re: Group Questions Comcast's Net Neutrality2) how to reconcile the conundrum that the reason market entry become so hard is because of the efficiency of the "natural" monopoly - and if so what is the complaint (other explanations for market entry would lead to the conclusion of an "unnatural" monopoly)?
I don't understand the question. Natural monopoly isn't due to efficiency per se. It's due to large fixed cost creating a huge a barrier to entry. Try to raise money to rebuild a duplicate US transmission and distribution grid. You couldn't do it. Adding one more drop to support one more customer cost nothing relative to that. That's why even neocon deregulators recognize transmission and distribution in electricity as a natural monopoly.
>> Silly FUD questions, which look like final exam questions ... <<
thanks for continuing the legacy of quality dialog on this thread. i see you were unable to answer most of those silly questions though.
>> Natural monopolies do change with time. <<
progress!
correct, which means they are not natural at all, they are conditional and sometimes transistional. "natural" is a misnomer. true natural monopolies occur around "natural" resources - and sometimes not even then (if there are substitutes - which a monopoly provides incentive to go find). monopolies that occur around structures of production are impacted by those things that impact the structure of production and on substitution for the products produced.
>> If you don't believe me, as a stockholder of the original RCN. <<
Can you please expand on what your assertions about RCN have to do with this conversation? is it your assertion that every instance of a company's failure to compete (pressumably your assertion about RCN) is a proof point of a monopoly condition, or do you have something more to add?
also, is it your assertion that every monopoly is by definition a social ill? please resolve this view with your view of why natural monopolies occur in the first place.
fyi, RJ says you are in favor of common carriage. we maybe able to find some common ground on that issue after we are done beating each other up over natural monopolies.
>> I did write a book about this stuff. I know what makes you go broke. <<
So I wrote a book about network nuetrality. Does that make me right about everything I say about it, or is it reasonable to expect that I still make an argument and answer the questions placed on the table?
re: Group Questions Comcast's Net Neutrality1) what causes price elasticity and what is its relationship, if any, to competitive conditions?
I think an answer to this in context of real broadband is dominated by the perception of luxury vs. necessity. Humans rarely perceive what they've never experienced as a necessity. Only a few early adopters will perceive something undefined and new even as a luxury.
My reading of history, as limited as it is, suggests before education was widely available, state supplied and mandated, that most people perceived it as unnecessary. I grew up with blue collar families that believed this to be the case. Their kids would forgo a college education to get a job paying hourly wages. If everybody around you is working in the fields, it's a rare exception that somebody can take the time and is supported by their surrounding social constructs, such that they can design a combine, freeing the masses to do other things.
In our context the goal of the monopolist is to deny the experience for as long as possible. Almost everything they do is denial based. Things like, "There is no killer app!" is just more denial, the denial to recognize that future innovation in the application of digital communications requires the infrastructure first.
Unlike the blue collar parents, the incumbents and the FCC aren't doing it out of ignorance but rather for a purpose. They know that denying the experience of real broadband to the masses helps to preserve their power. It explains why regulators and incumbents renamed fraudband as broadband and started gaming the statistics. If modern broadband, unicast networks were widely deployed both these entities would be marginalized. They don't like that.
"If you donGÇÖt have something, you generally donGÇÖt see a need for it. There are millions of people in the world without cars, electricity, computers, phone service, running water, gas heat, air conditioning, refrigerators, TVGÇÖs, and on and on. They adapt without them, as everyone has done throughout time, since they didnGÇÖt always exist. If you asked most of these people if they would pay to have any of the above, most would say no. But, if you gave it to them for free for a year, or exposed them to a lot of others that DO have them, they would change their tune. TheyGÇÖd find a way to afford them. The average person is not very good at comprehending the value of a technology without direct experience. Most users of all the above would have said they didn't need them if asked several years before they became widespread."
re: Group Questions Comcast's Net Neutrality7) whether a regulated monopoly that by definition prevents or discourages competition is more efficient than a monopoly that is so efficient it is naturally preventing entry to the market
Mark, I'm just picking out the questions I think are the most relevant to the issues at hand. I may be misinterpreting your intentions with the others so please reassert them if you think necessary.
