
NCTA Agrees Title II Virtuous Cycle Is Working - dsr_
http://www.wetmachine.com/tales-of-the-sausage-factory/ncta-agrees-title-ii-virtuous-cycle-totally-working-or-pais-economics-v-the-actual-real-world/
======
apeace
I've always felt the real problem is the monopolies. Net Neutrality doesn't
fix that--it's up to local governments to fix it.

In the early 2000's when my home town still had dial-up only, Comcast came
into the town and offered to build out cable broadband. They would even throw
in a $300k grant to the school district for new laptops. The only catch? They
needed to be granted a monopoly on all the telephone poles in the town. The
town agreed.

As circulated on HN recently, the town of Chattanooga, TN is another
interesting example[0]. Chattanooga made the smart decision many years ago not
to grant a monopoly in exchange for a fiber build-out. Instead they built
their own fiber network. Years later they offered to expand their ISP to the
surrounding towns, which only had dial-up and satellite. It would cost zero
taxpayer dollars. Instead the state decided to give $45 million to
Comcast/AT&T to build out--get this--DSL!

As the parent article points out: despite cost-per-bit plummeting over the
years, the cost to consumers isn't going down. The problem is monopolies
naively being granted by local governments. In a world where that didn't
happen, Pai would be right: ISPs would be forced to compete on features and
quality, and so nobody would be talking about bundling websites like they do
with cable channels, or whatever other nonsense Net Neutrality is designed to
prevent.

[0] [https://motherboard.vice.com/en_us/article/tennessee-
could-g...](https://motherboard.vice.com/en_us/article/tennessee-could-give-
taxpayers-americas-fastest-internet-for-free-but-it-will-give-comcast-and-
atandt-dollar45-million-instead)

~~~
HillaryBriss
I'm pessimistic about both arrangements.

I don't favor monopolies but, because I live in Los Angeles, I see that a city
can act like a sluggish, greedy monopoly, too.

Here, the city owns the roads and electrical grid, and it's doing a mediocre
or poor job of maintenance. We don't, for example, have "state of the art high
throughput roads." Many of the roads are crumbling and need complete
replacement. There's a huge backlog.

There's also a multi-year backlog of decaying wooden power poles which need to
be replaced because they're in danger of coming down during a windstorm.

And, when people go to the expense of having solar panels installed on their
homes, they have to wait many months for the city to come out and inspect and
give permission to connect to the grid.

The city does not have a good handle on the problems. (Don't get me started
about the leaky water mains.) City ownership of infrastructure is no guarantee
of good service and value for money either.

And of course, as you say, with monopolies, we're screwed too. I don't see any
easy answer.

~~~
apeace
All very good points, with great examples from where you live.

At the very least when decisions are made on a local level as opposed to
state/federal, there is more of a chance that 1) people will be able to
wrangle control of the situation by voting, and 2) the people who don't like
the result can move away.

But you're right, it sounds like there is no easy answer for Los Angeles.

------
mcguire
One of the things Richard Thaler points out in _Misbehaving_ (on behavioral
economics) is that traditional economics cannot decide whether out is
descriptive or normative.

Descriptive economics would be the science of how people actually engage in
economic activity. Normative economics describes how formally defined rational
actors should behave to maximize their formally defined utility.

Unfortunately, what economists do is create a normative model and then
retroactively assert that real people follow the model. As a result, their
conclusions don't necessarily relate to the real world.

[https://www.bls.gov/opub/mlr/2016/book-review/behavioral-
eco...](https://www.bls.gov/opub/mlr/2016/book-review/behavioral-
economics.htm)

~~~
dragonwriter
> One of the things Richard Thaler points out in Misbehaving (on behavioral
> economics) is that traditional economics cannot decide whether out is
> descriptive or normative.

That's because "traditional economics" doesn't actually exist as an entity,
it's a strawman.

It can't "decide" because it includes different people amd groups who can
decide, and who have decided differently.

