I don't favor monopolies but, because I live in Los Angeles, I see that a city can act like a sluggish, greedy monopoly, too.
Here, the city owns the roads and electrical grid, and it's doing a mediocre or poor job of maintenance. We don't, for example, have "state of the art high throughput roads." Many of the roads are crumbling and need complete replacement. There's a huge backlog.
There's also a multi-year backlog of decaying wooden power poles which need to be replaced because they're in danger of coming down during a windstorm.
And, when people go to the expense of having solar panels installed on their homes, they have to wait many months for the city to come out and inspect and give permission to connect to the grid.
The city does not have a good handle on the problems. (Don't get me started about the leaky water mains.) City ownership of infrastructure is no guarantee of good service and value for money either.
And of course, as you say, with monopolies, we're screwed too. I don't see any easy answer.
At the very least when decisions are made on a local level as opposed to state/federal, there is more of a chance that 1) people will be able to wrangle control of the situation by voting, and 2) the people who don't like the result can move away.
But you're right, it sounds like there is no easy answer for Los Angeles.
I suspect you're not correctly remembering what happened. It's illegal under federal law for municipalities to grant telecommunications monopolies. Municipalities hand out cable licenses in return for 5% of gross receipts + random giveaways like school district grants. But there is absolutely nothing exclusive about it.
To pick a random example, here's the cable franchise in my county: http://archive.aacounty.org/OIT/Resources/CableAgreement.pdf (see Section 2.4, "Grant Not Exclusive").
> despite cost-per-bit plummeting over the years, the cost to consumers isn't going down.
Bits per second have been going up dramatically. My parents' house in Virginia, got 256 kbps SDSL sometime around 2000-2001. They got 50 mbps fiber over BPON around 2006. That got upgraded to 500 mbps over GPON around 2008. They just got gigabit this year. That's doubling of speed every roughly 15 months.
The problem is not that municipalities are granting monopolies. It's that municipalities impose restrictions on building that make it untenable to compete with the incumbent. In most cities, a startup cannot come in and build out neighborhood-by-neighborhood based on demonstrated demand. They're required to commit to building out the whole city in a short time frame, without regard to demand.
> In most cities, a startup cannot come in and build out neighborhood-by-neighborhood based on demonstrated demand. They're required to commit to building out the whole city in a short time frame, without regard to demand.
-- EDIT
I checked on this, and you're indeed correct. The franchise in my home town includes a non-exclusivity clause.
As you said, it also contains a clause stating that "The Licensee shall make its Cable System Service" available to all residents of the town within seven business days of a request". So the network must cover the entire town.
Finally, in the non-exclusivity clause, it states that if any other cable provider is ever granted a license with "more favorable or less burdensome" terms, then the town will renegotiate terms with Comcast.
To me, this is the same thing as "granting a monopoly" in practice. But I appreciate your clarification!
-- END OF EDIT
I want to also point out:
> The problem is not that municipalities are granting monopolies.
In the case of Chattanooga that I mentioned, the law preventing the municipal ISP from expanding is unfair in the same way, even if this is not a case of a monopoly being "granted". Why shouldn't a company created by a town be allowed to compete in the marketplace?
Because EPB is a monopoly. In Chattanooga, it's illegal for anyone besides EPB to provide electric service. It's fairly conventional thinking that companies shouldn't be permitted to leverage their monopoly in one area to expand into a different area.
However, you're also bringing up an issue that seems really neglected in public discussion, which is the role of municipal infrastructure and policy.
To me there's three things:
1. The importance of net neutrality to the working of the internet, at a theoretical level.
2. The lack of competition.
3. The obligation of companies to the public because of advantages they've been granted.
These discussions always proceed like big ISPs own the land that cables are going over, etc. when that's anything but the case. There's things like the telephones you mention, plus right-of-way laws.
Why the EFF doesn't publish a huge map showing land used by ISPs that's not owned by them I don't understand.
It outrages me to see these ISPs being given right of way, and then having them turn around and act like they don't owe anything to the public, when in fact they wouldn't exist without the public bending over backward to give them all sorts of privileges. They're acting like parasites.
To me I might take arguments against net neutrality more seriously if those arguing against net neutrality would:
1. Lobby for the rights of municipalities and other institutions to set up their own ISPs and networks. No laws against public ISPs.
2. Lobby for ISPs to be held responsible for any and all criminally or civilly infringing content going over their networks. Want to preferentially treat packets? Then you should scan for child porn too. If not, you're implicitly supporting it.
3. Lobby for the elimination of right-of-way. Let municipalities, state and federal governments, and private landholders charge ISPs whatever they want for access over their land.
Of course, ISPs would scream bloody murder and argue such things are ridiculous, but I would argue that they're not at all unreasonable given what the government is asking for in terms of net neutrality. They want to have their cake and eat it too.
Likely because it wouldn't show anything interesting. State and local governments may only "manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government." https://www.law.cornell.edu/uscode/text/47/253. In practice, rights of way are poles and conduits, which are rented to all companies at published, non-discriminatory rates: https://www.law.cornell.edu/uscode/text/47/224. The idea that companies are sitting on all these free rights of way they don't own is largely false.
