Sorry for the weak pun, but I really couldn't help myself: I wish the title had been "Why Google is an acceptable ISP".
Apropos of the article, I'm increasingly unconvinced that free markets work well enough when they're dealing with infrastructure--roads, train lines, phone lines--that have an expensive one-off set-up cost and then a larger cost of switching while the original provider attempts to recoup the set-up subsidy. Certainly Britain's experience with train lines, and the US's existing telco network, among others, seems to demonstrate that it doesn't tend towards a free market. (Compare, of all places, Somalia's mobile network, which is thriving--at least relatively, for a country that's been in a civil war for two decades-- in the absence of a set-up cost).
The first-mover advantage has resulted in telecoms capturing their markets in major cities. The question is just how free are these markets?
In my city, for example, the city has a contract with a cable operator that basically states that any competitor wishing to enter the city must provide services in all the areas the first-mover provides service. The argument is that this "levels the playing field" among competition while also forcing telecoms to cover areas of the city they may not otherwise lay fiber lines. But in practice it adds a huge barrier to entry for any subsequent companies.
Ultimately I think it comes down to governments making decisions in the best interests of their constituents and not creating these kinds of deals. Let customer demand dictate how much service will be provided in the various segments of the municipality.
I'd probably argue that most private industry infrastructure efforts are decidedly not free markets. Given the politics involved in building out large utilities, governments tend to get heavily involved. Around the country this has resulted in some strange relationships between company and government, most involving some manner of limited monopoly in exchange for certain guarantees regarding types of service. Those agreements tend to be short-sighted and rarely updated, leaving us with aging infrastructure and legal impedements to competition.
There are some good and bad reasons for this. For example, the deregulation of electric utilities in California in 1996 was an epic failure. Part of that was due to the design of the deregulation scheme, but a lot of is was attributed to the perverse incentives of the free market.
Comments
Sorry for the weak pun, but I really couldn't help myself: I wish the title had been "Why Google is an acceptable ISP".
Apropos of the article, I'm increasingly unconvinced that free markets work well enough when they're dealing with infrastructure--roads, train lines, phone lines--that have an expensive one-off set-up cost and then a larger cost of switching while the original provider attempts to recoup the set-up subsidy. Certainly Britain's experience with train lines, and the US's existing telco network, among others, seems to demonstrate that it doesn't tend towards a free market. (Compare, of all places, Somalia's mobile network, which is thriving--at least relatively, for a country that's been in a civil war for two decades-- in the absence of a set-up cost).
The first-mover advantage has resulted in telecoms capturing their markets in major cities. The question is just how free are these markets?
In my city, for example, the city has a contract with a cable operator that basically states that any competitor wishing to enter the city must provide services in all the areas the first-mover provides service. The argument is that this "levels the playing field" among competition while also forcing telecoms to cover areas of the city they may not otherwise lay fiber lines. But in practice it adds a huge barrier to entry for any subsequent companies.
Ultimately I think it comes down to governments making decisions in the best interests of their constituents and not creating these kinds of deals. Let customer demand dictate how much service will be provided in the various segments of the municipality.
I'd probably argue that most private industry infrastructure efforts are decidedly not free markets. Given the politics involved in building out large utilities, governments tend to get heavily involved. Around the country this has resulted in some strange relationships between company and government, most involving some manner of limited monopoly in exchange for certain guarantees regarding types of service. Those agreements tend to be short-sighted and rarely updated, leaving us with aging infrastructure and legal impedements to competition.
There are some good and bad reasons for this. For example, the deregulation of electric utilities in California in 1996 was an epic failure. Part of that was due to the design of the deregulation scheme, but a lot of is was attributed to the perverse incentives of the free market.