The goal of a modern communications infrastructure isn't competition. That's merely a possible means. I've posted what I believe to be the goals before. Things like knowledge diffusion, free speech, etc.
If you accept that fiber networks are a natural monopoly than you observe they don't exist in distribution, the obvious questions is why not? Wouldn't any sound businesman want to own a monopoly?
The reason is due to large fixed costs and early revenue issues (price elasticity in demand). So to overcome this an overbuilder must raise large amounts of capital and somehow secure those debt obligations with a "luxury" revenue stream.
People that invest large sums of money are interested in generating an ROI. This is in direct conflict with competition as competition drives price to marginal cost to produce. Businessmen recognize this and that's why they focus on competitive barriers. (even the USDA does as they won't give broadband loans to areas where fraudband exists.)
Now, if people aren't investing in a natural monopoly it's likely due to societal distortions. I'll suggest there are two that are relevant.
1) Revenues of what is perceived as a luxury item to the masses won't be sufficient to recover the debt obligations.
2) The incumbents will use every mechanism possible (law suits, regulatory capture, etc.) to make it such that the new natural monopoly can't be built and such that overbuilders will default on their debt obligations.
These are both huge problems. I suggest solving the first one via an ecommerce tax or something of the such until society rids itself of the idea that communications infrastructures aren't a need. I suggest solving the second one by government protecting the new entrants during the build out phase, i.e. the lifetime of the bonds.
This isn't ideology. I don't really like government much myself. It's pragmatism.
re: Group Questions Comcast's Net Neutralityi do find it interesting that people who so readily assert other view points as faith-based theoretical models so completely sign up for what is an economic dogma and itself only a theory.
This really wasn't one of your questions but I'll address my thoughts on it.
I believe all models are human made and used to describe the world we live in. In hard sciences they become useful or effective when they can predict future outcomes. When they don't predict outcomes most of the time it's due to bad assumptions. In science, bad assumptions gives bad answers and scientists revisit their models.
From a human psychology perspective it's different due to the observation that the human mind, when healthy, will resolve dissonance all on its own. (hence the need for double blind tests, etc.) It's effective to resolve dissonance regardless of how it's achieved. There are a few options. Discount the dissonant cognitions by doing things like seeking out consonant ones. Or by changing beliefs and coming up with new beliefs. Or possibly accepting paradoxes and contradictions as the possible, though the mind doesn't really do that very much.
How does one know which path their mind is taking? I'll suggest to look at your beliefs. If these remain fixed, your mind is probably discounting (and possibly distorting.) The world I've experienced suggests it's one where consonance is rare, particularly when modeling human behaviors.
re: Group Questions Comcast's Net NeutralityThanks for the pointer Seven. I've got relatives in that area. I'll see if they can do some background on these guys.
"San Marcos-based telecommunications provider Grande Communications on Tuesday reported a second-quarter loss even though it boosted revenues from bundled services such as phone, cable and Internet service.
Grande reported the loss of $12.1 million, or 96 cents per share, on revenue of $38.8 million. That compares with a net loss of $13.2 million, or $1.06 per share, on revenue of $36.7 million a year ago.
The company ended the quarter with 303,517 customer connections, an increase of 16,526 from a year earlier. It also ended the quarter with $32.6 million in cash and cash equivalents."
re: Group Questions Comcast's Net NeutralityPoint 2: The rationale of IP protection is the society gains by encouraging new IP to be created, and not by having a few people get richer on piles of old IP.
I think this is incomplete. The individual gain and society gain go hand in hand. Take away either and the IP doesn't have value.
PS. Why, have you read Cormac McCarthy's Blood Meridian? You might notice yourself acting as a disciple of Judge Holden. The probability that your daughters/sisters have or will never be raped aren't as good you'd like to believe, but I'm sure you've got that covered.
