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Net neutrality (samaltman.com)
497 points by austenallred on July 14, 2014 | hide | past | web | favorite | 252 comments



I wonder. I wonder. I live in Russia and I have 2-3 very good providers on the block constantly competing with each other and offering better connection and prices. They would show up on time and connect you very fast. They fix things quickly (in my government maintained house, the basement once became filled with water after the rain, and the wires were damaged. Even though it wasn't their fault, the ISP came and fixed it the same day). I pay about $120 a year for my internet. It's faster than anything I saw when in the US. And that's in Russia, that authoritarian backward country. Do you know why I pay so little? That's because we have the free-est goddamn ISP market, government hasn't been interfering with it (it's starting to, though). Everything I see government touches is of low quality, whereas everything that's good in my country is private enterprise.

And yet, you claim free market fails. Dear american internet users. The only reason you have what you have - shitty speeds and near monopolies - is BECAUSE you have government sticking its nose where it shouldn't (I'd say, it shouldn't stick its nose anywhere, but that's another story). Comcast is the second largest lobbyist in Washington. And still you want to fix the problem by introducing more of the same, that is more regulation and more government, whereas the only way to fix things is to not allow governmental interference in the first place. You can't blame evil Comcast. Why? Because if not them, someone else would lobby and win. If you can lobby, you have to or you're gone.


Do you know why I pay so little? That's because we have the free-est goddamn ISP market

Yes, but also the communist architecture. Those buildings are easier to wire and the way they're managed makes it easier to get a permit. It's the same in Poland, if you live in one of those atrocious apartment blocks[1], you'll have a pick of three, or even seven various ISPs but move to the suburbs and it's suddenly either the national telekom or some crappy wireless.

Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl. And having a garden is almost a birthright. Ironically, it's the Americans in the big cities who favour regulation, and Americans outside of them who don't.

[1] http://www.michaeltotten.com/images/Communist%20Blocks%20Geo...


I live in the suburbs. Suburbs and especially new buildings in suburbs are best connected.


> Ironically, it's the Americans in the big cities who favour regulation, and Americans outside of them who don't.

Not quite, they just favour different regulation.

> Deregulation would probably help Americans living in densely populated areas but not so much in the sprawl.

Perhaps that would convince some people to de-sprawl?


> Do you know why I pay so little? That's because we have the free-est goddamn ISP market

This is a little imprecise; "free" and "free of governmental interference" are not the same thing. More likely it is because you have a _competitive_ ISP market. That might in turn be because of how free your market is, but in order to really know we'd have to know how your area solved the problems that led city governments to grant monopolies in the first place.


>"free" and "free of governmental interference" are not the same thing.

Since "free" in this context means absence of coercion against extant or would-be competitors, and since government regulatory efforts are a source of such anti-competitive coercion, unless one is concerned with firms sending hit squads against each other (which would more rightly be considered "crime"), the distinction isn't particularly useful.


Are you suggesting the only possible forms of anti-competitive coercion are government regulation or hit squads?


If it is voluntary it is not coercive. You can always not deal with your competition on unfair terms. In what circumstance could a 3rd party non-violent entity coerce you? The biggest one I can think of is "buying you out" but that is still either voluntary, in that the owners agree on the buyout, or it is a buyout of a publicly traded company, and I can't even get started on how non-free market the stock market is, but even then you elected to sell ownership in a public marketplace voluntarily and took that risk.


>In what circumstance could a 3rd party non-violent entity coerce you?

Predatory pricing. Buying up necessary capital. Paying other companies to not deal with you (Suppliers, Retailers, Advertisers etc.)

All completely voluntary, and these are just off the top of my head.


>Predatory pricing.

Offering a lower price to consumers than your competition is not coercion against a competitor.

>Buying up necessary capital.

Offering a higher price to suppliers than your competition is not coercion against a competitor.

>Paying other companies to not deal with you

Entering into exclusive deals with other firms is not coercion against a competitor.


> Offering a lower price to consumers than your competition is not coercion against a competitor.

It is if you are offering a price lower than your costs which you offset by cash from earlier deals, which the new upstart cannot do. When the new upstart is bankrupt you push the price higher, because now there's no competition anymore. That's the reason such stunts are forbidden (at least in civilized countries).


And when you go bankrupt because you're unable to run your business, you'd consider that completely voluntary?


How is it not voluntary? I started it. I knew upfront I could fail. Has anyone else forced me to fail?


Once you start the company, you are subject to market pressures, and when another company can manipulate those pressures, they can manipulate you.

Indeed, even your decision of whether to start the company is influenced by the same market pressures.


If you can't profit off an enterprise, then there is not enough demand to justify your existance. If the market leader is going to undercut you to drive you out of business to then jack up prices to exploit consumers, assuming no artificial barriers to entering the market occur (mostly legal exploitation) or the price to entry is not too high, then as soon as they up their rates they reopen territory for competitors to arise.

In the end, if the market leader is constantly crushing competitors through undercutting to maintain their position, they are not really exploiting their customers at a monopoly and its a market win. It is still competition - the leader just moves to eliminate competition (which would piss off shareholders or anyone in general with a long term outlook on the company) rather than compete against it. As long as they cannot stop competition (and in a voluntary fair system, they cannot) then they have to deal with it one way or another.


How do ISPs gain the rights to dig up the streets in Russia?


Don't know about Russia, but in Romania they didn't dig (or at least not until recently). Most of the ISPs would run their cables between utility poles, trees and buildings directly. This created messes like [1] and [2], but it was cheap. I think back in 2012 Parliament passed a law forcing all ISPs and cable companies to bury the cables.

1 - http://s.wsj.net/media/050710pow14_J_20100506172349.jpg

2 - http://farm7.static.flickr.com/6142/6205357944_8056b01e05_m....


Regulation serves the public when it ensures a level playing field. Through the law, protection of property rights, a fair and impartial judicial system, the right to petition your government, etc.

Regulation harms the public when it thwarts those democratic institutions. By protecting incumbents, limiting liability, forcing litigants into arbitration, hiding important information, etc.

Some things only government can provide well. Clean air, fire fighters, standards. Matters of public safety and health really shouldn't be (wholly) privatized, because profit motive is in direct opposition to the public good.

Maybe some day government can provide good (enough) internet service. Perhaps after the technology and rate of change settle down. But not today.


Why is it that only government can provide some things well? Can you prove it both logically and empirically?


Some goods and services are dominated by up-front costs. That makes usage-based billing economically harmful by discouraging usage of a use-it-or-lose-it resource that has already been paid for. It also makes competition extremely inefficient because each competitor has to duplicate the high up-front cost of e.g. building a last mile network. The result when left to private enterprise is generally a monopoly that charges monopoly rents for access to the resource, and in cases where there is competition (e.g. because two existing monopoly markets merged through technological change, as with telephone and cable) the competition is highly inefficient because each competitor has to duplicate each other's costs. And if competition exists then the competitors are essentially required to engage in some form of explicit or implicit collusion to not lower prices, since in a market dominated by up-front costs each competitor can always gain revenue by lowering prices to gain customers, until the competitor responds in kind ultimately causing all providers to be unable to recover their up-front costs.

Having the government pay for such resources (as with roads) with tax dollars and then providing free access to the public is massively more efficient than private enterprise, because you eliminate the incentive for rent-seeking and economically harmful usage-based billing and for that matter eliminate all the overhead of billing, marketing, collections, denying access to non-subscribers, etc. But the only way to do this is if the resource can be funded in some other way, specifically through taxation.


Having the government pay for such resources (as with roads) ... is massively more efficient than private enterprise

Good point that needs repeating, thank you.

I agree with business management guru Peter Drucker when he states that waste is immoral.

I support the most efficient solutions for a context, whether its collectivism, competition, cooperatives, lotteries, various kinds of auctions, whatever.

Whenever a better solution is found, I will support that. Because, you know, things change.


Another thing: you have a problem with private monopolies, but when a government runs some business, like building roads - it's somehow fine? With a private enterprise, even if it is a monopoly, I still have a choice: I can stop paying and not use the service. Can I stop paying to the government?


When a democratic government makes decisions, everyone gets an equal share in that choice. If the road gets built, it's because most people agree it will benefit them.

When private enterprise makes decisions, those with more money get more choice. If a road gets built, it's because those with money agree it will benefit them.

If a democracy starts letting the rich have more say, then it needs to be strengthened to resist them, not weakened so they can do as they please.


When a democratic government makes decisions, everyone gets an equal share in that choice.

Isn't this an assumption? Perhaps if the system were such that every issue were up to a nation-wide popular vote, the statement would be true...not that such a system is a good idea.

Some votes are worth infinitely more than others. That is to say, many votes are worth nothing. If you vote for the opposition party in a district that is 75% supportive of the incumbent party, your vote doesn't matter. It will (hopefully) be counted, but no one will take your opinion into account.

The other assumption is that majority rule is something worth working towards. Everyone wants government power to work for them. Problem is, it's a power that can't really be controlled. You might get your way this election cycle, but that same power could be used against you when the uneducated reactionaries rise up next time around.


I'm not going to deny that many existing democracies have been weakened, or were conceived too weak in the first place. My point is that the solution is to fix the democracy, not abolish the only thing that has any limiting power on the rich to exert their will.


> you have a problem with private monopolies, but when a government runs some business, like building roads - it's somehow fine?

The theory of free market capitalism presupposes competitive pressure as a check on the power of market participants. A monopoly has no such competition, allowing it to be abusive and reactionary.

There is no such expectation of competition with governments. The check on the government's power comes from the political system. Checks and balances and the four boxes of liberty. It is completely possible for this to fail too, but when that happens the efficiency of telecommunications provisioning is the least of your worries.

> With a private enterprise, even if it is a monopoly, I still have a choice: I can stop paying and not use the service. Can I stop paying to the government?

Of course you can. You can move to another country, or another planet. It's becoming about as practical as not having internet service.


> economically harmful usage-based billing and for that matter eliminate all the overhead of billing, marketing, collections, denying access to non-subscribers

So are you saying that feeding the whole IRS is LESS expensive than having an automated billing system that could track who is subscribed and who can enter a certain road? Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation? Too expensive to check tickets and deny access to free riders. It's better to just let everyone fly for free. Hell, you can say anything is more effective when funded by taxation. But that doesn't make it true. I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example. It's like as if I had to pay the same price for 1 airline ticket as the other person paid for 10. And while it may be a burden for a company to deploy a billing system, with government the burden is on the consumer: I have to fill all those tax forms and make sure everything is correct (or pay an accountant) - talking about some economically harmful activity, I don't like it when someone conscripts me to be a part-time accountant.

Your claims that government provided services are better because their production is more effective is not proven. Show me the exact mechanism. Show me how is it cheaper for everyone and not just for some? Can you demonstrate that the money spend on running the IRS is actually less than private enterprises would spend on the billing system? If you can't do it, then your words shall be called a speculation, not proof.


> So are you saying that feeding the whole IRS is LESS expensive than having an automated billing system that could track who is subscribed and who can enter a certain road?

The IRS is not a relevant cost because deciding not to have municipal fiber doesn't cause the IRS to go away. You have to pay for it regardless, unless your proposal is to have no taxes.

> Because if it's not more effective, then, by the same token, why don't we also fund air travel with taxation?

Because air travel has a significant unit cost. You have to pay for fuel, pilots and flight and ground crews, significantly increased maintenance of aircraft, etc. Moreover, governments have often subsidized the up-front costs of air travel, like airports and planes.

> I don't understand why do I have to subsidize someone who uses roads everyday, while I use it once a week, for example.

Because you're not subsidizing them, you're asking them to subsidize you. It doesn't require fewer road workers to pave the road in front of your house and the weather doesn't stop creating potholes just because you don't drive on it as much. You're asking for there to be a road in front of your house so that you can drive to the beach or call a cab or get on a bus or have an ambulance come to your house and you want to claim the advantages of having that available, when the availability whatsoever is the primary cost, without paying your share of the cost of that availability.


Show me the exact mechanism.

What measure of proof do you require?

PS- AnthonyMouse has been exceedingly gracious and patient with you.


> And yet, you claim free market fails.

Seriously? You have a cheaper/better internet access in Russia compared to the USA and suddenly the Russian (extremely corrupted) political and social model (a modern monarchy of sorts) became a model economy over the US?

PS. I can't find the source, but I've read that in the last Russian elections more than 35% of the population wanted to return back to communism.


Off by a factor of 2, if you are referring to the Presidential elections in Russia, where the communist party candidate received less than 20% of the vote. 35% roughly includes all parties except Putin's. Although I am not sure that voting against Putin (or voting for the communist party, even) is equivalent to voting to return to communism. Were you referring to a poll, or perhaps another election?


Since I can't find the link, I won't disagree on the numbers you're reporting, but seriously the only one who trusts Russian election results must be Putin (and you).

ps. I'm not saying that he wouldn't have won anyway, but I'm sure that the elections in Russia are extremely well guarded.


I'll admit that I gave official election figures, as estimated by Russian election officials. They are at link [0]. Judging by official results, support for the communist party in Russia has not been anywhere near 30% since the 90's. However the Communist Party is Russia's straw man party, it is built to provide a weak counterexample to Putin and distract those who would otherwise support the main liberal opposition. This is fairly obvious whether you go by official results or western polls. I'm not sure why you think I trust the elections though; you seem to think I am arguing in favor of Putin when I am not. I simply don't think that throwing around a figure like "35% of Russians support communism" is a good idea when it is purposefully misleading and there is nothing to back it up.

