It's interesting how pure competition and "rational self-interest" got us the likes of Comcast and Cox and Verizon and all these other awful, awful companies. They quickly locked up the market, injected their own lobbyists into Washington, and then were content to provide a poor service for a lot of money.
What is shaking them out of their complacency now is not "the market" or "competition" as it's usually understood. It's a very large company, with tons of cash, led by someone (Larry Page) with goals beyond pure financial gains and rock-bottom self-interest.
Perhaps it's time to go back to the drawing board, and figure out what's wrong with these purely mechanistic models of society and the markets. It seems like it's time to ask ourselves if a dose of self-less-ness is perhaps required to make the whole system work better. Not a very large dose, mind you, but just a little bit; anything over the current level of zero, really.
You don't think that the core of the issue is regulatory capture, rather than a failing of "the market"?
It takes a lot of money to break into a captured market, which is why it takes a large company to do it. Google entering the ISP market has done more to shake up and spur on the incumbents in the past couple of years than anything regulators have done. And furthermore, you can be assured that their doing so is absolutely self-interested; Google isn't building fiber for the betterment of humanity, they're building it to improve the delivery of their services which make them money.
People trot out "regulatory capture" but can never give a straight answer about what is being captured and how that leads to a lack of competition.
Verizon wants to wire up the yuppie neighborhoods here in Baltimore with FiOS. That'd be major competition for Comcast, because those yuppies subscribing to triple play are where all the money comes form. The city won't let them do it, because they demand Verizon wire up all the poor neighborhoods too (which cost just as much to service but won't turn a profit).
Is the theory that Comcast has regulatory-captured the Baltimore city government, forcing them to impose this requirement? Because I've seen absolutely zero evidence for that proposition.
When Google goes into cities, they demand exemption from regulation. The regulations they get exemption from are not ones that give benefits to incumbents. They are liberal public policy choices: you have to wire up poor neighborhoods if you want to wire up rich ones, you have to kick in money to support public access TV, you have to get permits and your fiber cabinets can't be too big, etc.
This is too true. It's more regulatory moats than regulatory capture. At any rate, it's not profitable after, probably, the first time.
It's strange how cities force companies to wire this way. It's as if they forced a luxury brand, Hermès, say, to open a store in the most shit-hole, criminal part of town in order to gain the right to open a store in the yuppie part of town.
> Access to the Internet is increasingly viewed as a right and/or an essential service. Access to overpriced handbags, not so much.
Clothes are seen as essentials in Western society. Luxury brands, not so much. Yet access to internet and access to cutting-edge broadband are treated similarly by regulators in the U.S. That's the asymmetry.
...access to internet and access to cutting-edge broadband...
At the pace technology advances, there's not so much difference between the two. Since companies are still constantly pushing the limits of technology, the majority of the benefits of connectivity come at the higher end of the bandwidth spectrum.
I disagree. Almost all of the "internet as a human right" uses of technology are at the lower end of the bandwidth spectrum: e-mail, job applications, Wikipedia, etc. 95% of what's socially valuable on the internet can be done with HTML 2.0.
95% of what's socially valuable is feeling like an equal -- that means edX videos, Khan Academy, Coursera, YouTube, live streaming, backup software, immersive games, etc.
Since when is "feeling like an equal" a basic right? Everyone in my high-school had a car and designer clothing. Should the public subsidize that stuff for poor kids? Note that clothes are a much bigger part of "feeling like an equal" to a typical kid than anything to do with computers.
Games are not socially valuable, they're a diversion. Backup software--it's much cheaper to give everyone a USB drive than build fiber out to them. Finally, the failure of rich media in the educational setting has been profound. Text (and static diagrams) is the most efficient and precise way to convey information.[1] In the 1990's, it was about getting "multimedia" into classrooms, and it was a colossal waste of time and money. The value of online courseware is the lecture notes and exams, which have limited bandwidth demands.
[1] I'll note that HN is about as plain text as you can get, and is a place for serious discussion.
Edit: added ---> to quotes to make the paragraph separation clearer and clarify some minor points
---> Since when is "feeling like an equal" a basic right?
Since always, because large groups of people not feeling like equals inevitably leads to instability and uprising.
---> Everyone in my high-school had a car and designer clothing. Should the public subsidize that stuff for poor kids?
Yes, in the form of basic income sufficient to feed, clothe, and transport oneself and one's family.
---> Note that clothes are a much bigger part of "feeling like an equal" to a typical kid than anything to do with computers.
We're not just talking about kids, but even kids deserve the basic dignity of not being terrified to walk the halls of their school because they don't have reasonable clothing. The distraction of being strongly disliked by other students can have a profound effect on a kid's outlook for the future and motivation to improve.