~~~
mcguire
" _Suppose the government its economy plunge into a deep recession and decides
to give everyone a one-time tax cut of $1,000 per person. The consumption
function tells us how much of the money will be spent and how much will be
saved. Economic thinking about the consumption function changed quite
dramatically between the mid-1930s and the mid-1950s._

" _[Keynes] assumed that if a household received some incremental income, it
would consume a fixed proportion of that extra income.... If we take the case
of a middle-class family that saves 5% of any additional income earned, Keynes
predicts that the MPC from a $1000 windfall would be 95%, or $950._

" _[Milton Friedman] proposed that households would use a three year horizon
to determine what their permanent income is, so would divide the extra
spending evenly over the next three years. That means that in the first year,
the family would spend about $317._

" _[Franco Modigliani] predicts that the windfall will be consumed evenly over
[the remainder of the individual 's lifetime, say 40 years] meaning that the
MPC to consume from the windfall will be just $25 per year._

" _[Robert Barro] assumes that their time horizon is effectively forever. In
this world, the predictions about how much money will be spent depend on from
where the money comes. If the windfall had come from a lucky night at the
casino, Barro would make the same prediction as Modigliani about consumption.
But if the windfall is a temporary tax cut, the beneficiary realizes that his
heir 's taxes will eventually have to go up to pay for the cut he is
receiving, so he won't spend any of it._

" _I gave a talk in the Cornell psychology department. I began my talk by
sketching Modigliani 's life-cycle hypothesis. My description was straight-
forward, but to judge from the audience reaction, you would have thought this
theory of savings was hilarious. Fortunately, the economist Bob Frank was
there. When the bedlam subsided, he assured everyone that I had not made
anything up. The psychologists remained stunned in disbelief, wondering how
their economics department colleagues could have such wacky views of human
behavior._

p. 94-97

~~~
dragonwriter
None of that is relevant to the ability of “traditional economics” to decide
between being a descriptive and a normative field, as all are examples of
hypothesized predictive models, not normative ones. They may seem naive from
the perspective of a field focussed on behavior at a more micro level (even
microeconomics aims at predicting higher-level aggregate behavior than
psychology), and, heck, they may even _be_ hopelessly naive, but that's not
even German e to the question.

(And whether or not an economist was there to put an imprimatur on it, _all_
of those descriptions are mischaracterizations, but again that's neither here
nor there.)

------
pdimitar
Bulgaria is a good example why net neutrality works. The capital city of Sofia
is brimming with ISPs -- last time I checked, at least 15 companies with good
coverage, fiber, and very affordable ($7 to $20 for 100Mbps ingress and
egress) connection services. And probably 50 or so more which are smaller and
with less coverage, but still with strong connections.

No prioritized traffic. No metered traffic. No endless Facebook and Whatsapp
traffic. Shielded and reinforced fiber-optic cables, laid underground. Rain
pours down as if it's the Apocalypse, both of my connections never flinch.

It's different in the USA. It's vast, it's costly to make a big fiber-optic
network, and the company lobbies and legal monopolies are rampant. I don't
think you guys will manage to push back anytime soon. You need somebody like
Elon Musk coming over and saying "I don't care about being in a VIP oligopoly
club, I'll do my own thing". Then you'll find Comcast suddenly improving
service and dropping prices.

People like Pai aren't stopped by words. There has to be a way for the market
to do its magic, otherwise it'll only get worse for the USA.

~~~
otoburb
>> _The capital city of Sofia is brimming with ISPs -- last time I checked, at
least 15 companies with good coverage, fiber, and very affordable ($7 to $20
for 100Mbps ingress and egress) connection services._

Sounds like a domestic sector ripe for consolidation. I hope that doesn't
happen for the sake of the consumers, but that seems like an overwhelmingly
large number of players for a total market size of only 1.7M subscribers[1],
which is even smaller from the census figures of roughly 500K households.

[1]
[https://en.wikipedia.org/wiki/Sofia#Demographics](https://en.wikipedia.org/wiki/Sofia#Demographics)

~~~
pdimitar
Some of the bigger players have been buying smaller ones but in general the
sector almost hasn't changed because the consumers switch away if somebody
slacks a lot -- the tricks of "we're in a merge and you may experience some
disruptions in the process" and a lot of other corporate lingo absolutely
don't fly around here. People just smile and switch away.

The mobile operators also pushed a lot for consolidation several years ago but
it seems they didn't have the leverage (and the money) to make it happen.
Thank the gods for that.

So far it's all good, we're enjoying healthy competition and extremely good
ISPs.