[0] http://www.parties-and-elections.eu/russia.html


I never said anything about the "Russian model". I simply suggested that where government stays out of the way, you get cheaper and better services. The quality of our internet has nothing to do with our government or social model, but with how free market and free trade work. If you had free market in Telecom industry in the US, you would also enjoy the same quality and prices.


But does the government really stay out of the way? Maybe my view is biased, but I always had the impression that in Russia a lot was about party and influential people connections.


That actually seems like a harder senario to rationalise, that a corrupt oligarchy is providing more competition and better services than a free market.

While Russia does have it's political elites and corruption (Like pretty much every other country) they aren't idiots, they have been on the other side of free markets and there are few there that know it's value.


People say US or EU are not corrupt or are less corrupt. That is a misrepresentation. They are equally corrupt in the higher levels (though they managed to convince people they are not). What happened there is consolidation. Thus if you want get things done, you have to spend more money lobbying at higher levels, because the lower level is scared of consequences. So a consolidation of corruption happened.

In the US when you want to win a court case, you spend money hiring top lawyers. In Russia you buy a judge. Results are the same. Who's to say one way is better than the other? You still need money to win, so how is it fair to the poor? In fact, I think it's incredibly irresponsible and actually immoral to tell the poor the system is fair while it's not.

The question is, which system restricts the free market more. That is very debatable. In some areas Russia's incredibly backwards simply because corruption expenses are higher than the equivalent expenses would be for complying with the regulation in the US. In other areas, it's great. City transportation is great, for instance. We have many private jitney services and they are not expensive, so people use them all the time. Same goes for cab services: you can literally raise hand and get any car at any time of day for much cheaper than in the US. You don't need licences to drive people around (at least nobody enforces that).

So, I'd say, in some areas the US definitely sucks. The quality of life you have in the US is most definitely not thanks to your government, but thanks to your private enterprises.


> In the US when you want to win a court case, you spend money hiring top lawyers. In Russia you buy a judge. Results are the same.

That's an extremely dangerous oversimplification: It's a fact that getting a good lawyer will give you more chances. But buying the judge it's a totally different thing.


Not at all different, if you look at the results. Both in Russia and in the US, if you don't have money, people can threaten and bully you with court, because they know for sure you cannot win.

Your claim is that the process somehow makes a difference. But if the results are the same, then it doesn't. It's like saying that war is NOT murder, because it's being declared by people in Washington wearing suits. Or that taxation is not theft because it's being done by a "legit" three letter agency.


If one of those 2-3 providers bought the others should the government intervene in the free market to stop it?

BTW do they operate their own wires to the building? If not is the owner of the wires allowed to compete in the market, raise prices or deny service?


No. If one of them grew and bought others and provided excellent service no one could outcompete, what's the point to interfere? I'm not against monopolies per se. I'm against monopolies that are created using government power. However, if this new monopolist started providing shitty service, competitors would emerge immediately. Granted the government wouldn't prevent them from emerging by demanding to purchase expensive licences and comply with regulations.


Why do you assume that it would be the growing company with a better offer? Takeovers are more often done with investment/debt.

Would the new competitor you envisage need to run their own?


That's naïve - it would be exceptionally difficult for a new ISP to emerge countrywide even in the a sense of regulation. It's very capital-intensive!


That's very well. Some industries mature and new companies don't enter those industries because they are taken. For example, not many people attempt to go into the soft drinks market. Why? Because there's Coca-Cola and Pepsi. How idiotic would that seem if government started saying things like "we need soft drinks neutrality so every McDonalds is now obligated to sell you both Coca Cola or Pepsi and that new competitor who just entered the market". That wouldn't solve any real problem, as you can imagine. If there is a problem, let consumers decide directly, not government.


>How idiotic would that seem if government started saying things like "we need soft drinks neutrality

Well yeah, that would be a pretty awkward way to encourage competition in the soft drinks market.

However, they do say things like: "You can't temporarily drop your prices just to wipe out competition." and "You can't agree on prices with Pepsi to avoid price competition" which work pretty well to keep that market competitive.


There's no evidence predatory pricing is effective. It's fear mongering.

Suppose you have company A trying to outprice company B, which is a much smaller company. If company A wants to drop its prices, it can't just drop prices on just the number of products equivalent to the market share of B, it has to drop prices on the whole line of products of its own. Even if it succeeds in defeating company B, it has to make sure it will make up for the losses in the future. And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing? Therefore, for company A it's much less riskier to compete with B on the market by doing honest things, rather than cheating with predatory pricing and hoping company C will not come to crush it.


>it has to drop prices on the whole line of products of its own.

Why?

>And who's to guarantee another company C isn't going to use the situation, knowing full well company A cannot afford another round of predatory pricing?

The competitiveness of a market depends on the costs of entering it. If the amount of capital needed to enter the market is significant, new entrants willing to risk that much will be much less frequent.

Predatory pricing allows monopolies to artificially raise those costs, simply by amassing a reserve of cash. Indeed, the real problem is not company B being defeated, but company B never even trying because the returns just aren't enough to justify the inflated entry cost. Company C never gets a chance.


> Why?

Suppose you produce socks and another company does the same and tries to compete. You produce 1 million socks a month and another company only 10 thousand. You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business - since there is demand for the rest of 990k of socks at your high price, your competitor would simply grab another 10k of your socks market share and then you'll only be able to sell 980k at your high price and not 990k. You actually have to drop prices on all 1 million socks of yours, which is going to be pretty damn detrimental to your profits.

> The competitiveness of a market depends on the costs of entering it.

What's there to prevent a rich investor from entering the market and competing? Google had no problem competing with Apple on the smartphone market, it seems. The goal is not to allow anyone with no money to compete. The goal is to allow to compete companies who have sufficient resources to do so. That's what the competition is about.


> You produce 1 million socks a month and another company only 10 thousand. You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business

Except that with internet access, you can do exactly that. Any new competitor is going to have to choose to wire up a particular set of neighbourhoods with a particular 10 thousand customers in, and they're going to need a decent proportion of people in those neighbourhoods to sign up in order to make a profit. You can easily cut prices just for customers served by your smaller competitor whilst leaving them the same for everyone else - it doesn't matter that there's still demand elsewhere, because your competitor doesn't have infrastructure elsewhere.


Very good example of a difficult problem. The answer to it is not government. I always challenge myself and others with this: if you had a problem for which government seems like a very reasonable answer, can you design a better solution?

And indeed, you can. In this example you have to realize that what government is selling to consumers is the service of preventing eventual rise in prices after the competition is weeded out. If, as a consumer, I am worried about such predatory pricing as in your example, what is to prevent me from signing a contract with a company which specifically states "you are not allowed to raise the price"? Then this contract can be enforced by whichever private court and protection agency I hired (how this would work is a matter of a separate post, but I recommend reading "The Machinery Of Freedom" by David D. Friedman on that subject).

However, I don't really think you'd need that contract. What would really happen is that many companies would have infrastructure in many places (as is the case in my country) or you would have alternative connections (as, again, is the case in my country with a 4g operator Yota). Or you would have willing rich investors if they see that opportunity exists to disrupt the market. Finally, people may move and stop using the service if they dislike it.

There are all sorts of opportunities. Government is just one solution with a very high cost indeed: you have many people die in bloody wars which are run for your tax money and on your behalf (as is the case with both of our countries, I suppose). And no, however you wanted it, with government you can't have only the good things and none of the bad ones. It's logically impossible, because for a politician the economic incentives are always in the wrong place.


>Then this contract can be enforced by whichever private court and protection agency I hired

And how they will enforce this contract? If it involves the threat of violence, how is it better than government? If it doesn't, how does it enforce your contract against the threat of violence?

>It's logically impossible, because for a politician the economic incentives are always in the wrong place.

Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.


>And how they will enforce this contract? If it involves the threat of violence, how is it better than government? If it doesn't, how does it enforce your contract against the threat of violence?

I would recommend, again, watching David Friedman's talk on the "Machinery Of Freedom", it's on Youtube. He's got excellent examples and explanations. It's 20 mins and totally worth it. In short. on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning. With government, neither me, nor the company signed any contract with the government. The government just comes and starts interfering when it pleases.

>Can you elaborate on this? I would say democracy is the only structure we know of which has shown itself able to limit concentration of power.

You cannot know whether a politician is truly a good guy or if he's lying to you. The only way to know that is to give him power first. Notice how different the situation is with a businessman: a businessman should first produce something and convince you his product is good before you give him your money. If the product gets worse over time, everybody stops buying it and he goes out of business the next moment. Not so with a politician, who knows he's going to keep getting his salary at the very least, and hopefully bribes, for the next 4 years. A politician knows very well that his voters will keep paying taxes, whether or not they like what he does. That is because if they stop paying, they risk getting in trouble and will possibly go to jail. A businessman doesn't have that luxury. He cannot force you to pay, he can only convince you by offering something you genuinely want to buy. Of course a businessman can also lie to you, but unlike a politician, his lies is more easily discovered and you have the option to stop paying him immediately.

And so, the incentives for a politician are in the wrong place. If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that. But simply saying “we should elect good people” is not a mechanism. It is an intention, and intentions are not results.

What's the alternative? Having no politicians and having only the market. On the market, you can decide to buy or stop buying things immediately with your own money.


>I would recommend, again, watching David Friedman's talk on the "Machinery Of Freedom"

I will try and watch this when I get chance.

>on the difference on it from government violence: when a contract is signed with by me and some entity, we both agree that out conflicts are going to be solved in such and such manner and in such and such courts. That is, if there is going to be some violence involved, we both know it from the beginning.

So you have some entity with the power to enforce contracts by violence? What incentive do they have to do that instead of simply mugging you? A democratic government has to care about elections. A private company has no such concerns.

>If you can show me an exact mechanism how to reliably elect politicians who would ignore those incentives and do good instead of those incentives offering them a much more profitable thing to do, then I would gladly accept that.

Well first of all, you're assuming that I mean representative democracy, rather than direct democracy. The system I've been thinking of recently tries to combine the best of both: Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time.

> On the market, you can decide to buy or stop buying things immediately with your own money.

Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.


>So you have some entity with the power to enforce contracts by violence? What incentive do they have to do that instead of simply mugging you? A democratic government has to care about elections. A private company has no such concerns.

Of course, it's the first reaction to say "but your private protection agencies are going to turn into de-facto governments". If you think long enough about it, you understand that they won't. Violence is never profitable unless somebody else pays for it (as with the government). Private protection agencies are in the business to make money long term, just like every other business. And that is only possible if you produce something people truly want.

So, two things as incentives to not rob you. 1. Your future business - if they rob you they, obviously, aren't going to get your business in the future. 2. Competition. Those two things government doesn't have to worry about! You always pay and there's no competition.

>Ostensibly direct democracy, where people can delegate their voting privileges to a representative, and change that delegation at any time

It's better, but it's still worse than the free market with no government, because you still have to pay taxes. You cannot just say "no, no, thank you, but I prefer to keep my money and not use these and these services or fund these wars". You still have to give politicians power first. And you still use government power to make other people pay for what the majority considers a good idea. I think this principle of majority is rather insane. A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.

>Indeed, so in a completely capitalist system, your freedom is contingent on the amount of capital you have. Personally, I think some freedoms should be guaranteed regardless of wealth.

When you have a democracy, you're still paying for it. Nothing is free. When you say "some freedoms should be guaranteed" you probably mean "some services", which is different. Freedom is not the product of someone else's labor. It simply is inaction, when you don't tell other people how to live their lives and how to spend their money. I may or may not agree that healthcare should be available to everyone at no cost, but you have no moral right to come and take my money to pay for something you consider to be good. You may, however, convince me to give you money and I may do it.


>Violence is never profitable unless somebody else pays for it

Well yeah, your victims pay for it. My point is that there's no inherent incentive for a private entity capable of violent coercion to use it for the benefit of anyone but itself. A truly democratic government has an incentive to use it to benefit at least a majority of people.

>I think this principle of majority is rather insane.

It's not perfect, but I think it's the only way we can make fair decisions about how to share limited resources.

In theory Capitalism distributes the most to those who provide the most, which sounds great. In practice those with more resources are more able to provide utility in future, so the distribution ends up being very unequal.

(EDIT: One solution might be a free market + enforced wealth redistribution at a rate based on the level of inequality. I think this would actually be much better at encouraging people to actually produce new utility constantly, instead of rent-seeking.)

>A simple test: if tomorrow the majority decided to shoot all redheads, if you followed your principle, you'd have to agree.

And you think a society that would pass such a vote would be any kinder in a free market? If a majority of people actively want redheads to be killed, then your supposed protection agencies would be happy to oblige.

And even without violence, the majority needs only to deny them work and they would starve to death, or at best live in ghettos.

> When you say "some freedoms should be guaranteed" you probably mean "some services", which is different.

No, my whole point is that access to services is a form of freedom. The freedom to eat. The freedom to learn. The freedom to be healed. If these things are contingent on labour, then they are lesser freedoms.

In a world with limited resources, some freedoms will always be curtailed. The question is which ones are the most important? I think the freedom to eat is more important than the freedom to decide how a portion of the utility you provide is shared.


