> It was not accompanied by increased investment into the actual wires that ran into peoples' homes. Indeed, it eliminated any incentive to invest in those wires--why pour billions of dollars into infrastructure you'll have to lease out at cost to your competitors?
The trouble is without competition they have exactly the same lack of incentive. Why invest in those wires when you can charge customers the same amount whether you make the internet faster or not, and the customers don't have any better alternative?
There are two valid ways out of this. The first is to somehow create competition at the wire level, but that seems rather implausible. Running new fiber to every American household is so expensive that nobody wants to do it unless they can have a monopoly. Creating competition would require some plurality of companies to do it even though the competition, if effective, would eat all of their margins. If anyone can describe a way to make that happen it would probably be worthy of a Nobel prize.
Which leaves the second alternative, which is writing the incentives into the regulations. Set it up so that the nationwide average ISP speed is regularly measured and the ISPs with above average network performance are allowed to charge more by an amount that justifies making regular upgrades.
Or just require the last mile provider to install fiber everywhere once and then let the competing ISPs who lease it provide their own terminating equipment, since the terminating equipment is the thing that needs to be upgraded but isn't the thing that constitutes a natural monopoly.
> People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means.
Your criticism seems to be that we aren't doing exactly the same thing they're doing. Is there a reason we can't just do exactly the same thing they're doing?
> So because we don't have a full answer to your criticism, you'd rather we roast in Comcast Hell?
Regulatory regimes are systems. Leaving out key provisions can result in a "solution" worse than the problem. It's like leaving a support off a bridge design--you don't get partial credit. If you impose unbundling without creating a compensating incentive structure, you'll just drive investment out of the industry and end up with stagnation.
Also, the choice isn't between Comcast/Verizon and Ofcom. It's between Comcast/Verizon and the City of Baltimore (or San Francisco, or <other city run by crazies here>).
Well if you put down your own wires to a new place you have a monoply. Of course if regulation requres you to share it then you dont. I think the root problem is that there never was a competiitive build up. You could easly imagen many diffrent companys starting out locally, say in big citys, and then to add more and more people, eventuall, you will get competution that way. These companys will soon find it profutable to rent out there wires to higher levels.
But non of this works if you have one company or the state build up a network and only then you start competition. Some people ignore the diffrence between free markets and privatisation/monopoly deregulation. This is the problem we are facing in tons of places. Free market get a bad wrap because privatisation often produces bad results.
Solving this problem now is really hard. One solution is that you just have the government build all the wires and rent them out low level to companys. Another is to deregulate completly and hope after some dark times market pulls threw. Another is to start doing fine grained regulation of every aspect.
I am very sceptical about government regulation that involve things lime you are suggesting, regulatory capture and the revolving door are a real problem if your regulation is to technical.
I dont have the solution, economiclly speaking all of these are very suboptimal.
The trouble is without competition they have exactly the same lack of incentive. Why invest in those wires when you can charge customers the same amount whether you make the internet faster or not, and the customers don't have any better alternative?
There are two valid ways out of this. The first is to somehow create competition at the wire level, but that seems rather implausible. Running new fiber to every American household is so expensive that nobody wants to do it unless they can have a monopoly. Creating competition would require some plurality of companies to do it even though the competition, if effective, would eat all of their margins. If anyone can describe a way to make that happen it would probably be worthy of a Nobel prize.
Which leaves the second alternative, which is writing the incentives into the regulations. Set it up so that the nationwide average ISP speed is regularly measured and the ISPs with above average network performance are allowed to charge more by an amount that justifies making regular upgrades.
Or just require the last mile provider to install fiber everywhere once and then let the competing ISPs who lease it provide their own terminating equipment, since the terminating equipment is the thing that needs to be upgraded but isn't the thing that constitutes a natural monopoly.
> People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means.
Your criticism seems to be that we aren't doing exactly the same thing they're doing. Is there a reason we can't just do exactly the same thing they're doing?