I don't know what's causing the hold up in Nashville. The lawsuits don't stop Google from deploying, only from relying on the city's "one-touch make ready" ordinance which would allow bypassing the FCC process. But Google deployed in Kansas City, etc. without the expedited process, so that doesn't explain the delay. And Google Fiber's deployment in newer Fiber cities like Atlanta has been slow even though they face no litigation there. I suspect it all has to do with the fact that Google Fiber only has like 1,500 employees and recently cut 10% of its workforce.
A lot of customers will pay more to get decent service. (Otherwise, McDonald's would have driven sit-down restaurants out of business entirely.) If you're running a local ISP, whose business is based on providing good service, screwing over your customers would seriously hurt your business.
You are assuming capital needed to set up an ISP is non-prevantably low. This can only be the case if the state, county or city owns the last mile and allows any business to rent it.
> A lot of customers will pay more to get decent service. (Otherwise, McDonald's would have driven sit-down restaurants out of business entirely.) If you're running a local ISP, whose business is based on providing good service, screwing over your customers would seriously hurt your business.
Your restaurant comparison doesn't work, because you don't have McDonalds customers or TGIF customers, you have people who eat at both at varying frequencies.
And as for your second point, I said screwing over you end-user for a reason. If it's more profitable to undercut prices to get the cheapest users, while selling data and deals to other market actors based on your users data, ISPs will compete for that instead of speeds, privacy concerns and other. And your choice becomes between varyingly shitty deals.
The "market" can't then make a choice until:
1) Someone wants to start an ISP with users as primary customer.
2) It being more profitable.
3) That someone having enough capital to do so.
Telephone companies are a public utility, and are, in most jurisdictions, legally required to lease space on utility poles to ISPs.
Laying lines is the largest cost of setting up an ISP; by using telephone poles, the cost would become manageable for a small business. Small business loans would be sufficient to cover the cost of setting up a small ISP.
As far as profitability goes, end-users could come together to set up a co-op, if they wanted better service.
>And as for your second point, I said screwing over you end-user for a reason. If it's more profitable to undercut prices to get the cheapest users, while selling data and deals to other market actors based on your users data, ISPs will compete for that instead of speeds, privacy concerns and other. And your choice becomes between varyingly shitty deals.
ISPs can undercut prices for the cheapest users, but the cheapest users aren't everybody. As I said, a lot of people will pay more for decent service. If you want a better analogy, consider a user choosing an iPhone 7 over a no-name Android phone. If price were the only consideration, Apple would not be one of the largest businesses in the world.
So you're arguing for tier 2/public utility/net neutrality? Then we agree. Otherwise you have to realize that DSL is already available as an alternative to cable or fiber. The problem is that the speeds are too low to even be called broadband.
> ISPs can undercut prices for the cheapest users, but the cheapest users aren't everybody. As I said, a lot of people will pay more for decent service. If you want a better analogy, consider a user choosing an iPhone 7 over a no-name Android phone. If price were the only consideration, Apple would not be one of the largest businesses in the world.
Alright, let's take your phone analogy. What we've heard is that Apple is somewhat protective of your privacy, at least that's what they're posturing publicly. We know fairly certainly that neither MS or Google (and all licensed phones) care for your privacy at all.
Now assume that Apple doesn't care either (we really don't know). You have a huge catalogue of phone options, but if you want something for privacy you might be able to get some fringe Finnish phone or a failed Ubuntu kickstarter. We've come to accept this for phones because we haven't known anything else, but we're not there with ISPs... yet.
This is what an unregulated market looks like. They all end up selling you the product, and then selling you on the backend making (more than) twice the money. And you're stuck with the illusion of choice.
Why would we want this for ISPs when we can make them a utility and both cheaper and faster? (see Japan, Korea, Nordics, Germany, etc)
This isn't even just Monopoly issues, it's pure corruption. That will require fixing gerrymandering and electoral corruption - a tall order.
In the early 2000's when my home town still had dial-up only, Comcast came into the town and offered to build out cable broadband. They would even throw in a $300k grant to the school district for new laptops. The only catch? They needed to be granted a monopoly on all the telephone poles in the town. The town agreed.
As circulated on HN recently, the town of Chattanooga, TN is another interesting example[0]. Chattanooga made the smart decision many years ago not to grant a monopoly in exchange for a fiber build-out. Instead they built their own fiber network. Years later they offered to expand their ISP to the surrounding towns, which only had dial-up and satellite. It would cost zero taxpayer dollars. Instead the state decided to give $45 million to Comcast/AT&T to build out--get this--DSL!
As the parent article points out: despite cost-per-bit plummeting over the years, the cost to consumers isn't going down. The problem is monopolies naively being granted by local governments. In a world where that didn't happen, Pai would be right: ISPs would be forced to compete on features and quality, and so nobody would be talking about bundling websites like they do with cable channels, or whatever other nonsense Net Neutrality is designed to prevent.
[0] https://motherboard.vice.com/en_us/article/tennessee-could-g...