I was tempted to reply, because I think you've made some points I can understand, but object to. And some others I believe you simply misunderstood.

> Well yeah, your victims pay for it.

That's not what I meant. I meant that when a country starts a war, it's not politicians who pay for it. Citizens pay for wars with their taxes. Politicians simply sell them a war, while not investing any money of their own. In fact, what happens is, politicians make money, because there are companies who benefit from wars (oil, military equip and tech), so they lobby politicians. If politicians or companies had to pay for wars out of their own profits, there would be no wars.

> In theory Capitalism distributes the most to those who provide the most, which sounds great.

That's a misunderstanding. A rich person can only spend that much for himself (even then, by buying things, he actually creates jobs). He then has to invest into something he believes to be sustainable. Thus, I see businessmen as ultimate redistributors. They proved on the market they're good at handling money, thus they deserve to have more of them. Politicians only proved they can manipulate public opinion and you are entrusting them your own and someone else's tax money. I don't think it's a good idea at all.

> And you think a society that would pass such a vote would be any kinder in a free market

Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them. With government, since it has the monopoly on protection and laws, no such thing would be possible. In other words, in a completely free market minorities are able to put a price tag on them being discriminated against, while when you have government, they would actually be paying for their own discrimination. Gay people have been paying taxes just like everyone else, yet until some point, it was even illegal to be gay, not even talking about marriage.

>No, my whole point is that access to services is a form of freedom

Very well. Even by your definition then, when government takes a portion of my money as tax for the services I don't use or disagree with (like wars) it takes away my freedom to use other services I consider good.

The crucial distinction is force. Government is force that is abused because it's so centralized. Government is telling other people what they can or cannot do, how they can or cannot spend their money and what services they can or cannot use. It doesn't matter what you consider freedom to be. With government some may indeed get a little more "freedom", but always at the expense of someone else and always with people in the government benefiting most from their position. I'm simply against this redistribution, because it is based on a system that is inherently unfair and broken. No, it cannot be fixed.


> That's not what I meant.

I think you've misunderstood my question then. I never mentioned wars. I'm asking why these entities with the power to violently coerce others would operate friendly protection agencies, instead of simply stealing from everyone around them?

I consider this a pretty obvious and fundamental flaw with anarcho-capitalism, and I've never heard a coherent argument against it, so I'd really appreciate an answer here.

> He then has to invest into something he believes to be sustainable.

Which works pretty well in our current situation where you have a bunch of regulations in place to stop them abusing that power. They can't use violence. They can't lie to consumers. They can't make dangerous products. They can't abuse their workers. You only have to look at developing countries to see how companies operate outside these restrictions.

> Thus, I see businessmen as ultimate redistributors.

Except nothing gets redistributed. They invest, and unless they fail, they get even more money back. And after a certain point, they can even leave the investment to other people. Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth. Their investments may slowly improve life for the poor, but the massive inequalities remain.

> Yes, because in a free market the redheads would be able to legally invest money of their own to protect themselves from other people, who wish to kill them.

Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.

> With government some may indeed get a little more "freedom", but always at the expense of someone else

Freedoms always come at the expense of other freedoms. Freedom from slavery means limiting the freedom to keep slaves, but I think most people are happy with that. There will always be trade-offs, the question is how we decide which freedoms are more important than others.

Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?

> No, it cannot be fixed.

Why not? I have already suggested the solution (direct democracy) and your only objection is that it allows the majority to abuse the minority, but you haven't explained how capitalism fixes that.


>I think you've misunderstood my question then. I never mentioned wars. I'm asking why these entities with the power to violently coerce others would operate friendly protection agencies, instead of simply stealing from everyone around them? I consider this a pretty obvious and fundamental flaw with anarcho-capitalism.

So the first thing to understand here is that monopolies and cartels can't exist without government protection for a long time (if you look at every case of a monopoly/cartel careful enough, you'll see some government involvement). When some company introduces a new, revolutionary technology (Microsoft or Apple both being examples) they may capture the market for a while, but not for long. Government didn't order Google to compete on the smartphone market. It happened because it was profitable to do so.

Now back to protection agencies. Suppose I'm an evil protection agency that wants to force everyone to pay, just like a government would. Alright. I send everyone an extortion notice and suggest that if they don't pay, we come and take money + fines (for our extra effort) by force and if they resist - we imprison them. People, being free and not brainwashed as they are, wouldn't see us as a protection agency anymore, but as an extortion agency. They wouldn't have any illusions about us being nice and kind. Therefore, there would arise a demand for another protection agency, that would offer protection from the evil agency. Naturally, people would rather pay the second protection agency, as it doesn't demand pay, but offers a service, therefore presenting itself like a legitimate business. The other protection agency would quickly lose its market share and wouldn't be able to finance its extortion, not even talking about any kind of war with the second agency. In the case in which the two agencies form an extortion cartel, it is not difficult to imagine a third firm emerging. And so on.

Therefore, competition is the key. Free market always serves the customer.

>Then you have a bunch of rich people doing nothing, but enjoying the majority of the wealth

You have to be precise here. What does enjoying the wealth mean? If they buy stuff, they create jobs. If they don't buy, but hoard, they are not enjoying the wealth in any way. Every time an evil businessman tries to enjoy his wealth, he creates jobs. And the more he enjoys, the more jobs are created. That's inevitable.

>Yet again, assuming they have any money. If your hypothetical society hates redheads to the point of wanting them dead, then I would expect them to be incredibly poor, since their ability to participate in the market would be extremely limited.

Now let's look at this comparison fairly. We talk about two societies, one with no state and one with a state, both hate redheads. Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty? You'd think that. So redheads wouldn't have any money either. Worse even, in a society with a state if it's not the rest of the 90% that hate redheads, but say, only 70%, they can still pass a law that says "redheads cannot be hired for more than $1 an hour". Then, even those who have nothing against redheads will not be able to hire them, whereas in a stateless society they would.

>Can you explain why you think the freedom to decide how the last 10% of your income gets spent is more important than the freedom to eat?

I think it's very important to communicate one sound principle, with which I hope you might agree sometime: you can't do good by forcing other people to do it (that is, by using the money you stole from them). If I had nothing to eat tonight, do you think it's okay if I go and rob you? If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf? How is it more humane or fair to you? If anything, I'm not going to ask you to fill any forms, so it's gonna save you some time.


> So the first thing to understand here is that monopolies and cartels can't exist without government protection for a long time

And what do you think a government is? They're monopolies on violence that have existed for a long time in an otherwise free market. If demand for an alternative was enough to defeat a protection racket monopoly, then surely the same argument would apply to governments? Is there any argument you can make for why governments haven't been out-competed, that couldn't equally well apply to a private protection agency?

> If they buy stuff, they create jobs.

In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.

> Now if the majority in a society with a state hates redheads, wouldn't they pass laws that would restrict redheads from escaping the poverty?

Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.

> you can't do good by forcing other people to do it

Of course you can. If someone is about to kill someone else, and you stop them, in what way have you not done good? Why is the situation any different when it involves property? If someone is withholding surplus food from a starving man, they are just as much a murderer as if they stabbed them.

> If you don't think it's ok, why do you believe it's okay for the government to do the same on my behalf?

Because the government's actions are approved of by a majority of society.

> How is it more humane or fair to you?

Because in your society, if I have no money, I die. In my society, if I have no money, I survive.


>And what do you think a government is?

It is a monopoly, of course. It clearly demonstrates that monopolies cannot exist without the threat of force, which isn't profitable to do in a free market, where you cannot force people to pay to sustain that force indefinitely.

>In an increasingly post-labour society, this is not necessarily the case. You might buy a machine that eliminates many jobs, and creates far fewer.

Did somebody build that machine? Doesn't that situation incentivize people to learn more sophisticated skills? And if a machine makes some product cheaper, wouldn't the poor benefit the most from it, since they would now be able to afford stuff they couldn't before? Would you like to be rich 200 years ago or lower middle class today?

>Of course. I wasn't suggesting otherwise. My point is that there are ways for the majority to hurt the minority in both cases, so it's not an argument against democracy.

It is an argument against democracy, because I clearly demonstrated to you how in a democracy the minority would be in a much worse situation if the majority of the society hated them. Please re-read it and I'd really like to hear your response to that.

>Because the government's actions are approved of by a majority of society.

So, if the government approved me robbing you directly, you'd be okay with it too?

>Because in your society, if I have no money, I die. In my society, if I have no money, I survive.

That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.


> It clearly demonstrates that monopolies cannot exist without the threat of force, which isn't profitable to do in a free market, where you cannot force people to pay to sustain that force indefinitely.

Private protection agencies do have the threat of force though, so they can force people to pay to sustain them. And clearly it must be sustainable, because governments exist.

Or do you think there some magical property of things called "governments" which protects them from the market forces you claim something called a "private protection agency" would be subject to? In what way are they different?

> Did somebody build that machine?

For now. My point is that as capital overtakes labour as the primary factor in production, using jobs as a means of wealth distribution will no longer be effective.

> Doesn't that situation incentivize people to learn more sophisticated skills?

And how will they learn those skills if they have no money?

>Please re-read it and I'd really like to hear your response to that.

You threw out some arbitrary numbers with no real basis. Why does it take 90% of society to harm the minority in a free market but only 70% in state?

The actual difference is that in a democratic state, you need a majority of people to harm a minority. Whereas in a free market, you need a majority of capital. If capital is evenly distributed, then they will be roughly even, but if there is massive inequality, then genocide could easily be committed in a free market with support of only 1% of society.

>So, if the government approved me robbing you directly, you'd be okay with it too?

Why would they come to such a decision? Why would society at large care about you and me in particular? If you mean as part of some wider social program, and I happen to have more wealth than you, then I would be happy to share it.

>That's actually not true. In my society there are friends and relatives. Individuals have responsibility to help others, not some abstract government or society.

Right, and what if they don't have any money to spare either? Or simply don't want to help me? I still die.


>You obviously can't just drop prices on 10 thousands socks of yours, because that would still allow your competitor to stay in business

Ah sorry, I misunderstood. I thought you were suggesting they'd have to drop prices on a range of different products.

>What's there to prevent a rich investor from entering the market and competing?

The fact that there isn't an infinite supply of rich investors queueing up to disrupt markets. And that there are likely much better investment opportunities than entering an expensive price war just to gain a foothold in a newly competitive market (at which point company C can enter, and reap the same benefits without the inflated upfront costs).


A company selling 1M units isn't threatened by a company selling 10k units. It might be threatened by a company selling 200k units, at which point the numbers are much closer - and there's also more payoff for eating the other company's pie.


In a free market that would not happen. The decline in quality of the very product that the companies are offering would lead to a lower revenue stream for them.


> BECAUSE you have government sticking its nose where it shouldn't (I'd say, it shouldn't stick its nose anywhere, but that's another story). Comcast is the second largest lobbyist in Washington.

Your argument, even though it reads like liberal laissez-faire stuff, actually is: the government is being controlled by corporations.

So, your solution of "stop regulation" is offtopic. Come up with something relevant to your own argument first. Like, hmm, "stop corporations from dictating governance". That'll work.


I actually think it's both ways. Both corporations and government control consumers. That's what it's about. The solution should be such that it is easier to administer it. You can fight numerous evil corporations to no luck. Or you could focus on one entity without which all those evil things wouldn't be possible.


Considering our government created the internet in the first place, I'm not sure that's a long-term winning strategy.


I disagree with that statement. People created internet. As well as built roads and educated children. Individuals do that. The only question is, how are they financed. If those activities are financed using tax money, it's called "government". Then, the question we should ask ourselves, would people still invent awesome things and build roads and educate their children without government funding? Would they, maybe, somehow use the money they don't have to pay as taxes now, to do all of those things?

After all, they use money to do other things all the time, and those other things are not nearly as important for them as roads or education.


> If those activities are financed using tax money, it's called "government".

Taxes don't finance US government expenditure; they create demand for the currency.

> Then, the question we should ask ourselves, would people still invent awesome things and build roads and educate their children without government funding

Government provides the coordination required to accomplish these things. The private sector is notoriously horrible at coordination between competing actors.


> The private sector is notoriously horrible at coordination between competing actors.

This must be why I can never get my luggage handled flying two or more airlines or why I can never use my cellphone in another country connecting to another operator's network. Can you give me some examples where the private sector is actually bad at coordination?


You picked two areas with massive government regulation. So yes, when government acts as the intermediary, the private sector can stop failing at coordination.


Well, you're not exactly correct. Airlines are indeed regulated, but not as much as they were before in the 1970s. After the deregulation of the Airline industry the prices dropped, and service levels increased.

Telecomm, again, is only heavily regulated in the US. In my country it isn't, yet we do enjoy rather low prices and quite a nice service overall. Telecom operators also cooperate without any government intervention: at some point they realized it'd be great to have incoming calls from ALL operators free (they weren't before) and outgoing calls to be of the same price for any phone (they weren't).


>whereas the only way to fix things is to not allow governmental interference in the first place.

But we are past this point. So what is the solution now?


Good question. The solution is not go full retard, it seems, but to stop doing wrong things. Whatever you do, you don't ever introduce new regulation. Don't introduce more opportunities for government bureaucrats to feed from. Because if you do, it's gonna lead to worse and more expensive things for the consumer.


