Comment by xenadu02 | Hacker News Reader

Comment by xenadu02 | Hacker News Reader

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Are you serious? I'm not being flippant here, but your question doesn't seem to be an honest one.

Laying cables is really expensive. It takes a lot of capital and the return on investment is long-term. Two things that aren't very popular among Wall Street or VCs. Even assuming you undertook such a venture, Comcast/ATT/Verizon have really _really_ deep pockets. They can undercut any price you care to offer.

The idea that "regulation" is causing high prices is farcical on its face. There aren't enough schools and libraries to make any difference to the bottom line.

The market is uncompetitive because broadband is a natural monopoly. Just like roads, water, sewer, and electricity. The capital costs are so high there is usually no business justification for having more than 1-2 providers in a given area. There are a few exceptions but they prove the rule.

A "free market" in broadband would look much like the "free market" in electricity: Either the government or a regulated utility granted monopoly power by the government should run the fiber. Any ISP that wants to compete can hook up at the local CO. The equipment on both ends of that fiber can even be owned by the ISP so if new technology allows faster speeds nothing blocks the upgrade (the favorite excuse for pro-corporatist shills).

The big three have fought anything that smells like a free market tooth and nail, outright purchasing legislation at the state level to squash municipal attempts to do anything like this.

The funny thing is the big ISPs rely on government-granted taking of private property in the form of right-of-way to run their cables... something for which property owners receive no compensation. So much for "using our lines" as the ATT CEO likes to claim.

I'm glad you wrote this as it is far more coherent than I was writing in my head while walking to the metro station.

To give an example of the type of competition an Isp upstart would face, just look at what happened with google fiber. That was a legal battle every step of the way for them and the incumbents defended against google's deep pockets. You have to have a heck of a defense to fend of a Google invasion. Yes, local government regulations played a role in this, but they blocked federal attempts to unravel the mess of regulations that allowed entire cities to be Comcast cities or time warner cities, and people argued it was a good thing to stop this.

Look at the few cities that can and do offer municipal broadband - competition thrives and consumers have good choices, and the big three have to play ball to get customers; rolling out new lines, better speeds and prices, no caps. Tacoma, WA has municipal broadband and it's great; you have lots of options, including Comcast and century link if you desire. And it's this way because of the municipal, not in spite of it.

If it's a natural monopoly, why are there all these laws only allowing one provider?

BTW, before the law enshrined AT&T as a "natural" monopoly, there were lots of phone companies who seemed to have no trouble at all running wires everywhere.

There aren't laws allowing only one provider. In fact those are banned by the FCC (though a few grandfathered Exclusive franchises may exist).

On the other hand a lot of America only got telephone access after the att monopoly was formed in 1913.

Most of the rest of the world only has one hardware network run by a well regulated monopoly.

If you're referring to the Kingsbury Commitment[1] that was an agreement with the government after AT&T was already a monopoly. After Alexander Graham Bell's patent expired there was a brief period where competition sprouted but then AT&T started consolidating and buying up the smaller competitors. By 1913 AT&T was already in a dominant monopoly position.

[1] https://en.wikipedia.org/wiki/Kingsbury_Commitment

It was not already a monopoly. Your link says there were other long distance companies, just that AT&T's was more extensive.

Note that scores of companies were running railroads everywhere, it doesn't make sense that running a telephone wire was infeasibly expensive.

A couple things: 1) While AT&T was not the only provider left standing, it was the largest and had scale advantages against its competitors. The Kingsbury Commitment was designed to halt AT&T's expansion and ensure that those competitors were able to compete. However, it failed: AT&T was able to continue to improve its dominant position by selling subscribers in certain areas while purchasing competitors in more strategically advantageous areas. 2) One of the reasons for "natural" monopoly regulation is that we do not want telephone wires, railroads, and pipelines running everywhere. Building a utility requires gaining access to rights of way. Society subsidizes all private utilities by creating rights of way and infringing upon the rights of property owners along the route. 3) The scores of companies running railroads everywhere were subsidized even further. At least in the West, the federal government gave land along the route to the railroad companies for construction. [1] In some ways, building a railroad was more about land speculation than private construction of transportation infrastructure.

[1] https://en.wikipedia.org/wiki/Pacific_Railroad_Acts

As a data point here (in your strong favor), consider UK broadband pricing and the effect of local-loop unbundling.

Well said.

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