Anyone afraid what will happen when companies which have monopolies can charge content providers or guarantee packet loss?
In a normal "free market", if two companies with a mutual consumer have a tiff, the consumer decides which to support. Where I live, I have one broadband provider. If they get upset with, say, a streaming provider, I cannot choose another BB company because I like the streaming company. I MUST pick another streaming company, as that is the only thing I can "choose".
How is this good for the consumer? How is this good for the market?
Gee whiz, why would any network have an issue with this ?
After all just about everyone continues to buys Cisco gear. Gear from a
router company that decided to compete against it's own customer base.
Cisco did when it invested heavily and took stock in one of it's
customers, Cogent. Cogent the largest network responsible (for the most
part) of lowering the overall bandwidth prices, because it could now
afford too. Networks today continue to feed Cisco money (buying their
gear) despite the anti-competitive nature of that deal which kindled all
this. Still to this day, Cisco fuels Cogent's (anti-competitive) low
bandwidth pricing. By handing Cisco dollars, from that day forward, we
voted for fewer ISPs & Backbones in the future.
Suck in your gut, because, it's to late to cry about it now. This concern
is over a decade late. That's how we got to this point. "Cause and Effect
- and the Blinders we put on".
How can that be fixed ? More government regulations ?
I agree with you, Patrick. Double digit/meg pricing needs to die.
I'm not sure that the change really alters backbone policy, but it would definitely open the doors for bad things in the access networks. That being said, only the largest networks could put enough pressure to benefit from it, and some do that currently. I also don't see this as any different than the business model some streaming sites enforce where the ISP must pay for stream access based on their subscribers instead of interested subscribers just paying for an individual account. Fair is fair, and some of the streamers have been hitting ISPs longer. Once again, only the largest streamers can hope to get away with it, and only the largest ISPs can get the low priced deals. In both cases, it's the small ISPs and small content providers that suffer.
I don't see the FCC stopping megacorp bullying anytime in the near future.
My take here is that I'd rather the FCC just leave it alone and see if
the market doesn't work it out in some reasonable way. That is, to not
even address it in rules, whether accept or prohibit. Just step back
and make sure that all you see is dust rising and not smoke. These
things take a while to resolve. This issue has been building for a
while but hasn't really reached its pinnacle yet so who is to say what
things will look like in five years from a business standpoint? To
codify something pretty well means you want it to look a particular
way or you are accepting a way of being that may or may not be in the
interests of those concerned and pretty well ending discussion,
negotiation, and experimentation regarding that point.
The problem is that all the RBOCs/ILECs/Cable groups seem to be headed
in the same direction (and most of them are trying to run their own
CDN and force their customers to use it instead of a third party--and
running them badly to boot. Sound familiar?) If that were not the
case, such a scheme would not be viable since there would always be
someone undermining it. (Like OPEC... The price they want is never
what they get because some country or another is always selling more
than they say they're going to because they want more money, meaning
supply is greater than it should be and prices adjust accordingly.) It
only takes one or two holdouts to upset the plans of all the rest.
*shrug*
I'll have to see how these changes are implemented and how things
are interpreted before we know what this is going to do to
competitveness.
I'd like to propose a new ICMP message type 3 code --
Communication with Destination Network is Financially Prohibited
Wait; it should be a new type code message, so the header format/data
section can be different. And include in the error response; the
160-bit Bitcoin addresses the user should send the ransom, err, I
mean payment to for various drop rates, and a declaration of the
amount of total payment that needs to be confirmed on the blockchain
per Kilobyte for successful delivery of the payload at the offered
service levels
The invisible hand of the market cannot fix problems when there is a monopoly.
Put in economic terms, a player with Market Power is extracting Rents. (Capitalization is intentional.)
Regulating monopolies allows a market to work, not the opposite.
Regulating monopolies protects monopolies from competition.
Monopolies can not persist without regulation.
You are confused.
Unless you are talking about "persist" on a time horizon spanning generations. If so, then nothing can persist, with or without regulation. And more importantly, I am not willing to wait that long for a fix.
A regulated monopoly is a monopoly, with all of the powers granted to monopolies by regulation.
Regulations can work to ensure monopolies do not form. This is not supposition, but historical fact.
It is an open question whether our current regulator regime is capable of repeating that feat, however.