I understand your point, and I don't want to derail this thread into a discussion on language. However, saying that introducing more governmental regulation is going "full retard" (even if the idea behind it is actually true) is reductive and detracts from your point.

This is not an issue of political correctness. Saying "not go full shit-head" falls into the same category. Please treat your opposition with respect, even if you disagree with them.


Oh, ok, sorry. I never realized "retard" is super offensive in that way. It didn't sound like a very strong word to me, so I apologize.


Funny :-)

Guessing, but I think snitko may have actually meant "full retard" in the sense of "retard" meaning to slow down or apply the brakes, rather than meaning "dumb" or "mentally retarded".


"If you find yourself in a hole, stop digging"?


Isn't that the point of digging?


Everything I see government touches is of low quality, whereas everything that's good in my country is private enterprise.

And yet the countries that are consistently in the top 5 or top 10 of most quality-of-life measures are those countries that are social democracies (generally scandanavia and aust/nz/canada), where the government puts its fingers in a lot of pies. If the things that your government touches is bad, then that's a problem with your government, not the awesomeness of the free market.

Out of curiosity, how well do your ISPs cater to rural users? People in urban centres are cheap to service, but spread-out rural users are quite expensive.


In rural areas you pay a lot for initial connection, then usual rates. Or just use radio links (WiMAX and fixed 3G stations are kind of popular where my parents live).


I don't see how a normally libertarian-leaning group of people have embraced regulation rather than deregulation as to this issue. Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies? Two words: universal access.

It's the same principle that led municipalities to grant taxicab monopolies, of the kind that stifle companies like Uber today. The idea is that in a free market, providers would only focus on the profitable parts of the city, leaving the lower-income areas without service.

Universal access is why it's impossible to "disrupt" the market for local internet. A new entrant can't just come into the market and pick off the most desirable customers or the ones that are cheapest to service. They have to be prepared to service everyone, even many customers who can only be served at a loss, in order to be allowed to operate at all. Additional regulation in this space isn't going to eliminate the underlying problem, it will just make infrastructure construction a more unattractive business and decrease investment.

There is no free lunch. You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two. If you think universal access is important, and net neutrality is important, you have to be willing to publicly subsidize the construction of telecom infrastructure.

PS. Some folks have mentioned BT OpenReach, but it's important to understand what did and did not happen there. First, BT was originally a government-owned corporation before it was privatized, so the government was in a position to set the terms of the privatization. Second, the government used a fairly generous "RPI - X" price cap to certain of BT's services. Between monopoly pricing power and a relatively generous price cap, BT made very healthy returns on investment. See: http://www.academia.edu/3399930/LESSONS_OF_PRIVATISATION_IN_... (p. 28-9).

In the U.S., unbundled DSL was a failure. First, it got caught up in litigation because the infrastructure was never public at any point. Second, it was an almost pure losing proposition for the telecom companies. The FCC mandated a not-very-generous cost-based price control (TELRIC), which made further investments in DSL infrastructure unattractive.


> I don't see how a normally libertarian-leaning group of people have embraced regulation rather than deregulation as to this issue.

Presumably because there is a difference between "libertarian-leaning" (to the extent that is an accurate description of the group described) and "having a blind, kneejerk preference for deregulation".

> Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies?

Because incumbents that got infrastructure built with government support in acquiring property for infrastructure as monopolies have an insurmountable advantage as a result of the access they acquired then, and effectively leveraged that cable infrastructure to internet infrastructure, whereas without direct government support that comes with that, its pretty much impossible for anyone else to build the necessary infrastructure because property rights.

> You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two.

Okay.

> you have to be willing to publicly subsidize the construction of telecom infrastructure.

There are extensive public subsidies that have been given in the US for telecom -- and specifically broadband -- infrastructure [1]. So can we have our neutrality and universal access already?

[1] E.g., http://www2.ntia.doc.gov/infrastructure


>There are extensive public subsidies that have been given in the US for telecom -- and specifically broadband -- infrastructure [1]. So can we have our neutrality and universal access already?

Where do you live that you do not have universal access and net neutrality?


I don't see how internet is any less a natural monopoly than electricity. Picture a residential street with 100 completely separate fiber optic networks vs 10 vs 1, now which seems more efficient. It's not like everyone connects to a different Hacker News.


It's not obvious whether it's really a bad idea to have several independent fiber networks in the same geographic area. Choice is good. And it would also necessarily imply more total capacity, which is also good.

So deciding the "right" number of network operators in one place is subjective, and comes down to what consumers are willing to pay for. Or at least it would, if competition weren't illegal. There's nothing "natural" about the monopolies we have now.

And even if it turns out that a single network is the best arrangement, it should still be possible for municipalities to choose to own their own last mile fiber and buy transit at competitive rates. Which is also generally illegal in most of the US, thanks to the lobbying efforts of the big incumbents.

And it's also absurd that we're still letting analog-era regulations govern our use of wireless spectrum. We should really have ultra wideband wireless ISPs by now.


In the Netherlands we force the physical network part of the infrastructure to be separate from the services that run on top of it.

It can be implemented fairly easily by separating a company into two and forbidding them from giving special deals to their former counterpart.

That seems to have a very good effect on competition in practice...


They do the same with the fibre network in Singapore, too.

I think the British rail network might work on similar lines? The German electricity companies emphatically do not work on those segregated lines. There are some politically pushes every once in a while---Germany has some biggest price differentials between domestic and wholesale electricity prices (and some of the highest domestic prices), but the regulatory capture seems to be too much to overcome.


Choice and redundant infrastructure are different things.

If you have one wide, dumb pipe, and you paid an ISP to route your traffic from some other point on said local pipe into the backbone, you would have tons of ISP choices. The only reason more ISPs do not exist is because of the infrastructure costs.

And those won't change. You will never be in a climate where it is haphazard to rip up roads or peoples lawns or add more mess to the overhead lines to run fiber channel everywhere. In terms of cost, the fiber cable itself is not even expensive - it is the manual labor installing it all.

> we're still letting analog-era regulations govern our use of wireless spectrum.

It isn't ideology, it is the current incumbent owners of spectrum like having artificial superpowers over the future of communication.


Because with electricity, everyone gets the same power. You're tied to the same grid; your provider just meters your usage, bills you, then pays wholesale prices for the power you used. But the system as a whole only measures inputs (from power generators) and outputs (consumers). It works for something like electric power where a volt is a volt and a kilowatt is a kilowatt.

With Internet access, you're looking for SPECIFIC packets. Those packets have to be routed in a certain way and delivered over a shared, multicast last mile infrastructure. If you want the ability to choose your ISP, then while it may be the same Hacker News, the route the packets take to get there might be very different.


> With Internet access, you're looking for SPECIFIC packets. Those packets have to be routed in a certain way and delivered over a shared, multicast last mile infrastructure. If you want the ability to choose your ISP, then while it may be the same Hacker News, the route the packets take to get there might be very different.

That is only really true in the parts of the network that don't matter for network neutrality. If you want to send or receive 500MB worth of data, the last mile doesn't care whether you're communicating with Hacker News or Google or Amazon, it's all going over the physical wire that comes into your house. It's only after you cross the last mile and get into the central office that the paths of packets diverge in every direction, but those are the parts of the network that have competition.


Your ISP does not give a shit where your packets are going to or where packets directed towards you are coming from. That is the backbones problem, and most ISPs do not manage it at all. For an ISP, it is effectively electricity - the cost to route a packet is always constant, assuming they don't have meterage deals with different backbone routers depending on the destination. To them, they just care where the packet is going, to just send it in the right direction either way. And maybe billing for data usage is a valid business model, but the real world per unit costs of packets are magnitudes lower than the per unit costs of even electricity in traditional measures like kwh. IE, the modern "pricing schema" for data, where a gigabyte costs multiple dollars, is an insanely unrealistic measure - if you are not paying for the wires in the dirt.


> assuming they don't have meterage deals with different backbone routers depending on the destination.

That's a big assumption, and an incorrect one at that. Most content delivered to large ISPs is delivered by CDNs over paid interconnects (and it's been that way for a decade or more). They either pay the ISPs directly or for transit at a peering point.

> IE, the modern "pricing schema" for data, where a gigabyte costs multiple dollars, is an insanely unrealistic measure - if you are not paying for the wires in the dirt.

If you're expecting pricing to be tied to cost, you're gonna have a bad time. That's just not how modern product pricing works for ANY product. You pay as much as the service is worth to you; if it wasn't worth it, you wouldn't pay it.


With internet access, everyone (should) get the same bandwidth (per-dollar).

Similarly, with electricity you're not looking for SPECIFIC electrons.


> Similarly, with electricity you're not looking for SPECIFIC electrons.

Actually, I am, though its more the source of those electrons. I pay more specifically to get as much power from wind/solar sources. This is an option on my power bill that I explicitly support. I would pay more for internet access that isn't comcast and isn't tied to their stupid bs.

So keep that in mind.


>I pay more specifically to get as much power from wind/solar sources.

And you are able to do this because there is a grid network, which allows your alternative energy provider to enter the market simply by connecting themselves to it, instead of having to run cables to your house.


Actually not really, there is only one electric provider here, they just give you the option of choosing to prefer power generated with renewables or not.

I don't think the actual electrons come from there its just a budgeting trick I expect.


Of course it's a trick. If you're anywhere other than an island that has no transmission lines running to it and you pay for electrical service, you're connected to the same grid everybody else is. Your power comes from the same place everybody else's does. You don't actually have a choice of where your "electrons" come from (they come from the wires, by the way, generating stations just make them move around).

Your "preference" is nothing more than providing an extra subsidy to generating stations that make the electrons wiggle via renewable energy sources.


First, regulations regarding universal access have little in common with net neutrality regulations except that both are simply examples of regulation. A person might support one but not the other without crossing some logical event horizon.

Secondly, it's not clear that the implied solution in your comment ("more competition") would lead to firmer protections for net neutrality. Any changes to open the market to competition would take many years to come to fruition while current ISPs would jump at the chance to discriminate traffic immediately. By the time competition arrived, it is likely that the idea of traffic discrimination (and extortion) would have become so standard and endemic that it would no longer be a point of competition for these new competitors (especially true given how hard it is to explain net neutrality to laypersons).

It's for these reasons that I support both strengthening net neutrality regulation and loosening universal access restrictions (although, to be honest, I would rather have a government ISP with a universal access responsibility, similar to USPS).


I don't know about the Openreach comparison being completely invalid - Openreach was only created in 2006, 12 years after BT was fully privatised.

Is there a reason why the FCC couldn't provide a similiar regulatory climate in the US? Even with subsidies if required?


"Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies?"

This is because last mile internet access is a textbook Natural Monopoly: http://en.wikipedia.org/wiki/Natural_monopoly


Then how do you explain the smaller ISPs like Monkeybrains, Sonic, and Astound? They don't provide Universal access.

Neither does Comcast and AT&T. I've lived in several areas where they won't provide service.


Universal access is usually implemented as build-out requirements in an ISP or cable provider's franchise agreement. The exact terms vary by municipality, but build-out requirements are the general rule.


It's unclear how this plays out in the era of state-wide franchising agreements.


Statewide franchise agreements are usually layered. For example, there is a Delaware cable franchise agreement, but the City of Wilmington has its own provisions. Also, e.g., many places in Maryland have granted Verizon FIOS franchises, but in Baltimore there is no FIOS because the parties got stuck on a build out provision.


I'd like to hear how they feel about the points pmarca made on twitter about this issue: http://gigaom.com/2014/02/24/marc-andreessen-says-more-net-n...


Not necessarily -- if a net-neutral infrastructure as a whole is profitable to operate, then it can be constructed and operated by profit-making businesses without subsidies. But in that case, you need regulation if you want to keep net neutrality -- which is what YC is asking the FCC for.


Merely being profitable is good enough if you're happy to maintain the status quo. If you want companies to invest billions of dollars of new capital to upgrade the infrastructure, you have to make that investment not just profitable, but an attractive one relative to other opportunities.

Simple question: Silicon Valley talks a lot about the problems with the telecom industry, but why does nobody want to actually invest money building telecom infrastructure? Google is the only one doing it, and they're only doing it on the condition of not abiding by any build-out requirements. See: https://news.ycombinator.com/item?id=7889163.


> Silicon Valley talks a lot about the problems with the telecom industry, but why does nobody want to actually invest money building telecom infrastructure?

The incumbent--descendants of local/regional/national monopoly telephone or cable--providers have little competitive pressure to do so, and other people face intrinsic (largely non-regulatory, except to the extent that real property rights are "regulatory", though there are some regulatory burdens as well) barriers to entering the market, which make it enormously expensive with very little chance of any positive return for most players.


But don't telcos face the same issue: enormous capital costs with limited prospects for attractive returns? E.g. FiOS is profitable, but the margins have been quite disappointing to shareholders. Indeed, observers have been skeptical about the value proposition of FiOS since the beginning: http://bits.blogs.nytimes.com/2008/08/19/a-bear-speaks-why-v.... Note that this article was written in 2008. As of 2014, Verizon is still below the 40% penetration rate assumed in the article: http://www.dslreports.com/shownews/Verizons-FiOS-Growth-Slow....

At the end of the day, the math has to work out. Everyone assumes, arguendo, that the value proposition of building out fiber is there, but if telcos continue to be required to offer universal service, and if they are forced to operate in a regulatory regime where they can't capture some of the money generated by services running on top of their infrastructure, it's not at all clear that the enormous investment into fiber is going to be justifiable for the shareholders of telecom companies.


