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Comment by minimax | Hacker News Reader

To follow up with your water analogy: we don't expect the water company to deliver 400x the water to our homes than we did 20 years ago, but that's exactly what we expect of our broadband providers. It's hard to imagine a scenario where a municipal (or monopoly) broadband service will upgrade its network as fast as we expect. Competition is the answer.

My city spent just over $3b last year, meanwhile Time Warner Cable spent roughly $3b on capital expenses in the entire United States.

This is about as apples to oranges as it gets, but if your city spent $3B just maintaining water and sewer, and time warner spent $3B over the entire country then TW is winning in my book.

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> we don't expect the water company to deliver 400x the water to our homes than we did 20 years ago, but that's exactly what we expect of our broadband providers.

It is a 400x increase when measured by the yardstick of a software developer, but by the yardstick of "how much money does it cost to connect Joe Schmoe to a network that meets his expectations" the business has not appreciably changed in 20 years. What changes is the model number on the Cisco switch and the type of cable in the ground, but "what is the maintenance cycle on this electrical cable and power transformer" is a problem that municipalities have been successfully solving for well over a century.

I think you are confusing the practice of actual dataspeed innovation (e.g. what Cisco, Juniper, Alcatel-Lucent, Qualcomm etc., do) with ISPs like AT&T or TWC who merely buy and install equipment and service cable runs. AT&T, Time Warner, Verizon, et al do not appreciably contribute to the number of packets it is possible to send in 10 seconds, except insofar as they buy products from those companies that actually do. That role (of buying Cisco products) can easily be shifted to a municipality with no downside to Cisco. In fact, from Cisco's perspective, large nationwide ISPs operate more or less as a consolidated union of individual markets and have a lot of bargaining power, so a more diversified customerbase that doesn't cooperate as tightly means Cisco can make more money, and since they are actually the ones who make the internet fast, that seems like a positive outcome to me.

> but if your city spent $3B just maintaining water and sewer, and time warner spent $3B over the entire country then TW is winning in my book.

Of course not. $3b is the total budget for the whole city, which is mostly public safety (police, fire, EMS, etc.) The capital spending on energy is only about $200m/year, which is about 50% production and 50% distribution. If you imagine that it is probably easier to run fiber than it is to run 110,000V powerlines everywhere, the ongoing capital expenditure to run the actual fiber lines themselves would be less than $100m.

If you want to make Internet service a regulated monopoly or a municipality provided service, there will be no incentive to upgrade to new technology when it becomes available. That is the virtue of competition. Competitors can differentiate their offerings based on price and features. Competitors will install faster networks in order to win market share. Competitors will find ways to reduce costs so they can offer service at lower prices to gain market share. You don't have any of that if the municipality owns the network.

How much "competition" is offered by the effective duopoly that exists in most places for broadband?

Duopoly? A large number of major cities and their suburbs only have 1 true highspeed option (cable) and slow wireless or DSL. FIOS deployment is sadly limited.

Too bad in germany the big privately-owned ISP's (tier1 DTAG being among them) have very little interest in upgrading to new technologies, making city-owned ISPs pretty much your only option if you ever want to get FTTH or VDSL (the village even offered to pay some money to DTAG to implement it - no thanks - the next closest city's utilities company had to roll their own network to get it done).

You've made many predictions about what "competitors" will do. Why the hell haven't they done them already? Data service in this country is terrible, for most business and nearly all residential customers.

Yeah it is a common mistake made by free market folks:

Competition will drive down prices, increase speed and result in the best possible customer service!

Except that in markets with expensive outlays to get started that rarely happens because the expenses put a natural limiter on the amount of people that can actually mount competition making that number low enough that the competitors can essentially carve up the market, price fix and then all suck approximately equally, indefinitely. Just like ISPs and cell phone carriers do now (and will continue to do so until the government steps in and forces them to fix their shit).

If one must generalize, I think we should say that competition tends to benefit the consumer, and fortunately competition often arises spontaneously, but there are many factors that can disrupt this virtuous process.

> competition tends to benefit the consumer

In regulated markets. After all, things like anti-cartel laws are regulations, and we absolutely do need those.

There are better examples one could use. After all encouraging competition isn't really the point of cartels.

I think the point was that cartels will form in a regulatory vacuum and therefore the intrinsic virtues of market forces are oft overstated.

You're saying that there's no competition in municipalities? They're called elections. We hold them more than once a year.

Not to mention that municipalities compete with one another; it is actually easier in most places in the United States to move to a neighboring municipality than it is to switch to a better ISP. For example I would have to move over a hundred miles to get better internet access than the large, regional ISP that serves my area, and meanwhile I could move about five miles and "technically" live in a different city in the same metro area.

Finally, I am not advocating municipal control instead of private ISPs, I am arguing municipal offerings in addition to private ISPs. It is tautologically impossible for the introduction of new entrants into the market to itself constitute a reduction in competition.

...time warner spent $3B over the entire country then TW is winning in my book.

TW is winning, but their customers certainly aren't. If we actually had free markets in data connection, consumers would have other providers to choose, and TW would have to spend a great deal more on their aged creaky networks in order to stay in business.

Why did we defer to the judgment of local government when they wanted to shackle residents to one provider in exchange for big bribes through franchise agreements, but now that they want to encourage that same provider to get off its ass and provide decent service they're enemies of capitalism?

Wait, do you want them to upgrade there service or not? If the goal is to maintain service without upgrades then minimizing cost is great, if you want improvements then minimizing cost is a stupid way to evaluate things.

Once the fibre (if you don't buy junk) is in the ground upgrading becomes very very cheap. And given that the required access speeds aren't very high (100M-1G), they can be had rather cheaply second hand/new. So you can direct all the money from the cost savings to upgrading your backbone, where it does get rather expensive.

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