"The judge placed his hands on the ground. He looked at his inquisitor. This is my claim, he said. And yet everywhere upon it are pockets of autonomous life. Autonomous. In order for it to be mine nothing must be permitted to occur upon it save by my dispensation.
Toadvine sat with his boots crossed before the fire. No man can acquaint himself with everything on this earth, he said.
The judge tilted his great head. The man who believes that the secrets of this world are forever hidden lives in mystery and fear. Superstition will drag him down. The rain will erode the deeds of his life. But that man who sets himself the task of singling out the thread of order from the tapestry will by the decision alone have taken charge of the world and it is only by such taking charge that he will effect a way to dictate the terms of his own fate."
I'm not going to answer all of your questions because some are rhetorical, some are irrelevant, and some are just plain silly. You might as well ask about Paris Hilton's favorite hotel, or something. It really looks like you're avoiding the issue by bringing up irrelevancy. Hey, how about them Pats?
Natural monopolies do change with time BUT they are still a real phenomenon within their time. The FCC seems to predicate telecom policy on the imminent availability of cheap Star Trek Subspace Communications. It's about as likely as their other "third pipe" dreams.
RCN is relevant as the biggest overbuilder. They lost $1B/year trying to compete with incumbents for triple play. Successful overbuilders, to the very limited extent that they exist (e.g., Grande, because its losses haven't shut them down yet), only work in selective markets. So they're not a solution for, say, "network neutrality". And that's my point: Wire is an essential input to a naturally-competitive business (Information), so leveraging its natural monopoly is precisely what regulation is supposed to prevent.
Yes, I am in favor of common carriage. I think there should always be a common carrier available everywhere. That does not mean that self-provisioned ISPs should be banned. But ILECs built their plant with, and for, common carriage. If their managers or investors don't like that business, they can change jobs or sell their stock. Natural-monopoly plant should be made available to all at fair rates (rate of return regulation). The extent of regulation should be the least needed to accomplish the goal -- it needn't be highly detailed, and shouldn't extend above the raw transmission. I actually prefer that only outside plant be regulated, as a "LoopCo", which is what has been done in the UK. But common carriage is a distant second best.
What book did you write about network neutrality? My book is relevant because it documented the failures of various different competitive models. With names. I did a lot of research in order to write it. And since I was consulting to the industry as it happened, I watched a lot of it, and saw a lot of really, really dumb stuff.
re: Group Questions Comcast's Net Neutrality"The probability that your daughters/sisters have or will never be raped aren't as good you'd like to believe, but I'm sure you've got that covered."
Yes, because they are prepared, and not by random chance. Because by random chance, it's very high.
When I was a lot younger, I dated several young ladies. Based on my experience, over 60% had been raped at least one time, about 10% had multiple. I define rape as being forced to engage in sex against their will. Not fun and games "no", the real no, and mean it. Then it got ugly. One had been "party raped" by a bunch of jocks. One had her dad "visit" her at night.
This is not something any casual poll will ever pick up. In most cases, they had not told their family or closest female friends. They were afraid to questioned about what they might have done to "ask" for it, with "whore" in there somewhere. They had been holding it in for years. Some had adjusted well, a couple were pretty messed up, and had real trouble with intimacy let alone sex.
Like the song says:
You who are on the road Must have a code that you can live by And so become yourself Because the past is just a good bye.
Teach your children well, Their father's hell did slowly go by, And feed them on your dreams The one they picked, the one you'll know by.
Don't you ever ask them why, if they told you, you would cry, So just look at them and sigh and know they love you.
And you, of tender years, Can't know the fears that your elders grew by, And so please help them with your youth, They seek the truth before they can die.
Teach your parents well, Their children's hell will slowly go by, And feed them on your dreams The one they picked, the one you'll know by.
Don't you ever ask them why, if they told you, you would cry, So just look at them and sigh and know they love you.
rj,
See Grande Communications. They overlay both other cable companies AND telcos.
Given the right business strategy and a place where people feel they are underserved, yes it is possible.
seven