Nobody's asking them to build this stuff out for free. I'm cutting a check north of $100 to Verizon every month, last I checked. And that IS them capturing some of the money generated by services running on their infrastructure.

If they're not getting enough money to continue building, first off, I find that hard to believe, second off, they should just charge more to consumers, either additional $/month or an additional fee per GB.

Orrrrrr we could have a crazy system where they manage 50,000 unpublicized relationships with different websites, charge them, pay the people to manage those relationships, and the websites charge more to consumers, hiding the pricing information about network connectivity in the process. That sounds way more 'free market', not to mention more efficient.

What's so anti-competitive and backward thinking about "I pay you $ for bytes, cough up the bytes"?


Please see the NYT article I linked. The per-subscriber capital investment into FiOS is almost $4,000, assuming that 40% of potential subscribers actually sign-up (Verizon is almost there, but still below that benchmark). Now, you're cutting a $100 check to Verizon every month, but how much of that goes to: advertising,[1] maintenance, paying for video content, etc? FiOS is about 70% of Verizon's wireline business, and Verizon's operating margin in that segment is about 22%, so let's assume the margin in FiOS alone is 25%. What's the value of a $25 payment discounted by 5% over 15 years? About $3,200.

As the author of the article above concluded, Verizon might not even come out ahead on each customer with FiOS.

[1] You can ask "why spend so much on advertising?" and the reason is that you want to maximize uptake, otherwise you spend a lot of money running fiber past houses that don't actually subscribe.


First off, most of the things you're taking out of the monthly were already factored into the fronted cost in the linked article. Second off, if Verizon does that shitty of a job of cost control compared to foreign government bureaucracies, maybe we should consider nationalizing them.

But back to my actual point -- It costs money to deliver the service? Charge more for the service if you can't deliver it profitably. That's fine, I even suggested that in my comment, charitably allowing for 2 different ways they can do it.

I'm going to pay anyways, whether it's a check to verizon or additional costs on my amazon streaming -- I'd rather pay up front for the service I'm consuming than f-up the marketplace with a bunch of submerged hidden transactions. That's why libertarians are on board with liberals on this, they believe in market transparency.

What's your objection to our actual point? Remember, raising the price for the service they deliver to their customers is ok, we're not arguing they should provide it at a loss. You'd rather the costs of the network were hidden in a bunch of backroom deals? You think that netflix paying comcast won't ultimately come out of consumer pockets anyways?


> First off, most of the things you're taking out of the monthly were already factored into the fronted cost in the linked article.

No they're not. They cover, e.g., marketing to get you to hook up in the first place, but not, e.g., marketing to keep you from switching to Comcast a year later. They account for the cost of hookup, but not, e.g., ongoing maintenance.

As to your other point, charging up front is not the same as charging services that operate on top. The former effectively creates a cross-subsidy: my parents who just want fast-loading web pages end up subsidizing Netflix junkies. Now you can charge per-GB, but Netflix really doesn't want to go in that direction. They're quite happy with this implicit cross-subsidy.

"Market transparency" is a red herring. You pay $10 per month to Netflix, because that's the value of that content to you. You don't care if some of that money goes to Verizon any more than you care that some of it goes to the studios that own the content. Indeed, the "backroom deals" ultimately have the effect of allowing Verizon to capture the costs from the people who derive the most value from the infrastructure, because the consumer value represented by one GB is not equal across services.


I must be doing a really bad job of writing, because you're not addressing the point I was trying to make at all.

I'm ok with paying $100 for internet access (well, not really, but still). If $100 cannot get me internet access at the advertised speeds, I'm ok with paying 120, or whatever additional cost per GB.

What I'm not ok with, is if $100 doesn't do it, Verizon goes out and shakes down the companies I do business with on the internet connection that I ostensibly paid for, who then raise their prices (gotta pay the bills) for reasons I don't understand. I'm still going to pay, there's no such thing as a free lunch. And not only does this obscure information about the real cost of my connection and the services I use (and that does matter), not only does it open the door to all kinds of anti-competitive practices around who gets the best deal with comcast/verizon, it's guaranteed to be less efficient than just upgrading the network and charging me for what it costs. Now I'm paying for all the hotel rooms and buffet spreads that went into that deal being struck? In addition to the cost of the fiber? Just build the fiber, and charge the customer (me) for it.


This is shared infrastructure. If it costs you $16,000 to build out to a neighborhood of 10 people, then you have to set the price at a point where you can amortize that cost over the maximum number of subscribers. The Netflix junkie may be willing to pay $130/month, but if he's the only one that signs up, your cost per subscriber explodes. Thus, if you're a provider, the amount of money you are willing to spend on telecom infrastructure is going to be dictated by how much that, say, 60th percentile customer is willing to pay, not how much the 90th percentile customer is willing to pay.

Now, you can ameliorate this somewhat based on per-GB charges, but people have an irrational hatred of that. The business deals on the backend are obscure, but at the end of the day, how much a customer spends on services on top of their internet connection is a decent proxy for how much utility they derive from that connection.


Why not just price it as $/month for X transfer, with $/GB above that rate? That'd be simple, transparent, no damage to the market structure of internet businesses, no future anti-trust cases, and we're straight-up paying for the infrastructure that we, as consumers, are using.

Is your case that more money would go to network improvements with the backroom deal routine? Have you considered that the backroom deal routine allows a lot more room for pocketing money and not really investing in the network?


What you are ok with paying and what the median Verizon customer is ok with are probably not the same thing.


I'm about as ok with paying $100 for internet as I am with paying $4/gallon for gas during the summer. Read: not very.

But that's what it costs. Make it clear to the consumer what things cost and they'll either curtail their usage or cough up the money. Maybe they should have a charge per GB of transfer over some monthly limit. I don't know. But obscuring it through a bunch of additional business deals on the back-end isn't going to make those costs go away, it's just a way to hide them and delay the day when ISPs compete with each other on actual cost per GB delivered.


> "Market transparency" is a red herring. You pay $10 per month to Netflix, because that's the value of that content to you. You don't care if some of that money goes to Verizon any more than you care that some of it goes to the studios that own the content.

If he's on $OTHER_ISP, I'm sure he's not thrilled that some of that money is going to Comcast and Verizon.


"If they're not getting enough money to continue building, first off, I find that hard to believe"

Entirely possible that they are getting enough money to continue but they want to take a break to inhale some excess profits not hindered by more expansion. Get something in the bank. (Kind of opposite of what Amazon is doing I guess.)


> If you think universal access is important, and net neutrality is important, you have to be willing to publicly subsidize the construction of telecom infrastructure.

Indeed, why isn't anyone willing to take this logic as far as it should go? Publicly funded highways have facilitated trillions of dollars of economic activity. How much more growth could be enabled via publicly subsidized gigabit fiber?


Your arguments suggest workarounds instead of a stable system. Libertarian mostly believe free market is a stable system, where things get evaluated very quickly and errors fixed without exception handling.

A good metaphor would be government trying to do try/catch all on entry point solving every little problem we have. While we should have explicit exceptions such as use of violence, fraud etc. We should not try to fix every little problem. When user enters data into a form, a password into the email field and an email into the password field. Sure you can make a change in code that would allow both cases. But now you have tons of other vulnerabilities exposed this very instant.

Thus. Neutrality means bandwidth cannot be manipulated by companies, well I remember 90s when we had LAN and private internet bandwidth shared with LAN. Bandwidth had to be chopped, http protocol had to get guaranteed bandwidth otherwise bunch of leechers would destroy vital internet access with their kazaaa, emule, napsters and what not. So Neutrality is not a necessity. While its not a big problem nowadays it was a problem back then and imposing this solution would have made it worse.

Universal access. Well I can easily argue that. There is a bunch of irresponsible people who build house in complete desserts. I know some people like that and they can that but society now has to fund them access to water, electricity and internet. I mean its their choosing. They can build their property closer to the city limits where they would get access to those for significantly less amount of money, they chose otherwise and they are free to do so. So should be I to not help them with their life choices. Problem only escalates as they start to demand shop/grocery access, leisure facilities, public transport etc. By making guarantees of those services we essentially lead to inefficient land usage.


> Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies? Two words: universal access.

It's true that universal access is what causes networks in major cities to lack competition. But getting rid of it wouldn't solve the problem anywhere else, because there are still millions of people who live in areas that couldn't economically justify more than one ISP. The only way those areas can justify the investment is if the ISP can collect revenue from a majority of the customers (and/or not compete aggressively on price), meaning that a competitor entering the market would cause both ISPs to become unprofitable and so no rational investor will be the second to service that market. Those geographical areas are natural monopolies. There is very little realistic alternative to utility regulations in those markets, short of massive government subsidies to create market conditions that can sustain multiple competitors.

> There is no free lunch. You can have: neutrality, universal access, or a mostly privately-funded telecom infrastructure, but you only get to pick two. If you think universal access is important, and net neutrality is important, you have to be willing to publicly subsidize the construction of telecom infrastructure.

That isn't necessarily true. What it means is that without public investment, the subscription fees for internet service have to be sufficient to justify private investment. It isn't at all clear that they aren't already at that level. The lack of investment in many markets is at least in significant part attributable to the fact that neither competition nor regulation currently provides a large incentive to make infrastructure improvements. But there is no reason that in markets with insufficient competition, regulations could not be made to create that incentive, e.g. allowing ISPs to charge higher rates only if they provide higher speeds and then over time increasing the required speed for a given rate. And ironically the rates required to justify a given level of investment would be lower if we had less competition, because the cost to wire a street is in large part proportional to the number of miles of road rather than the number of subscribers, so Verizon and Comcast having to build parallel networks each with half the total number of subscribers causes each to be significantly less profitable and that much less likely to make future investments. "More competition" is not a panacea.

And more than that, why is public investment in infrastructure a controversial position? We have public roads, what's wrong with public last mile networks?


> But getting rid of it wouldn't solve the problem anywhere else, because there are still millions of people who live in areas that couldn't economically justify more than one ISP.

So city dwellers have to subsidise the country folks?


> So city dwellers have to subsidise the country folks?

No, build out requirements are actually very stupid and we should get rid of them. It's just that getting rid of them doesn't magically create broadband competition in unattractive geographies.


> I would love to see a world where the companies that own last-mile infrastructure are required to lease the lines to any ISP the end consumer wants; this would create a competitive market and mostly eliminate the problem. [2]

This is pretty much how it works in the UK; see http://en.wikipedia.org/wiki/Openreach

It does seem to work pretty well.. there are a wide variety of operators and prices are very low. If I had to pick out common criticisms, Openreach can take their time if you have to deal with them directly (getting a line installed in a new office or apartment can take a few weeks), and there seems to be very limited innovation in the last mile - even in London it's hard to get more than 20mbps, and many people in rural areas are stuck with a crappy DSL line at 2mbps or so.


> and there seems to be very limited innovation in the last mile - even in London it's hard to get more than 20mbps, and many people in rural areas are stuck with a crappy DSL line at 2mbps or so.

This is the entirety of the problem with the DSL-style line sharing. If the companies operating the infrastructure get paid on a per-customer basis, they have no incentive to make the service better by improving service for individual customers. The incentive is to provide service to as many customers as possible regardless of the quality / speed of that service.

If you want DSL-style line sharing to work in the US, the line owners will need to charge the ISPs on a per-gigabyte basis. This pretty much requires the ISPs to charge on a metered basis as well. This would be an overwhelmingly bad thing for companies doing business over the Internet.

I've been banging this drum for a while: companies will act in their own best interest, so you have to align the economic incentives with the desired behavior. If you try to regulate to enforce the behavior you want without the proper incentives, the investment dollars will just move somewhere else because it becomes too hard to make a profit.


> If you want DSL-style line sharing to work in the US, the line owners will need to charge the ISPs on a per-gigabyte basis. This pretty much requires the ISPs to charge on a metered basis as well. This would be an overwhelmingly bad thing for companies doing business over the Internet.

Why? It seems to me that metered internet could work just fine, if the prices are at least somewhat connected with reality (meaning cents per gigabyte at most, with a base cost not more than about $20/month). The form of metering we currently have in the US is usually punitive overage charges for data in excess of some unrealistically low monthly quota, and is applied on top of $60+/month subscription fees. That's obviously bad for internet content providers (since their whole point is to deter further usage), but I think reasonable prices are possible.


But the prices you list aren't connected with reality. They're your wishful thinking of what Internet access should cost. Reality says that most telecom companies make about 10-15% net margins, so there really isn't room to drop prices more than 10% or so from where they are currently, even if the ISPs are willing to abandon all hope of profits.

It's also a well-known psychological phenomenon that people will curtail usage if they know their usage will cost them more -- even if the amount is trivial. The last thing Internet-based companies like Netflix or Amazon want is for people to use the Internet less. Current metering systems really only "catch" the most egregious offenders (less than 1% of total customers). Most ISPs have a "business class" plan you can purchase for more that truly is unlimited, if you find yourself exceeding the caps on a residential account on a regular basis.


Telecoms have huge marketing budgets. A large portion is just a zero-sum war with competitors (another portion is enticing people to upgrade existing service).

