I'll assume that your comments about socialism aren't simply trolling and respond that even in a broadly capitalist system, network infrastructure is effectively a natural monopoly.
Due to physical property issues, it needs public rights-of-way for deployment and maintenance. Also, fixed infrastructure costs are very high and only become cost effective with widespread buy-in and positive network externalities.
It makes no economic sense to build two or more parallel networks side-by-side, with each capturing only a fraction of the potential customers.
As a result, an unregulated telco in a natural monopoly has no competition and minimal market incentives to innovate and improve service. Consumers cannot "simply choose another supplier" because other suppliers wouldn't be crazy enough to sink the necessary huge capital investment into a competing service.
In general, the options to deal with this situation are:
* Public ownership and/or administration.
* Regulated monopoly with mandatory service quality benchmarks and profit reinvestment requirements.
* Introduce competition by forcing telcos to offer wholesale service to resellers.
* Introduce competition through public investment in parallel facilities.
* Introduce competition by allowing network service providers to leverage their networks to offer different services (e.g. cablecos offering telephony, telcos offering streaming video).
The perception, rightly or wrongly, in the rest of the world is that in the USA people go "OMG !!! IT'S SOCIALISM !!!! AAARRRGGGGHHHHHHHH !!!!"
Nowhere else have I come across people who dismiss ideas by saying - Oh, that's Socialism - and seem to think that that's enough.
Game Theory says that mixed strategies are almost always (in the technical sense) the best, so the instant dismissal of ideas simply being they have a flavor of socialism seems stupid, and yet it seems that it's the instant reaction of many, many people in the USA.
I could be wrong, it might not be the case, and it's interesting to see that the perception from outside the USA might be wrong.
What you'll find if you get into more detailed discussion with public-utility internet before dropping the socialism bomb is that they're usually advocating a hybrid model: municipality builds out the pipes and then isps compete on actually providing internet service.
You're right about the loudmouths here, but it'd be a mistake to let your sense of public sentiment be overly colored just by volume.
Calling something socialism here is a pretty good debate hack, like calling someone racist or anti-semitic or whatnot; it's enough of a social taboo that the so-accused will usually feel compelled to defend themselves against it, thereby derailing the original course of discussion...this is a good strategy for winning unrefereed debates.
Really? I just laugh when I hear someone talk about Socialism in the US. We have been Socialist for years. Ever drive a car on the road? Did you buy the road? Did you pay a company for a subscription to the road network?
No, it's all paid for by the government. That, my friend, is Socialism. And it's a good thing.
(Actually, it's a bad thing; if people had to pay the full cost of using the road network, it would be a lot easier to get people to take public transportation. But I am just saying it's clear that Americans have nothing against Free Stuff From The Government, even if that Free Stuff is paid for with tax dollars.)
Actually, most of us do pay for access to the roads, in the form of vehicle registrations, driver's licenses, and tolls. On average, I pay about $600-$700 every year just to drive on the public roads.
The fact that the roads are owned by state and local governments does not inherently make them socialist.
The perception, rightly or wrongly, in the rest of the world is that in the USA people go "OMG !!! IT'S SOCIALISM !!!! AAARRRGGGGHHHHHHHH !!!!"
This is true, but only because most of the people decrying "socialism" don't understand that many of the things they support are also socialist. Both the right and the left are already fairly socialist in the US; Norman Thomas, who ran for US President on the Socialist Party ticket a bunch of times in the early 20th Century, was asked why he wasn't running again at one point and replied that the Republicans had embraced all his major platform points, and the Democrats were already beyond that, so he'd accomplished much of what he'd set out to do. I can't find this in a minute of googling, so maybe it's apocryphal.
In any case, socialists on the right were discredited effectively everywhere by WWII, and in the US, socialists on the left were discredited by the collapse of the Soviet Union around 1990 and/or the (perceived?) near-collapse of Britain in the 1970s.
In fact you are wrong socialism can never work because it doesn't have proper price signals. There's an excellent paper: Economic Calculation in the Socialist Commonwealth that details this problem from the 30s.
Also, it is very hard to have a mixed plan because eventually one will exploit the other. Game theory is great and all, but most of the time I don't think it applies to multiple trials -- which is what the real world is.
I forget the term, but the current system is government and corporations teaming up to screw the citizens. It's basically the opposite of communism. It's not capitalism because competition is outlawed.
The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism—ownership of government by an individual, by a group, or by any other controlling private power.
In large parts of the USA, there is only one (or fewer) decent Internet providers. It's hard to let the free market decide when there is no real competition.
That tells me there is a huge market waiting to be tapped by the right company. 20 years ago there were barely any cell companies and now people (and phone companies) are dropping their land lines left and right.
Up here in Burlington VT there is about to be some heads rolling on how the gov handled the gov run phone/internet company.
There are multiple competing cell networks because it's relatively inexpensive to set up a cell site, compared to running wires to everyone's house in the same area.
If this wasn't the case, you'd have a dozen pairs of copper phone wires and as many cable TV coax lines running into your house, all by different companies -- those industries have existed for far longer than the Internet has, and have traditionally been ridiculously profitable. That you don't have more than one telephone line and one cable line is a strong indication that last-mile infrastructure is a natural monopoly. Whoever gets to your house first basically owns you.
It is also far less expensive to drop a few new cell towers (or lease space on competitors' towers) than to go through the gigantic, expensive process of laying new cable/fiber.
"[T]he right company" is basically guaranteed my money.
I can't even imagine what 50MB must be like. The fastest connection I can get here in Georgia is 1.5MB ADSL that costs $35/month (plus phone service, no naked DSL offered) and stops working every time it rains.
In capitalism people are supposed to have choice. I'm not American either, but from reading HN for a while I gather that this does not hold for ISPs in many areas of the US. So basically what they have in those cases is a state-granted fiefdom.