---> Games are not socially valuable, they're a diversion.
Games are every bit as socially valuable as any other form of art or entertainment. As just one example of an artistic game, see Braid.
---> Backup software--it's much cheaper to give everyone a USB drive than build fiber out to them.
Give someone a USB drive you back up their files for a day, but give them fiber and you back up their files for a lifetime. Once built, the fiber is good for a very long time and many other uses.
---> Finally, the failure of rich media in the educational setting has been profound.
That's because people who call things "rich media" didn't know what they were doing or how to measure it. They were just jumping onto a buzzword. As a counterexample, Encarta on CD-ROM was quite useful as a tool for education and inspiration.
---> Text (and static diagrams) is the most efficient and precise way to convey information.
It depends on the information. What sound does a penguin make, in text? What does it look like to fly over an island rain forest?
If this is true, why do we still have classrooms at all? Why was video or telephone invented?
---> In the 1990's, it was about getting "multimedia" into classrooms, and it was a colossal waste of time and money.
I'll repeat my earlier mention of buzzwords, and add the benefit of a generation of students having early experience with computers, allowing them to perform better in a modern workplace.
---> The value of online courseware is the lecture notes and exams, which have limited bandwidth demands.
Strongly disagree. I took the very first edX course, MITx 6.002x. 95% of the value was in the excellent lecture videos by Prof. Agarwal, which I could speed up or slow down as needed to maximize understanding. The remaining value came from interactive circuit simulations. It's not just the medium, it's the quality of execution. Excellent videos and interactive software are invaluable and can't be replaced by lecture notes and exams.
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But all that said, I'll return to the first paragraph. People need to be connected to society in the way society wants to connect. Because the majority of the price of broadband is in the installation, it makes no sense to install second-class hardware in poorer areas unless you want to create a permanent digital underclass that will eventually drop out of the workforce, drain welfare resources, and eventually, revolt.
Cities already have to provide water, electricity, gas, and sewer services, so the roads will be dug up and the labor expended whether fiber is added to the mix or not.
Regulatory capture doesn't have to mean literal corruption. It can cover situations where governments acting on their own and in good faith, assume the status quo and grandfather incumbents. It might not even be on purpose, but rather the logical consequence of a distaste for laws and regulations with retroactive effects. But the end result is the same: legal obligations that impact new players more than old.
So the question is whether Comcast has to meet the same standard of building out their network in poor neighborhoods as Verizon does.
The "capture" part of the phrase necessarily means corruption. It's where incumbents control the regulatory process to keep competitors out. Unintended consequences from regulation is not "capture."
In every city I've studied, incumbents are bound by the same requirement to build-out their network as potential competitors. I'm sure there are exceptions to this, but the only one that comes to mind is Google Fiber: they get a pass on build-out requirements. These requirements curtail the most obvious route to competition: deploying in dense, rich neighborhoods where the incumbents generate most of their profits.
I've never felt that implication.If companies engage in effective (but legal) lobbying to benefit themselves at the public expense, that's regulatory capture even if it's not literally corruption.
I guess it could be an argument about what corruption means, but I think that people underestimate how dysfunctional the legislative and regulatory processes can be even without any legal violations.
Regulatory capture is more than just lobbying, it's a hijacking of the regulatory process by regulated companies. In any case, lobbying is an attractive narrative, but I don't see the link between lobbying and the actual anti-competitive regulations. Verizon and Comcast didn't lobby to be forced to build fiber/cable all over vast swaths of ghetto. AT&T isn't lobbying for San Francisco to impose inane restrictions on where you can put fiber cabinets.
To put it another way: look at the regulations Google demands exemption from in return for building fiber: build-out requirements, slow permitting, etc. Did the incumbents lobby for these things? No. They arose out of municipal politics that have little to do with lobbying.
Self interested lobbying is different to regulatory capture.
Even Wikipedia says:
Regulatory capture is a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating.
I don't think I could say it better. Regulatory capture is different to lobbying because the regulatory agencies act in the interest of the company instead of the public. Lobbying is when the company puts forward its own interest.
It's horribly inefficient to lay new fiber for every ISP that wants to enter the market. At some point the economies of scale are such that it becomes impossible to even enter the market; many thought two entrants was the limit, Google is proving that the market can support three.
This is a classic case where government should be laying fiber to cover the last mile and selling access at cost to any ISP that wants it. The equipment on either end can be the ISP's equipment, a fiber is a fiber. Except for cuts, there's nearly no maintenance required.
If three fiber nets are not enougth to creat a good market, why not lay another? If all the ones that are there are really shit there are costumers to be had.