Those are effectively a source of hidden profit margins--NFL, Major League Baseball, et. al. get them instead of the telecom operators, but when looking at how much prices could drop, you have to consider that.


Telecom service is by its very nature a high-churn business: you lose approximately 20% of your customers every year. Churn happens for a lot of reasons: people move, competitors offer better deals, or people simply get rid of the service (but the "people move" one is actually probably the biggest). But because it's a high-churn business, you have to do brand marketing so that when people say "I need TV service. Who offers that?" your name is the first one they think of. Since so many of your customers leave you (and your competitors) every year, you have to be constantly acquiring new customers through a variety of means. If you don't, you'll be out of business in 5 years flat.

The huge marketing budgets don't go away if you suddenly split the market between a dozen or so providers. In fact, overall marketing spend across the industry would probably go up substantially because there would be more competition for limited consumer mindshare.


Total bullshit. People don't replace the wires in their yard every 5 years. Sure, they move (and immediately get replaced by new customers), and they sometimes opt out of the TV service and increasingly opt out of landline phone service, but the only "churn" that's relevant to this discussion is people switching between DSL and Cable, which wouldn't matter if we could get one set of neutral cables installed to get the data to and from the nearest peering points. The rest of the churn you listed and its overhead costs are for the parts of the business that need to be divorced from the actual internet connectivity.


If you have multiple ISPs selling connectivity over a carrier-neutral set of wires, they're going to be trying to poach each others' customers whenever they churn. Any business with high customer churn carries high marketing costs because the return on marketing is relatively good with 20% of the market up for grabs every year. With more players doing marketing in a zero-sum system, overall marketing spend is likely to rise, not decline.

All I'm saying is that the marketing costs wouldn't go away even if the big cable companies do: they would just be replaced by a dozen smaller companies doing the marketing, billing and connectivity. These smaller ISPs would just be taking each others' customers rather than customers jumping ship to DSL or some other last-mile tech.


Investment dollars are definitely not coupled with profit. They haven't been for almost 100 years in the US.


There was a show on PBS [1] that looked at internet access in several countries, and one of the segments covered the UK. There were two amusing facts they mentioned about line sharing in the UK.

1. BT was very much against it, claiming they would lose a lot of money. They now admit it was great for them.

2. AT&T and Verizon were strongly in favor of this. Ask them about doing it in the US, and they say it would be terrible for consumers.

The reporter for that PBS show did an updated print version of this story for Engadget [2].

[1] http://www.pbs.org/wnet/need-to-know/culture/video-high-fibe...

[2] http://www.engadget.com/2011/06/28/why-is-european-broadband...


OT, but I've been looking for examples where a group opposed a policy that passed anyway and turned out to benefit them by their own admission, and your #1 is exactly what I was looking for: http://www.quora.com/What-are-some-cases-where-a-group-admit...


If I had to pick out common criticisms, Openreach can take their time if you have to deal with them directly (getting a line installed in a new office or apartment can take a few weeks), and there seems to be very limited innovation in the last mile - even in London it's hard to get more than 20mbps, and many people in rural areas are stuck with a crappy DSL line at 2mbps or so.

That's exactly what I'd expect. Make infrastructure a low margin utility and a true monopoly and you'll get utility-grade results.

If everyone here (as I do) hopes they'll have gigabit speeds to their homes in a few years, you have to plausibly explain how those upgrades happen in a utility infrastructure regulatory world.


The same way they happen with unregulated providers: some government actor has to step in and provide incentives.

We've already seen that expecting multiple last-mile physical providers everywhere is impossible due to cost reasons and the fact that land lines are a natural monopoly, therefore you'll have to manage it as such in the face of absence of normal market pressures.

It's still a better scenario than the current situation in the US


German here – we have one company owning most of the lines, it gets subsidies from the government, but is in turn forced to make their lines available for everyone.

Also the government just forces ISPs to provide specific speeds in specific areas.

And we have many small ISPs which provide their own network, most of the time they are the same company that also provides water and electricity, and these ISPs compete heavily with the government-owned ISP.

Also right now ISPs have to upgrade rural areas first, so in many rural areas you can already get 200mbps to 500mbps for 50€/month, while I'm in the city and can only get it from next year on.

Overall: It is possible to create competition and still have governmental regulated fast internet.


> If everyone here (as I do) hopes they'll have gigabit speeds to their homes in a few years,

Unless you already live in a very densely populated area[0], I don't think there's any reasonable chance of that happening for most people, whether we go the Title II route or not.

Title II is better than the alternative, but having gigabit speeds for most households is quite a ways off no matter how we do it.

[0] And even then - I live in Manhattan and several buildings on my block have FiOS, but mine does not (thanks to TWC's exclusive agreement with the building owner).


> [0] And even then - I live in Manhattan and several buildings on my block have FiOS, but mine does not (thanks to TWC's exclusive agreement with the building owner).

This is a problem with MDUs and why the big telecoms have dedicated sales teams assigned to make these kinds of deals. The more likely scenario is that Verizon was working on getting these kinds of deals set up, then they halted FiOS expansion and stopped adding new buildings before they got to yours.

I don't think contractual exclusivity is legal, but a building owner does have to set up agreements with a company like Verizon or TWC to allow them access to the building, provide a contractual basis as to who owns what wiring, etc. So if Verizon doesn't reach out to the building and set that up, FiOS isn't going to be offered.


> The more likely scenario is that Verizon was working on getting these kinds of deals set up, then they halted FiOS expansion and stopped adding new buildings before they got to yours.

Actually, no, they are still adding new buildings in NYC, but only on the condition that they provide both television and Internet service to the building. (For a short period of time they did Internet-only out on Long Island, but they've stopped that).

I got very far up the Verizon chain and found out a lot of information about this, which is why I know the specifics here.

In my case, I requested that Verizon figure out whether they wanted to provide service to my building (they did) and that they then contact my building (they did), at which point it turned out that TV (not Internet) for the building could only be provided by TWC.

For what it's worth, I'm pretty sure Verizon uses this as an easy excuse to avoid expanding their service (since 2010 or 2011, Verizon has been very half-hearted about FiOS and doesn't really seem to care about expanding FiOS as much as they care about appearing to care)[0].

> I don't think contractual exclusivity is legal,

No, but they've found creative ways to get around it, and it's certainly not something that's widely enforced.

[0] My evidence in favor of that comes more from my experience dealing with them in New England.


>utility-grade results

Hopefully not gas-delivery grade results. 5-10% of methane delivered via mains in the UK is lost to atmosphere. Similar leakage rates are found in the US, sometimes much worse. The main (heh, no pun intended) source of these leaks are cast iron pipes that are over 100 years old.

And unlike the Internet, when those things fail, things literally explode.


Methane is a much worse GHG than CO2. This seems like a very significant problem.


It is. Methane leakage in the US is comparable to the GHG output of half the coal plants in the US.


One idea could be to look at those who actually have gigabit residental connections at see how they did it...

I've seen several different models and most have their uses. I pay roughly $80/month for mine in a somewhat dense suburban area.


Didn't 1996 telecom deregulation mandate sharing of last mile copper, creating short-lived (~5 years) DSL CLECs funded by about $20B of public IPOs? Various tactics were employed by incumbent telcos to slow down the CLECs, while nominally complying with the requirement to share the last mile.


Yes, that was rolled back in 2001 as one of the first Bush Administration moves against the internet - I have no doubt this protectionist move was done in exchange for these big telcos to support the "terrorist surveillance" that's now turned into constant surveillance on Americans.


I've been led to believe (by conversations here on HN as well as elsewhere) that DSL in the US is operating under that regime -- the phone companies are required to lease them out, so you can have 5 different providers all selling you DSL over the same wires. But DSL bandwidths strongly lag behind cable modem bandwidths because the people laying the wire have no desire to upgrade for the benefit of their competitors.

How much truth is there to this?


It's a little bit complex now. The incumbent carrier (ILEC) is still required to lease lines at the Central Office, but they used to be required to lease access to DSL delivered from remote terminals as well. AT&T still provides leased access to DSL delivered from remote terminals, but does not provide leased access to U-Verse, so companies leasing access can put their own DSLAMs in the central office and compete on speeds for users near the central office, but not in areas that are primarily served by remote terminals after AT&T rolls out U-Verse's ADSL2 and VDSL based DSLAMs; the leased access for users behind remote terminals is limited to 6mbps ADSL1.

In cities which have been dense for a long time, like San Francisco, there are lots of central offices, and competition using leased access is feasible, but in cities where density is more recent, such as San Jose, there may only be one central office, and there's only a small area with feasible competition with leased access.


DSL in the US used to operate that way until it failed spectacularly due to the reasons you mention and the FCC reclassified DSL as an information service.


I don't know when that happened, but when I had DSL about, oh 6 years ago, they practically begged me to sign up with MSN. I think they got a commission for it. I chose just to go straight with the company who owned the equipment, my phone company.


I think some resellers were grandfathered in when it was reclassified, but not many of them were left at that point anyway. And you're right, they probably did get some sort of commission: providing the service itself was so unprofitable (even with line sharing) the DSL ISPs had to find additional revenue channels.


You can use the local loop, if it exists. It's just not cheap than ADSL, which is already cheap as fuck.

Though AT&T and Verizon are ripping out the connections if they bring fiber to your house, and you can't share that line.


Same here in France, both for copper lines — a.k.a "dégroupage" — and FTTH — a.k.a "mutualisation".

The first one was imposed to lift the monopoly of France Télécom (then the universal telecom public service, now Orange), while the second one was imposed not to repeat mistakes made when cable operators created local monopolies by negotiating cable installation at discounted prices with syndicated building owners or neighborhoods (Of course prices went through the roof once the monopoly was in place, and up again when one ended up buying them all).

Pragmatic result: I'm paying 35€/mo for 100Mb/50Mb (incl. TV/IP and landline/IP), due for an upgrade to 300Mb/100Mb.


"there seems to be very limited innovation in the last mile - even in London it's hard to get more than 20mbps"

That's just not true - vast swathes of London now have access to the VDSL-based Infinity service which is up to 76Mb down; there are quite a few FTTP exchanges too.


Well, when I looked (in E1, close to Central London) it wasn't available yet, and only about half the people in my office can get it. Hopefully things have changed in the meantime :)


+1, I live in a semi-rural town of ~10k residents and I get 75Mbps / 15Mbps fibre-to-the-cabinet broadband.

The infrastructure is owned by the incumbent monopoly provider, but the service over the top can be supplied by any one of a number of large and small suppliers.


That's also how it works in France.


I agree, there's no real competition for the "last mile." (If there were real competition, ISPs would be trampling over each other to deliver the best Netflix experience and bragging about it in their advertising campaigns!)

Requiring the incumbent mono/duopolistic last-mile ISPs to lease their lines may improve the situation, but I'm not as sure as Sam Altman that it would bring about real competition, because of the difficulties inherent in enforcing "fair, transparent leasing." Incumbents surely would find lots of clever ways to game any leasing scheme imposed by the FCC while technically "complying" with it.

I expect it would be better for US consumers than the status quo, though.


One option would be to prevent any company from operating a last mile AND selling it to retail customers.

Honestly, what I find most striking is how bad cable boxes are simply because there is no completion.


Texas does this for electricity, where the grid maintainer (regulated) is split from the power provider (deregulated). It took a decade to get it to work, but now it works really well and the competition in the power provider market is fierce.


Recently, due to their (Comcast's) own stupidity, I ended up having a couple of visits from Comcast techs trying to fix an issue.

Every single one was wowed by my TiVo. Just seeing how fast it was to respond (which has never been a TiVo strong suit) and how reasonable the interface was amazed them.

That's pathetic.


Why bother attacking the comcast techs? These guys are just trying to make a living. The real problems come from well above


Sorry, I meant due to Comcast's stupidity, not the techs.

The two techs I worked with were very nice and clearly frustrated with their inability to help me at times due odd barriers in the way Comcast has things setup, stupid hoops to jump through.

I've edited my comment.


> One option would be to prevent any company from operating a last mile AND selling it to retail customers.

How would that help? As long as there is still the one company owning the one last mile line. Whether it's consumers buying it or intermediaries leasing it in order to re-sell, there is still no competiton. I suppose, an itermediary may have more pull then a consumer, but in the end it's the operator that the leverage as there are no alternatives in that area.


> Honestly, what I find most striking is how bad cable boxes are simply because there is no completion.

Anecdotally, my Comcast X1 is worlds ahead of the old Comcast boxes. Not perfect, but no longer so bad that I look longingly at Tivos. So, slowly but surely, they're making some progress...


I've been fairly on the fence regarding net neutrality, and this article turned me around on the issue.

Previously, it was nearly impossible for me to reconcile a valid reason for regulating the telcos. It's their pipes, they should be able to route it however they want. And aside from that, we've never had net neutrality -- there's no ISP I've ever used that allows unfettered upstream access to port 80 from my home, for example. That was, up til now, my belief, which I understand is not a popular one.

That said, the final paragraph actually hit home with me.

"As long as consumers don’t have freedom of choice, last-mile traffic discrimination should be per se illegal."

If the game is already rigged, then the players should have to play by the same rules.

Edit: s/traffic/pipes/g


there's no ISP I've ever used that allows unfettered upstream access to port 80 from my home, for example.

