't initiate the use of force, including the government, so you could not get into the situation you describe in the first place.
http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1...
It's either pure competition, or they're injecting lobbyists to tilt the table in their favor, but not both.
EX: 20,000 employs and or contractors and companies can’t own shares of other companies without being included in that cap. Outsourcing seems like the obvious loophole, but hardly an insurmountable barrier.
Though, increasing tax load as companies scale is probably a much better option. Not that there is a realistic chance of this passing any time soon, but large companies are harmful to both democracy and free markets so it's likely to be tried by someone.
PS: The only real counter argument I can think of is global completion.
Edit: (3 downvotes no responces.) How odd, looks like I hit one of those things you can't say. http://www.paulgraham.com/say.html I wonder why?