And just by the fact that there are three horrible equally sized companys there we allready know that they are not able to change because if they could, they would allready be winning over market share there.
Also its easy for one of these providers to sell of there own fibers to many providers on top of itself so they dont have to figure out all the costumer managment and things like that.
There are many, many option outthere but the are currenly very hard to take (because of old and new regulation).
Everything from a truly huge company building a huge new net for the hole country in order to provit from economy of scale to small local companys that take offer specialised communitys and then spread from there.
In principle letting government lay down the fiber sound like a fine idea that can work, but juging by other technical project governemnt do I have my doutes.
It's not just "regulatory capture" stopping competition in the broadband market.
Let's say I launch a startup fiber ISP that serves a small area, planning to use the profit from that area to expand to cover the entire country, and to show investors there's money to be made so they'll loan me money for the expansion. I invest a bunch of cash digging up the roads to lay new cables.
All the national incumbents have to do is drop their prices and increase their performance - which they can easily subsidize with profits from the vast majority of the country where my startup isn't operating, and economies of scale.
Now I've spent a load of money digging up the roads to launch a service that is lower performance and more expensive than my subsidized competitors. My planned expansion never goes ahead, and my initial investors lose their capital.
Far better to spend my time on a photo sharing app, where you only need nine employees to start a company you can sell to facebook for a billion dollars :)
The reality is that arguments of this kind are always made by people who dont have any fantasy on there own. This mechanical story you layed out is devoid fantasy.
In the real market people take advantage of oppertunities, large companies are not always so flexible and dynamic for example, companies can survive in small market, more companies may join.Maybe for some other reason all the streets have to be opened and you can somehow get your cable in for cheap. Maybe you have a groupes of special costumers that require special networks and you can give them a discount because you wanted to do that anyway.
The are for example universtiy networks in some country that are connected by glass outside of the internet. Now if you can find a costumer like that you can lay some internet glass as well.
Or how about a big company that did something diffrent joining the game (google in this case), they will not be underpriced so easly.
A small company could survive in a single place or town, and if they can do it other might be able to do it as well.
There are a millions of possible ways that your mechanical view does not take into account, and that why we have markets. Im not smart enougth to figure out a good solution, you are not smart enougth but somebody might come up with something. There were many great and powerful countrys that crashed in a suprisingly short time because of these sorts of things.
If we can get away from "regulatory capture" we have change to see these effects. For what is worth in Switzerland a new company is laying down massiv amount of fiber right now and the competition has yet to dynamiclly rearange themself to this new challange. Also even if it fails, its not at all clear that once prices went down, they will go up again. Just because the new competition is gone, does not mean a company wants to take the marketing hit of rising the price again. People might switch to the equally bad competition just because they are angrey at a company raising prices on them.
We have empirical evidence that competition has an immediate effect on improving the marketplace. Competition is hindered because of regulatory capture. It would seem to follow that competition is the cure, and impediment of regulation bought through corruption is the disease.
> Perhaps it's time to go back to the drawing board, and figure out what's wrong with these purely mechanistic models of society and the market
I've always had the impression that it's more a matter of timescales. Places do what's best for them in the next year, not the next 50yrs. If companies thought further ahead and building long term plans and potential would be a reason to spend capital, then I think we'd see a very different market, in many markets.
"with goals beyond pure financial gains and rock-bottom self-interest."
This doesn't paint an accurate picture. Google isn't deploying Fiber out of any notion of selflessness. This is a competitive play, and a very good one at that.
You say selfless ideals, I say this is exactly how "the market" and "competition" are commonly understood to function -- in the absence of corruption, regulatory capture and state granted monopolies.
And you're ascribing purity of motivation based on nothing more than apparent religious belief in your savior Larry. Hardly a more convincing argument.
I tend to think that it's just really easy to look at things on too-small a timescale.
Consider the extreme: in a single second, there aren't any discernible market pressures in the ISP industry, and it would be weird to expect it.
Which is mainly to say that it is important to talk about how quickly you want competition and market forces to come into play (not just that you want them to) when talking about why and how to change "the system".
While I agree that Page has more goals than pure financial gain, I don't see how those other goals really play into fiber. More bandwidth to Americans means more potential money for Google. No one else was increasing the bandwidth, so google is trying to jump start the process. But they are doing it purely for financial gain. It is just a bonus that it also benefits consumers. But isn't that how free markets are supposed to work?
> locked up the market, injected their own lobbyists into Washington
Ergo, it was not a free market and it was not laissez-faire capitalism.
In a free market, i.e. laissez-faire capitalism, anybody is free to do whatever they want as long as they don't initiate the use of force, including the government, so you could not get into the situation you describe in the first place.
A soft cap on corporate size seems like the simplest solution.