Back in the day, I used to subscribe to Sprint's wireless cable equivalent. It had a range of 30 miles from the base station, and provided cable-equivalent speeds (for the day; the upstream was very slow by today's standards). Notably, they also provided a static IP address and unfettered access to ports 25 and 80, so I ran my own personal web and mail servers.

As you realize in your last two lines, if we had more competition, ISPs might still block ports by default for consumer safety, but provide a no-cost, no-hassle option to unblock them.


"It's their traffic, they should be able to route it however they want"

It's their pipes, not their traffic. A minor distinction, but an important one. :)


You are 100% correct. I'll edit.


The claim that the infrastructure is theirs is pretty dubious.

Sure, they may be the ones making money hand over fist on the pipes, but we US taxpayers invested $200 billion for them to build out that infrastructure. We paid for the pipes that they are profiting off of and now mismanaging.


> Unpaid prioritization is sometimes necessary; if everyone in a neighborhood is trying to stream 4k video, something is going to get prioritized.

I don't understand where people get this impression. If there is not enough capacity in the network then yes, some packets have to be dropped, but there is no cause for the ISP to be looking at what kind of packets they are. Building a network where this is considered necessarily is inherently defective because the ISP cannot possibly even know what every kind of packet contains.

The only sensible algorithm for ISPs to use is to drop the packets of the users currently transferring the most data. This actually does the right thing in the large majority of cases. If you're using VoIP, your packets don't get dropped because VoIP is not very bandwidth intensive. If you're doing some bulk transfer at full bore then your transfer slows down because you're transferring more data than anybody else. If you're streaming video then you're fine as long as the bitrate is less than what the ISP can currently provide to each active user, and if it isn't then you're screwed in any event.

The alternative is begging for gamesmanship. You can easily make a bulk transfer look like a hundred VoIP streams. Especially with P2P. Building a network where cheaters get ahead and innocent but unrecognized protocols get downgraded is completely unreasonable. You can't cheat an algorithm which is completely fair to all protocols.


Direct link to the proceeding on the fcc website: http://apps.fcc.gov/ecfs/upload/display (Proceeding #14-28 here: http://www.fcc.gov/comments)


I'd love to see someone scrape all of these comments (since they're provided in convenient tabular form, might as well!) and analyze them to see if there is any interesting data to be seen.

Just browsing through a couple, some people give one-liners but a few comments are all-out, nearly essays. I assume the FCC doesn't read all of these. Do they just use a program to analyze these comments, and gauge overall content?


There is a lot about the wording of this that I really like. It clearly acknowledges the real cause of the problem, which is basically locally rigged markets, and actually suggests a solution that won't simply help entrench the incumbents through increased regulation similar to price and quality fixing.


Folks: If you go here: http://www.fcc.gov/comments and click 14-28 ("Protecting and Promoting the Open Internet"), it will take you to a form where you can submit your comments.


In order to post comments, you have to make your name and address available on the site publicly? Am I understanding that correctly?


In general submitting comments on a government action is completely visible to everyone.

As a favor to a colleague I once did some data-analysis for public comments. She just shipped me everyone's data. I asked if that was legal and was told that she was required to give it to anyone who asks.

This feels weird for a web-comment BBS, but it's totally normal for the government requesting comments on policy.


Or just send an email, no name or address required:

http://www.fcc.gov/page/fcc-establishes-new-inbox-open-inter...

Or use/create a Twitter account:

http://www.fcc.gov/events/twitter-chat-gigi-sohn-netneutrali...


Yeah, looks that way. Putting my name on protecting the internet is something I'm proud to do. Putting my address down is a bit obnoxious though - I doubt they're going to do any verification on these.


They don't have to. If anyone wants to, they could verify it. I helped support an effort to find evidence of astroturfing an FCC request for comment. Having this data enabled us to do that work.

Knowing that the data could be verified is supposed to be a deterrent to acting in bad faith. Later, one could do the verification if they doubted the comments were genuine. Given the amount of tech power behind keeping net-neutrality, we should want the process to be as open as possible, so we could verify it ourselves.


They could ask for the information, but not make it public.


Making things public is how the government gets data closer to the truth with less work, and you don't have to trust them to do it. Groups with interest do the verification (lobbyists, journalists, you, etc). This is part of what makes democracy work.

The alternative is that we have to trust the government to do the verification with no check or balance.


"I have met with the Chairman of the FCC, Tom Wheeler, and I believe he is a good actor that wants to do the right thing. But he is fighting against very powerful lobbyists and large companies that want to disrupt the freedom of the Internet."

"Prior to working at the FCC, Wheeler worked as a venture capitalist and lobbyist for the cable and wireless industry" -Wikipedia

Really? Somehow I doubt that he has turned a full 180 and is now trying to protect the internet against people in his former occupation.


Rule of thumb. Assume people are operating fairly until proven otherwise. If you meet someone and treat them as a good actor, it becomes easier for them to BE one.

Truth is he is probably a politician. He will do whatever he thinks is going to get him the most support. So if you can convince him that is going against his former friends, he will do that. (180 flips in policy are very common in politicians.)



1) Lobbyists are hired guns not true believers or activists. There is no reason to believe he is still beholden to them or something.

2) He worked for cable in until 1984. Cable wasn't even operating in internet then.

3) Most of his tenure when he was a cellular and internet lobbyist was in trying to get more spectrum for wireless use.


Instead of making the lazy connection that he used to be a lobbyist and he must still keep those views, why don't you read some of the stuff he's written over the years, or look at some of the companies he's backed to see if you think he's still beholden to the cable companies?

Read this article from Wheeler about SOPA, written long before he was at the FCC:

http://www.mobilemusings.net/2012/02/how-sop-was-undone-by-s...

> Backed by Hollywood and others whose business model requires controlled scarcity of product, SOPA in many ways echoed the cable fight of 40 years earlier. The policy matter is not whether copyright holders should receive recompense for their products (they should), but whether legislation to protect that right is aircover to perpetuate old practices at the expense of new networks. There is no doubt there are honest-to-God Web pirates operating in China, Russia, and elsewhere who are stealing copyrighted product. These pirates should be stopped. But SOPA’s effort to accomplish this – which also just happened to strengthen the hand of content companies in other regards – applied concepts more applicable to the command and control networks of yesterday than to the open access networks of today. The result was an unparalleled protest and a political train wreck.

Does that sound like some mustache-twirling lobbyist-in-disguise?

Or his thinking about net neutrality from 2009:

> So, in a world where spectrum licensees are unwilling to part with their assignments and the spectrum agency wants to help while at the same time increasing demand, why isn’t net neutrality an opportunity for the wireless industry? Viewing the current spectrum and net neutrality issues holistically rather than in isolation just might be an opportunity for both the wireless industry and the Administration.

> President Obama campaigned on his support for net neutrality. Thus, it should come as no surprise that his FCC chairman has moved promptly on the matter, or that a Democrat-controlled commission is likely to adopt it. How it is implemented thus becomes more important than whether it exists. Rules that recognize the unique characteristics of a spectrum-based service and allow for reasonable network management would seem to be more important than the philosophical debate over whether there should be rules at all. Similarly, a rule that allows for variable pricing is an opportunity for wireless carriers to change the revenue paradigm at a time when revenue per megabyte is in a freefall.

http://www.mobilemusings.net/2009/11/net-neutrality-and-spec...


In this debate, a lot of people - especially those discussing "paying per GB" - that seem to be missing a key issue. Sometimes this is intentional, but I suspect that is a fairly small minority.

The central problem: trying to apply the concept of money and economics to packets doesn't work, because money and economics are tools for handling scarce resources, while the major benefit of the modern "digital age" is that you can copy those bits without a per-copy cost[1]. As bits are not scarce, "pay per GB" becomes a case of applying to wrong tool or trying to solve the wrong problem.

Observing that the infinite scalability of bits isn't leading to free high-speed internet for everybody, a better question is: which resources really are scarce? These are the costs that billing should be based upon.

With networking, those costs are things like creating the network hardware, installing it, and maintaining that hardware. The first two are a one-time cost. We usually distribute that kind of high-variance, unpredictable cost into "monthly payments" in a variety of industries, and tthe maintenance costs are inherently a "per-unit-time" cost as well. This includes the expensive routers that you need to have anyway to be able to tolerate variations in usage[2]. At no point does the contents ("number of packets") enter into this as a cost.

A common rebuttal to the idea of usage not being a cost is to point out the problem of saturation and how an oversubscribed line would the ISP to make expensive upgrades. This problem does exist, and should be part of the billing... because it is a problem about bandwidth, not bits. You don't get to keep billing someone indefinitely for a one-time cost. Attempting to do make up costs like that would be rent-seeking[3].

Various ISPs have shown that billing for a given amount of bandwidth (at some defined defined guarantee of service) can easily be profitable.

[1] Electricity costs are not relevant, and are often not relevant anyway in physical layers where you have to send an empty carrier if there is no data. Most of the rest of the "costs" are associated with using those bits (see: CMOS), which is addressed above.

[2] The specific amount of tolerance required being defined by the guarantees (sometimes with SLA) offered by the ISP.

[3] http://en.wikipedia.org/wiki/Rent_seeking


To add to this, 95 percentile billing seems to work very well in the UK. But since this isn't useful to an individual end user, this requires the last-mile provider to be required to resell wholesale access under 95 percentile billing, and for multiple ISPs to compete buy under this cost structure and resell to consumers under price structures that work better for them.

This works very well in the UK. We have no "net neutrality" problem as a result.

[1] http://en.wikipedia.org/wiki/Burstable_billing#95th_percenti...


The structural reason is the government itself. There is no free market. There are no checks and balances from consumers. Telecom is a government enabled monopoly, and now you're seeing the dangers of consolidating power into a few corrupt men http://www.huffingtonpost.com/craig-aaron/wake-up-internet-t...


When you submit a comment, don't forget to click the text link "Confirm" or else your comment will be lost. It's easy to miss since the screen looks like a post-submission confirmation.


The wireless v. home internet is a great thing to point out. It's the exact same companies, but operating with less of a monopoly.


I now get about 30down/20 up at my house with LTE from ATT and pay for and get 15/5 with ATT U-Verse. 6 months ago we paid maybe $160 per month for two phones and 2 GB per month download. Now it's $160 per month for 4 phones and 10GB. So it seems to me that, when I factor in the cost savings of $50 per month of shutting down cable internet, won't I be happy to soon spend $200 to $250 per month with ATT LTE to get 30/20 and say 100GB per month?


This feels very much like the kind of thing Marc Andreessen would complain about. Whatever the original good intent government created a monopoly or duopoly in many markets for cable companies. So now we have a lack of competition. Now we need more government regulation on top of the regulation in place to fix the original problem. It seems to me that sites like NetFlix are artificially cheap because they're subsidized by all websites and end users paying into the internet access pool and that artifical cheapness results in? Higher usage which in turn drags down the overall performance of ISP's.


This is not the case for the “last mile”. Consumers often can only buy Internet access from a single provider; there is no choice.

This is often asserted, but not true. According to the FCC, 97% of consumers have access to at least 2 broadband providers. 67% of people have access to at least 2 providers at 10mbps.

Here is the graph from the FCC:

http://i.imgur.com/xhn1YCF.png

and the original source doc:

http://transition.fcc.gov/Daily_Releases/Daily_Business/2013...


The "last mile" argument is true, your numbers don't disprove it because they don't represent a percentage of consumers with said broadband options.

The report's title is: Percentages of Households Located in Census Tracts Where Providers Report Residential Fixed-Location Connections of Various Speeds as of December 31, 2012

If the census tract where a household is located has access to 2+ broadband providers it satisfies this test, even if the household itself has access to less than 2. An entire tract that includes 2 cable companies that offer 10+ mbps but only offer exclusive service to locations would still satisfy this test even though 0 of the residences have access to 2+ services.


Yes it seems possible that they could be overestimating, but it is the most thorough report I have seen. And if their sample set is large enough, they should have accounted for it. Do you have any actual data that shows different numbers?


No I don't think they are overestimating, the graph just doesn't say what you said it does. It does not count the residences that have access to 2+ options, it only counts the number of houses that lie within census tracts that have 2+ broadband options available anywhere in said tract.

This means that even a residence with literally 0 options would be counted as a "2+ broadband options available" house if there were 2+ broadband options available anywhere in the census tract it lies within.

The numbers don't have to be refuted, they simply aren't numbers that indicate whether there is a problem or not because they answer a different. But unfortunately no, I don't have any data other than this report. I was super disappointed when it came out because I don't know of anything else.


You are right, what the report says is that 97% of people live in census tract where there are two broadband providers. What percent have access to the two is unknown, but absent any evidence to the contrary, and given the relatively small size of census tracts, it is reasonable to assume a majority have access to the providers in their tract. I'm open minded here, show me some data that shows a large group of people don't have access to at least 2 broadband ISPs.


Apartment buildings often make exclusive deals with cable companies for a variety of reasons. And even when they don't, it can be very hard to deploy new infrastructure anyway.


Yes of course, like I've said, the number is overstated, but by how much? How many people in the country live in apartments like you describe? 2%? 5%? 10%? It still doesn't make much of a dent into 97%


In most places it's still a duopoly, the choice between DSL from the single telephone company or cable internet from the single cable provider. It's just as bad as a monopoly.


Duopolies are not just as bad as a monopoly. Duopolies might not create perfect competition, but it normally produces pretty good competition.

