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What about after the airlines were deregulated? Didn't we get great prices and service from lots of newcomers? Would you rather we go back to airline regulation?



What about after the electricity market in California was "deregulated" a few years ago? Didn't my employer lose millions of dollars by having to shut down its factories during the ensuing rolling blackouts, which in turn were caused by successful efforts to create artificial scarcity and extort billions of dollars from the public?

But you shouldn't read too much into that example either. The lesson here is that buzzwords aren't always useful for understanding the world. The word deregulation means different things in different situations. Airlines are still a heavily regulated industry: Health and safety regulations, security regulations, labor regulations, international treaties, state and local regulations. (You think you're going to be allowed to launch a jet helicopter from your suburban backyard? Your neighbors think otherwise.) But there was a moment when a few of those regulations were removed or changed in a useful way that permitted the market to work better, and that event was named "airline deregulation".

Which does not imply that every action called "deregulation" is going to be equally successful, or even that such actions are especially similar to each other. The devil is in the details. What matters is what the regulations are, and what the situation is.


The comparison is not apt; you seem to be invoking airlines in the belief that they are a similarly capital-intensive industry. This is not really true. You can start up an airline with a bunch of rented or chartered planes, so you don't have to buy much of anything. (And even if you do want to buy them, investors know that they can be sold later and take that into account when loaning you money.)

You can't really do that if you want to be a modern ISP. (At one point, due to line-sharing rules, you could be a DSL ISP without too much infrastructure investment, but this is no longer true; the rules were gutted a few years back and with them went most of the small mom-and-pop DSL operations.) It's a hell of a lot harder to get investment for a fiber deployment---which won't be worth much of anything if the business folds---than it is to buy an aircraft, which at the end of the day will still be a valuable asset.

The industries in question have very little in common, so it should come as no surprise that strategies to induce competition within them look totally dissimilar as well.




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