EX: 20,000 employs and or contractors and companies can’t own shares of other companies without being included in that cap. Outsourcing seems like the obvious loophole, but hardly an insurmountable barrier.
Though, increasing tax load as companies scale is probably a much better option. Not that there is a realistic chance of this passing any time soon, but large companies are harmful to both democracy and free markets so it's likely to be tried by someone.
PS: The only real counter argument I can think of is global completion.
Edit: (3 downvotes no responces.) How odd, looks like I hit one of those things you can't say. http://www.paulgraham.com/say.html I wonder why?
I completely forgot about that. I remember having some POS 100Mb account with hotmail and upgrading to Gmail was a godsend. I think I bought an invite on ebay.
100mb?! I remember hotmail slowly reducing the mailbox capacity to like 20mb by the time gmail appeared.
A friend and I did a big trip to Southeast Asia and he begged his friends on email not to Include his email in their responses to save space on the server.
Of course, most competition also died. In terms of free email, there's now... I think Outlook.com is the only one I see semi-regularly? Yahoo's email service is utterly dreadful and I seem to remember a lot of kerfuffle regarding them and mailing lists.
No one I'm friends with uses yahoo, but out of a class I taught of 160 university students, I'd say about 20% of those who actually emailed me were using yahoo.com.
And for older folk, I still see plenty of @aol and @<serviceprovider> addresses.
Don't mistake what youre friends are doing for what the world as a whole is doing!
Most of the competition deserved to die. At the time 10-50MB mailboxes were normal, and Google came out with 1GB (and counting!) from day one, along with a much better UI than everyone else, and kick-ass spam filters.
Nobody's done much more than reach parity with GMail since then, so there's been no big incentive to switch back.
I'm not suggesting that there was meaningful competition before - just that there's no meaningful competition now, contrary to the comment I was replying to which asserted that "the competition got serious".
I never understood why people are hating on big companys that produce great effects and big market share. I can understanding people hatin horrible IE6, but gmail was and is fantastic and most people love it. Noting is stopping them from leaving to other provider (and there are still many other) but they are happy.
So why is everything that has big market shares bad?
How about we switch to a model where we gat bad at companys that are actually selling us shitty products instead.
I'm not getting mad at anything. I'm responding to "the competition got serious" - no it didn't, that's an outright lie. The competition died.
In any case, it's bad because it means that if I don't want to agree to Google's terms of service for whatever reason or just don't want to interact with them as a company (perhaps I disagree with some corporate policy of theirs), then I have to either deal with a worse experience, self-host, or pay money to a company like FastMail. If there were reasonable competition, I and many others could use them, and Google would have to convince us not to switch.
Are you really claming that there is not a single accaptable email hoster, even for money anywhere on the internet?
Even if there is no good one, there CLEAR are still many, many others that you can use.
Edit: Competiton is not defined as same service at same price. All email services compete with each other, gmail did not kill the competition or the market they just offered the best system on one price range. You are basiclly complaining that others that have diffrent privacy policy are not as good or cheap as gmail.
You offered this as a response to somebody saying that google was good for the market, but they clearly were. You get better free email in most aspects and you still have tons of other options including the old shitty free email providers.
These post feel like a bad accuse to find a reason to hate on google, or maybe im misunderstanding you.
Are you really claming that there is not a single accaptable email hoster, even for money anywhere on the internet?
Even if there is no good one, there CLEAR are still many, many others that you can use.
Edit: Competiton is not defined as same service at same price. All email services compete with each other, gmail did not kill the competition or the market they just offered the best system on one price range. You are basiclly complaining that others that have diffrent privacy policy are not as good or cheap as gmail.
You offered this as a response to somebody saying that google was good for the market, but they clearly were. You get better free email in most aspects and you still have tons of other options including the old shitty free email providers.
These post feel like a bad accuse to find a reason to hate on google, or maybe im misunderstanding you.
> You offered this as a response to somebody saying that google was good for the market, but they clearly were.
Look. If I have a measurably worse email system, and email is a central part of workflow in my industry, then I am not able to compete as well as those who have measurably better email systems.
You could argue that there are equally good email systems, or that there's no possible reason that I could possibly want to not use Google's email system. That would be valid and constructive.
No. Your attack on Google can easly be made in every single market on the planet.
"If I have a mesurably worse Ice Cream Delivery Guy, and Ice Cream is a central my marketing stratigy, then I am not able to compet as well as those who have measurably better Ice Cream Delivery guys."
What you take issue with is simple that you happen to not like on aspect of a service and your complaining about it. Your critic is basiclly a critc on markets as such, if that is what you are doing then say so, if not stop repeating that the world is unfair, nobody said it was.