AMD/Intel, Visa/Mastercard, Airbus/Boeing, etc. all have stiff competition.

And your local telecom and cable company are engaged in pretty stiff competition. At least Verizon and Comcast are where I'm at.


I'll try not to be an overbearing libertarian here talking about how this is all the government's fault. It's not 100% clear to me and somebody else has that covered. But I do want to put one concept out there as food for thought. The FCC's mission statement (amended in 1996) is the following:

"make available so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, rapid, efficient, Nation-wide, and world-wide wire and radio communication services with adequate facilities at reasonable charges."

Net Neutrality seems to fit within the spirit of this mission statement. And yet the FCC is also in the business of censoring nipples. Do you want to risk the FCC to be in the business of censoring nipples on the Internet? I can already anticipate what people will say when that day comes. "Look, the government isn't perfect, we don't have to dismantle it, We the People just have to vote somebody into office who will speak for us and implement reasonable standards.". Ok, so when was the last time that happened to your satisfaction? Do you really want to risk having this kind of future on the prospect that reasonable people will be voted into office?

This is one reasons libertarians and certain conservatives fight tooth and nail against every increase in the scope of government, no matter how reasonable it may seem. I'm more interested in the future of mesh networking, or any number of things we haven't even thought of, to work around this sort of thing.


To play devil's advocate, Apple also censors nipples. Both can change their stance on nipples. Like private companies, representative governments do respond to popular opinion, the avenues of applying pressure are just different.

Government and corporations each have certain advantages and faults by design. I'd prefer a public road and a private car, to a private road and a public car.


So if the current implementation of democracy is broken, the solution is to completely abolish government?


Honest question from a non-citizen about this line "But he is fighting against very powerful lobbyists..."

I do not understand lobbying? Is it a euphemism about bribing a bunch of politicians? If yes, then why isn't it illegal? If no, then can someone please throw some light on it.

I was not born here in the US so I am always confused by what "powerful lobbyists" can do to deter someone like the chairman of FCC who can literally make the rules (right?).


Lobbying in its purest form is supposed to be a way for people to have a voice in their government. Anyone in this country can ring up, or write, or email, their representative and push for an issue they feel strongly about. Likewise they can also make campaign contributions to the representatives, or candidates, they like and want to see in office. And the two can very easily be tied together: "I'm donating to your campaign because ...". If you keep it that simple it's a pretty good idea and is one that I think most people can get behind.

However in our modern world it really is just blatant bribery. Because corporations and rich individuals are able to donate such vast amounts that they are the only ones people care about. Take a look at how much money is spent during election cycles and it's obscene how many millions are poured into running for office. All that money has to come from somewhere. Say, for arguments sake, you must raise at least $5m to have a chance of winning an election but you think you can only raise about $2m from small donations (individuals) and then a few companies come along offering you nice big money bags if you agree to support their causes. Who do you care most about?


I see. So, the only way to have fair "for the people, by the people, of the people" elections is to have people fund the elections?

Thanks for a nice explanation.


Well the idea is that anyone can run for election and in order to afford to do so people can pool their resources and help out. So if I want to run for mayor and you really like me a lot better than the other person you can pitch in in different ways. You can help me reach out to voters, you can make calls for me, you can help me with social media, or you can donate money to me so I can pay people to do those things. This by itself really isn't a problem especially when there are caps on how much money people can donate, which there are. But if you donate as much money to my campaign as you are allowed what's to stop you from calling up the local TV station and paying them directly to run an ad for me? I might not even necessarily be involved at any point.

The big problems come when we do things like decide a multinational corporation qualifies as a person and therefor the rules around how much money a company can donate don't apply to them. And we do things like change the rules around what the limits are. And then people do things like fund PACs where they pool their resources and promote a candidate on their own without actually donating to the campaign itself directly. Some of these are just outright stupid decisions that never should have happened in the first place and others are loopholes. Campaign finance reform in the US doesn't have a single silver bullet that's going to fix everything. There's a lot of things that are wrong with it. Citizens United (the corporate personhood ruling) is probably the biggest but it's still just one problem among many.


Lobbyists lobby. All that means is that they share their opinions with government officials. Money need not be involved. When people complain about lobbying it's usually in the context of corporate-sponsored lobbyists who are paid to push their agenda and are spending money. Money can't be paid as an outright bribe (I'm sure it happens, but is pretty rare) but rather in the form of campaign contributions, or occasionally in direct political advertising. Recent Supreme Court rulings have really removed any restrictions on how much can be spent by independent political groups even if they are 100% sponsored by corporations or trade groups or whoever. Wheeler is an appointed leader of an executive branch agency, meaning that he has no campaign fund. Funds can be directed to Congressional campaign funds and Congress can in turn put pressure on his agency (the FCC) to either defund them or rewrite their authority, or to sue them for whatever perceived breach of their existing authority. Theoretically, there is no way a lobbyist can directly influence him.


I hate this debate. It's mostly politics and buzzwords with 0 cost/benefit analysis. Google already buys last mile access and if people keep acting like profits don't already come from customer choice they're going to end up with slow socialized internet and you'll never see 4k video. Net neutrality helps competition... In what world? That's like saying public schools increase competition in education.


> I would love to see a world where the companies that own last-mile infrastructure are required to lease the lines to any ISP the end consumer wants; this would create a competitive market and mostly eliminate the problem

This is not enough. In Germany we already do have that situation, and the big leader (German Telekom, who own the vast majority of cables) just leases them for bad conditions. For example, their own customers got "real" flatrates while leasing competitors got only traffic-based contracts, so when they sell flatrates they have big trouble with traffic-intensive customers. (In the last year, the situation became more complicated, but that's another topic).

We should go one step further and require a complete separation of infrastructure providers, ISPs and content providers.

That is, a company who owns cables should only lease them to ISPs and should not be allowed to play ISP itself. Also, the ISPs should not be allowed offer content themselves.

(Also, the owner of the infrastructure (cables) should probably not be a company at all, but that's another topic and not important here, as long as the separation works.)

As a bad analogy, a company who sells cars should not own the streets.


> I would love to see a world where the companies that own last-mile infrastructure are required to lease the lines to any ISP the end consumer wants; this would create a competitive market and mostly eliminate the problem.

Devil's advocate, why would any company want to be the infrastructure-owning company then? Aren't they in the worst spot?


Why would any company want to sell electricity or water? This is not a new problem. Let's stop pretending it is.


It's not a new problem, but the history of telecoms show exactly why it's a bad solution. Do you really want to go back to the days of AT&T controlling everything?

Do you want a local PUC deciding how fast your internet should and how much it should cost? Do you want them deciding that 5 dollars more a month isn't worth tripling the speed?

It works for power and water because the infrastructure doesn't turn over very fast.

If you had your way in the late 1900's we'd all be on ASDL right now.


The electricity and water systems, while definitely needing upkeep, don't need to prepare for a doubling of usage every few years.

Edit Plus, the electric company definitely does some kind of demand shaping: shutting off AC compressors on a rolling, as-needed basis. In water emergencies the water company will declare which days I can water the lawn or wash my car. "Utility" isn't synonymous with "totally dumb pipe."


The electricity and water systems don't benefit from their component costs being cut in half every few years. This isn't some situation where people just unreasonably expect better service for no reason, the technology gets better and cheaper.

Furthermore, Internet bandwidth is not a commodity like electricity or water. There's no supply to diminish. What the telecoms want to do is more like if suburban streets were toll roads, Amazon owned the toll roads, and Amazon wanted to add a "congestion" charge for trucks carrying non-Amazon packages.


Internet bandwidth is not a commodity like electricity or water

I agree


Conversely, I wouldn't say there has been much innovation at all in water or electricity infrastructure over the last 50 years. The utilities in place are perfectly happy to collect their modest, but government-guaranteed profit.

Perhaps it still makes sense to turn the last mile into a utility, but best to go in with our eyes open about the looming downside. There's not a free lunch to be had here.


You don't demand CAGR of 20% or more of your electricity or water supply.


The government did this in the 1800s with railroads and various entities still built a shit ton of them.


Not really. With the burden of regulation also comes the impossibility of going out of business.


to lease the lines and get revenue that way


Not if it's the government.


Really interested in hearing more about sama's meeting with Wheeler... Did he discuss concerns about putting new rules in place that would not withstand court challenge (i.e. the "commercially reasonable" standard)? Any additional creative ways to help him push Title II classification beyond commenting and contacting congress?

Also, you describe a last-mile competitive scenario that is very similar to the energy deregulation that recently occurred in New Jersey. I think it has produced pretty good results for customers. Here's a good/concise explanation of how they did it:

http://www.njelectricity.org/about-electric-choice/


I know this may end up seeming a pretty useless comment, but I cannot miss the opportunity of recommending a VERY good book about this subject, by the guy who coined the term net neutrality: http://www.amazon.com/The-Master-Switch-Information-Empires/...

The book analyses monopolies in information businesses, since Western Union, going through Bell and proceding all along to the era of Google and Apple. The end of the book is filled with very good insight on the subject. If this is a topic that interests you as much as it interests me, you should get yourself a copy of this.


If you want competition, perhaps the simplest way of doing it might be for municipalities to provide universal service at layer -1: run an underground plastic pipe to each house from the street. That way it suddenly becomes cheap for multiple telcos to run fibre to each house, but the municipalities aren't doing anything with an ongoing technical burden which they might be bad at, or running an ongoing service which might be subject to some kind of capture. Of course, this assumes that laying a pipe isn't drastically more expensive than fibre, which I don't know.


As I understand it, laying pipe is the fundamentally high cost of expanding or rebuilding a network. The cable itself has a non-negligible cost, but getting zoning and town permissions, securing land for junction cabinets, and digging through existing roads and around existing utilities is hugely expensive.

What I don't understand is why any new neighborhood could be built without such underground conduit in place. If they're going in for water, sewer, power, etc. then it should be trivial to pop in an additional tube for "future connections."


When my part of Amsterdam was built (1) all houses were provided with a phoneline (about 6 different providers), Cable (sadly only 1 provider) and Fiber (about 5 providers).

(1)http://en.wikipedia.org/wiki/IJburg


Cities do this, eg San Francisco, but the pipe is mostly unused.


Its not a matter of expense in many cases. Municipalities have agreements that span years with cable providers enforcing their local monopolies in exchange for kickbacks and universal access. It is impossible to compete in these markets with any amount of money.


I've seen solutions where connection provider and Internet service provider aren't same entity. If connection provider connects customers to POP where there are several Internet provders, it makes it trivial to switch service provider.

I've also always avoided deals where Internet operator owns cabling. It's much better that those are separated. There was a free offer for fiber connectivity. I refused it, ordered own fibers and now it's possible to choose provider quite freely. Because switching provider doesn't prevent using the same fiber with them.


DSL competition/local loop unbundling did seem to work pretty well, after a rough few years.

I wonder technically how hard it would be to do this with DOCSIS 3, by having channels per competing ISP. There would be a relatively small limit to the number of cable ISPs which could be overlaid on the infrastructure (5?), but that would still be preferable to what we have today.


How about this. The speed rating that you advertise for your cable modem (or dsl) service should be the slowest download rate on the last mile. In other words if the best I can get is 10mbps from the MSO headend and netflix should be able to prove this then that is what should be advertised. Consumers should get money back when customer service fails.


What if everyone physically helped? I bet 100 million adults could dig up their streets and lay fiber in a weekend if we made it a point of national pride. Okay, a few power lines would come down and water pipes would burst. If you planned it well and let cities organize volunteers I think you could just maybe pull it off.


I went to the fcc.gov website but couldn't figure out how to "file in support". Any tips?


Forced leasing of the last mile nor any kind of actual competition doesn't solve the problem, and the US wireless market is far from healthy.

Half of this article is still free-market wishful thinking.

The Netherlands, where there are plenty of ISP's to choose from, made Net Neutrality law exactly because the mobile providers "magically" nearly simultaneously announced plans for breaking net neutrality. (And after net neutrality became law, they all decided to raise their data prices.)

In a market with a limited number of players (and there will always be a limited number of players, regardless of regulation), it's way too easy to form informal cartels. A free market doesn't mean we magically don't need consumer protection or civil rights.

Also "wireless Internet is good"? All mobile services in the US are overpriced, suck balls and generally exploit the lack of regulation in a way that would see consumers in most other countries revolt.


What we should put on priority is city wide wireless internet capabilities. I think there are some early versions of this in some states but it would be very useful if it were more widely used.


Not Sam's (and pg's) usual style of super-pithy and easy-to-read writing. Did this get rushed out the door?


The petroleum industry seems to know how to balance fairness with profit making. ISPs need to learn some lessons from them instead of making decisions which hurt the platform itself in the long run. If all ISPs become like this, people will be very willing to move to an alternative that becomes available. This will just make them more vulnerable to 'disruption'.


so why don't we fix the real issue and disallow municipalities to create monopolized last-mile infrastructure?


The author of this article -- like most others who write on the topic -- fails to understand that the lack of competition is not due to a "market failure". Rather, it is due to government intervention that allows only a few -- or a single -- provider in an area.


From the article:

> Municipalities, often for good reason, gave these edge providers a monopoly (the bad kind of monopoly where consumers can’t choose to leave) and often used tax dollars to fund the development.

Your guess about the author was mistaken.


The opening paragraph indicates otherwise. It's not very well-written.


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