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Comment by Nextgrid | Hacker News Reader

To be fair, the auction model doesn't seem to work well when it comes to spectrum. What you end up with is a few big players delivering awful service while having enough money to outbid anyone, essentially preventing any competitor from ever breaking into the market to provide better service.

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I would consider that an anti-trust problem, not an scarce-resource-allocation-system problem. The concept of an auction is predicated on having a liquid market—both that there are replacement goods available from other sellers, and that there are many buyers "at the top" with enough bidding power to compete fairly between themselves, such that they'll "pick their battles" by buying only what matters most to them.

The government can only give away slices of a fixed resource for so long. Eventually it runs out.

You literally can't start an airline from scratch. You have to first buy one that already has landing slots, then figure out how to dispose of the planes/staff/operations/debts that come with the package. Is that really better for competition than just having a market for slots?

Only for them to immediately be gobbled up by 1 or 2 big players.

How about a market for destinations? Oh wait that will be immediately controlled by one player.

Hm it seems consolidation is the natural path we prefer towards solving a problem. Why not let the bureaucracy manage it then?

Give up the pretense. This is all market capture of finance by low effort grifters who will throw a fit when they don’t get privilege for nothing but being an obnoxious talking head.

> Oh wait that will be immediately controlled by one player.

According to[1], the average number of competitors per US domestic city-pair is 3.5 and has been increasing over the last few decades.

[1] http://darinlee.net/pdfs/airline_competition.pdf

Freakonomics did a good episode related to this [1]

One of the takeaways was that as organizations grow they become more married to spending resources to maintain their existing system which comes at the cost of innovation. So they “innovate” by buying other firms/ideas and it eventually leads to consolidation of an industry.

[1] https://freakonomics.com/podcast/in-praise-of-maintenance/

They won’t be gobbled up if they aren’t offering a better service. Then that just clears the way for yet another competitor to come in and offer better service again until the large airline improves enough to make entering the market unprofitable.

Big companies buying small companies is good. It’s a reward for improving the market. Big companies preventing smaller companies from even starting via government regulation (i.e. regulatory capture) is what’s bad.

Giving it to the government is just skipping to the worst possible outcome. Nobody has any incentive to compete.

> You literally can't start an airline from scratch.

Gonna need a citation on this one. I would guess the actual reason airlines are hard to start from scratch is the massive capital required, but would be interested in having this guess proven incorrect.

Porter Airlines in Canada (which presumably has a very similar regulatory regime) was started from scratch about 20 years ago.

You can also do like Kenmore Air and just land on the nearest body of water.

Very small airline. They have 29 planes that can hold 74 people. American airlines (including regional partnerships has 1700).

Few notes there:

* The parent comment didn't caveat "large airline".

* Porter is the third-largest airline in Canada. Canada has 10% of the population of the US, so our airlines will be accordingly smaller.

* American Airlines is the largest airline in North America [1], serves the entire country + international. Really not a reasonable comparison to a regional domestic airline.

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

That speaks to the lack of airlines in Canada if the third largest has 74 max people and 29 planes.

> That speaks to the lack of airlines in Canada if the third largest has 74 max people and 29 planes.

No, it speaks to the population of Canada... Porter still comes in at 18th largest in North America [1]

(It might also be because each of the two large carriers, Air Canada and WestJet, has a number of subsidiaries/wholly owned sub brands which would each be larger than Porter - eg Air Canada Rouge, WestJet Encore)

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

Porter Airlines appears to have started in an entirely unique regulatory regime, actually:

  https://en.wikipedia.org/wiki/Porter_Airlines

In particular, airline monopoly control over allocation of terminal resources at an airport is not a useful prerequisite to generalize from.

> Porter Airlines appears to have started in an entirely unique regulatory regime, actually

I did a quick skim of that wiki article (skimmed a couple sections, ctrl+f'd for "regulat" and "monopoly"), but couldn't find anything about a unique regulatory regime. There has been regulatory issues with the Toronto Island Airport (where porter wants to extend the runway to allow jets to land, but no one* else wants this), but I don't see where they required a unique regulatory regime?

No one wanted it because it would have meant more flights. That's precisely my point. There is no such thing as new traffic capacity anymore. You can only take it from someone else.

> There is no such thing as new traffic capacity anymore. You can only take it from someone else.

JetBlue started in the late 90s, and according to the wiki [0], "was awarded 75 takeoff/landing slots".

Sunwing Airlines [1] started about 15 years ago, with departures from Toronto Pearson. They targeted the southern vacation niche. I don't know the details of the traffic capacity at Pearson, but they didn't get their landing slots by buying some other airline.

I'm not disagreeing with your comment about the limitations of dividing up a limited resource - many airports in North America are at capacity, and there's no room there for new competition to start up. But you followed it up with an absolute "You literally can't start an airline from scratch", which I took issue with because there are several examples that disprove it.

[0] https://en.wikipedia.org/wiki/JetBlue

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

Porter tried to go around the problem by partnering with the government to revive a disused island airport, accessible only by ferry. Part of the deal was going to be a bridge.

The community organized vigorously against the prospect of new flights, and succeeded in kneecapping Porter by killing the bridge.

https://en.wikipedia.org/wiki/Porter_Airlines#History

What I don't like is the DoD keeping the best 5G spectrum to themselves (3GHz-4Ghz) while the rest of the world is using it, putting our future lead in communiciations industry at risk.

Lead? Telecom in the US is an oligopoly, with most of the major spending backed by government grants. Many areas are still supported by rotting copper and old 2g/3g towers because there's no incentive for providers to upgrade them. Unless you meant something else by "communications industry".

That rotting copper is going to be immensely valuable after the collapse.

Yeah, go check out what type of ISP service you can get in Australia for comparison of a similarly sized country. Get ready for ADSL and quotas.

It has nothing to do with size and everything to do with politics. Plenty of small countries have crap internet too.

Australia's internet sucks because the conservative government nerfed the NBN plan.

There is no large country that has amazing Internet everywhere. Size does matter in this regard.

"everywhere" is moving the goalposts. The US (and Australia) doesn't even have amazing internet in the cities.

It does, both of the last two metros I lived in offered gig symmetrical fiber to my apartment for $70/mo.

What's keeping our "lead in communications industry" at risk (and has been for decades) is the broken pricing model for mobile data. With that model, whether you have 4G, 5G or 9G wouldn't change anything because the limiting factor is never the speed but the usage quotas.

To be fair, it seems to work just fine. I can choose from at least 5 carriers in my city for cell phones alone, multiple of which offer unlimited data now. That’s only cell phone spectrum.

For other spectrum, it’s easy enough to acquire spectrum that microwave ISPs are able to get into local markets with very limited capital. I graduated with 2 folks who started an ISP together and the spectrum was cheaper than the hardware to transmit on it at the time.

Yeah, the problem with cellular in the US is that it is moderately expensive.

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