Re:Senate votes to reinstate net neutrality
by caf on Wednesday May 16, 2018 @07:43PM
(#17087369)
thats not a glowing recommendation of he system though because our electrical network is all kinds of expensive
Yes. The distribution monopolies are only allowed to make a fair rate of return on their operating and capital expenses, as determined by the independent regulator (this is to prevent them from raising their prices to the point that they capture all the economic surplus, as they otherwise would). Unfortunately this has incentivised over-investment in the distribution networks (the more they spend, the more profit they're allowed to make) - referred to as "gold-plating" - which ends up being passed on in the prices faced by consumers.
Specific to the ISP issue, this is how the NBN works in Australia too - the NBN provides the underlying network, but isn't a retail ISP itself.
Yes. The distribution monopolies are only allowed to make a fair rate of return on their operating and capital expenses, as determined by the independent regulator (this is to prevent them from raising their prices to the point that they capture all the economic surplus, as they otherwise would). Unfortunately this has incentivised over-investment in the distribution networks (the more they spend, the more profit they're allowed to make) - referred to as "gold-plating" - which ends up being passed on in the prices faced by consumers.
Specific to the ISP issue, this is how the NBN works in Australia too - the NBN provides the underlying network, but isn't a retail ISP itself.