I think Mr. Sheldon is pointing out this:
--xx--
The biggest myth of all in this regard is the notion that telephone service
is a natural monopoly. Economists have taught generations of students that
telephone service is a "classic" example of market failure and that
government regulation in the "public interest" was necessary. But as Adam
D. Thierer recently proved, there is nothing at all "natural" about the
telephone monopoly enjoyed by AT&T for so many decades; it was purely a
creation of government intervention.
Once AT&T's initial patents expired in 1893, dozens of competitors sprung
up. "By the end of 1894 over 80 new independent competitors had already
grabbed 5 percent of total market share … after the turn of the century,
over 3,000 competitors existed.[55] <http://mises.org/daily/5266/#note55> In
some states there were over 200 telephone companies operating
simultaneously. By 1907, AT&T's competitors had captured 51 percent of the
telephone market and prices were being driven sharply down by the
competition. Moreover, there was no evidence of economies of scale, and
entry barriers were obviously almost nonexistent, contrary to the standard
account of the theory of natural monopoly as applied to the telephone
industry.
(...)
The theory of natural monopoly is an economic fiction. No such thing as a
"natural" monopoly has ever existed. The history of the so-called public
utility concept is that the late 19th and early 20th century "utilities"
competed vigorously and, like all other industries, they did not like
competition. They first secured government-sanctioned monopolies, and
*then,* with the help of a few influential economists, constructed an *ex*
*post* rationalization for their monopoly power.
--xx--
The Myth of Natural Monopoly http://mises.org/daily/5266/
To be clear, I have no idea if AT&T was a natural monopoly in the 1890s or not. But the idea that there can be no "natural monopoly" is ludicrous, unless you distort the definition so far out of shape is doesn't resemble anything except a complex syllogism in a textbook. Here in the real world, sometimes there is very clearly an overwhelming preference for a single company / provider / etc. to own a market segment. Pointing out the laws of physics do not prohibit competition does not mean there will be competition.
Regulating monopolies protects monopolies from competition.
Monopolies can not persist without regulation.
You are confused.
I think Mr. Sheldon is pointing out this:
Thank you.
[more comment below]
--xx--
The biggest myth of all in this regard is the notion that telephone service
is a natural monopoly. Economists have taught generations of students that
telephone service is a "classic" example of market failure and that
government regulation in the "public interest" was necessary. But as Adam
D. Thierer recently proved, there is nothing at all "natural" about the
telephone monopoly enjoyed by AT&T for so many decades; it was purely a
creation of government intervention.
Once AT&T's initial patents expired in 1893, dozens of competitors sprung
up. "By the end of 1894 over 80 new independent competitors had already
grabbed 5 percent of total market share … after the turn of the century,
over 3,000 competitors existed.[55] <http://mises.org/daily/5266/#note55> In
some states there were over 200 telephone companies operating
simultaneously. By 1907, AT&T's competitors had captured 51 percent of the
telephone market and prices were being driven sharply down by the
competition. Moreover, there was no evidence of economies of scale, and
entry barriers were obviously almost nonexistent, contrary to the standard
account of the theory of natural monopoly as applied to the telephone
industry.
(...)
The theory of natural monopoly is an economic fiction. No such thing as a
"natural" monopoly has ever existed. The history of the so-called public
utility concept is that the late 19th and early 20th century "utilities"
competed vigorously and, like all other industries, they did not like
competition. They first secured government-sanctioned monopolies, and
*then,* with the help of a few influential economists, constructed an *ex*
*post* rationalization for their monopoly power.
--xx--
The Myth of Natural Monopoly http://mises.org/daily/5266/
I don't know what got me to thinking about it earlier today but I recalled when I started at the telephone company in Los Angeles there was a pitch made early on that in earlier days a business in Los Angeles had to have several telephones on desks to be able to talk to all of their customers.
Which was true ONLY because regulation required that each telephone line terminate in an instrument owned by the providing company.
Absent that one regulation, businesses would have invented multi-line instruments a lot earlier than was the case.
There would still be some other problems like interchange traffic between companies, but I suspect that some entrepreneur would have (or maybe did) install two or more switchboards within lord reach of each other. (The high school I went to in the 1950s had a very complete non-Bell System telephone system on-campus. In a small office off the Main Office were two identical cord boards along with placards prohibiting connections between the two boards--which were ignored unless there was a telephone man in the office.