And the solution of course is not to have the state run it. It's to introduce competition.
While competition is generally a Good Thing, there are times when it doesn't make sense to waste a lot of effort through duplication.
How does anyone benefit by having two or three equally-slow internet connections into their house (say over copper phone wires, coax, and BPL), rather than having one much faster connection (fiber)? All the money spent duplicating parallel infrastructure could potentially be spent making a single more robust network, one that gets upgraded more frequently.
It doesn't make much sense to force each would-be ISP to drag lines out to their potential customers' houses; once customers have a connection, a second one is just waste (unless there's some way to use both at once, but there generally isn't and most people couldn't afford to anyway due to the way they'd be priced -- each ISP has to recoup the cost of its own infrastructure).
The better way, and the way that actually fosters more competition where it counts, is to have a good, shared, high-speed infrastructure that all providers can operate on and which is made available to all on non-exclusive and non-discriminatory terms.
I think the proper vehicle for these sorts of things are public-private partnerships, similar to the way that transportation projects have been handled for years. (Ex. both the Erie Canal and the NY State Thruway were done by public/private partnerships, called "Authorities" in NY state parlance.) This provides a degree of isolation between the day-to-day management of the infrastructure and the machinations of the political process, and also discourages wasting of taxpayer funds, or raiding of infrastructure funds for other projects. The state might support a project via bond guarantees, but could reasonably expect it to stand on its own (and operate as a non-profit) from then on.
That strikes me as a compromise solution which is likely to produce the most competition where it actually benefits users.
> In capitalism people are supposed to have choice.
Yes - but nowhere it's stated that the choice must be between immediately comparable services.
The alternative choice they have is to go build their own ISP. But, such a venture is difficult, expensive and risky, and thus wasn't deemed a better option than sticking with the current offering. Until the municipality came around and forced the citizens to undertake the venture.
Things like this where the costs are dominated by the need to build lots of infrastructure before you can even sell to your first customer are naturally uncompetitive, and even may be natural monopolies. Without significant competition private companies will generally perform worse (as far as the consumer is concerned) than government.
This is certainly not Socialism, as the use of government to provide services that individuals and businesses cannot efficiently provide goes back thousands of years, well before Marx started writing.
Ideally, people should be able to choose another provider. Unfortunately, the many of the ISPs in America exhibit monopolistic tendencies. What you call "effective Socialism" is just encouraging competition, like the article says.
People in big cities usually have a choice of ISPs, but in rural towns, often there is only one "high-speed" ISP. It's kinda a sad state of affairs. I've recently gained a very interesting view, as I'm currently living in Japan. I'm American born though.
In the US many essential services work this way. Taxes pay for fire, police, roads, water, etc. Electricity & telecom are heavily regulated. Originally this started as a way to get coverage in rural areas. The government setup a non-compete franchise wherein a provider would agree to cover rural areas (even at a loss) but their exclusive rights would allow them to recoup costs. That alone wasn't a bad idea -- the US's adoption of electricity, telephone, and cable TV outpaced the rest of the world. This however is where it should have ended. Instead the exclusive coverage agreements mostly continue to this day. In spots where local government has decided to open competition the incumbent providers have such an overwhelming advantage that most smaller providers fail quickly but usually no one bothers trying. It's too capital intensive.
If it's too capital-intensive to compete, then I'm having real difficulties with your argument that "this... is where it should have ended." Having grown up out the boonies, I have to say that I really appreciated my access to electricity and telephones.
It is. It's an all too common knee-jerk reaction in well-off western societies that when something doesn't go exactly your way, call for politicians to fix it with force. And politicians are all to happy to oblige.
In Britain, back in the early 80s when British Telecom was operated on cost, and not lining the pockets of greedy corporations, it would take weeks or even months to have a single phone line installed.
One data point is a good example, but hardly a good way to back up an argument. I will concede that I'm unaware as to whether any serious analysis has been done of the efficiency of publicly-run corporations vs. privately-run corporations in first-world, democratic countries, but nearly any data set can be cherry-picked for evidence to support any view.
Arguing that all (or the great majority of) public organizations are wildly inefficient on the basis of i) philosophy, and ii) examples, is like arguing that all (or the vast majority) of governments are dictatorships because back in the 80's, Romania was one.
The argument made, was that a service will by default be better when profit for the owners is no longer a factor. This is largely a philosophical argument, even though it's framed practically, so I will counter it philosophically;
The argument fails to incorporate some very basic and well understood market mechanism. A company whose products consumers are forced to buy (either because they are subsidised or because they have a government-enforced monopoly) are less inclined to invest and take risks in development. Why take a risk when people are already buying what you have today and can't go anywhere?
Another factor is political interference and the ensuing ICan'tBelieveItsNotCorruption. What happens when the pipes clog up before there's budget for increasing bandwidth because more people than expected are downloading and seeding torrents? Is the memo that says that it's mostly porn and piracy anyway, and we can just block the ports going to be ignored over pumping money in new bandwidth? To help people get porn? Protect the children, save money and get re-elected -- all in one firewall.
Yes, absolutely, a government run business can be more efficiently than a private one, and sometimes if can get some infrastructure in place where it simply isn't practical for for private actors to work. But it's never because they don't have to make money for their owners.
As I understand it, some ISPs have a legal monopoly as the only Internet service utility company allowed to operate in an area (similar to how other utilities such as power and water work).
Almost every single industry in america is oligopoly and defending oligopolies with the free market capitalism argument is completely illogical and unfair.
If companies (private or state owned) are making huge profits at the cost of tax-payers money, then capitalism or socialism doesn't make any differences...
Under Capitalism, shouldn't people simply choose another supplier when your ISP does stupid things?