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A thought occurs to me- the standard historical approach to natural monopolies that people have generally been happy with is government involvement, ala power plants. Would it be insane for the government to get involved with social networking?

Would ISPs and/or cellular service be a good example of what happens when government does not get involved? I don't follow that stuff too closely, but I think both have in fact been de-regulated?



The problem with the standard approach to monopolies is that in the long term the corporation ends up having power over government, while popular power is disorganized and diffuse. See Government's End by Jonathan Rauch or read about the Problem of Collection Action by Mancur Olson.

My current thinking is that the best route would be to alter corporate charters to give consumers voting power as the company increased in market share. So if a company had 70% market share, there might be a consumer elected board that had the power to veto anti-competitive acquisitions, changes to the terms of service, changes to privacy policies, revocation of open access, etc. If you have Congress trying to regulate the company, the company will end up controlling Congress. But an elected consumers board should have a better shot at representing the interests of the customers of that company.


I like this idea. If any rent-seeking group achieves market dominance, the government should regulate their prices. For example, the price of prescription drugs and higher education should be set by the government. Laissez-faire capitalism only works in markets with price competition.

Ultimately, I think most industries will evolve into government regulated monopolies. Consolidation is a standard part of the life-cycle for most markets. We should embrace the efficiency that dominant players can achieve.

With regard to individuals, I think a universal basic income is the long-term solution. Let a few people become billionaires, while the masses are paid to relax at home. There is a large amount of wasted resource in industries like retail, marketing and sales. Society would probably be better off if those industries shrank.


I have another viewpoint and solution proposition - I think the vast majority of the reason politicians can sanely get away with completely fucking over the many for the interests of the powerful few is because the power and influence is so far disconnected from the people themselves.

I wrote a stupidly long copy paste here: http://zannyland.blogspot.com/2012/10/political-ranting-part...

On this topic though, people should have very specific direct election of one representative, per 500 - 1500 people, who would represent them in local voting and selecting higher representatives from their elected peers (ie, a local council of 10 would select one to go to the state, the state would select maybe 3 to go federal), and higher tiers of government can't impose laws not adopted by the lower branches (1/4 of local governments can't actively oppose in legislation something proposed in the state, 1/4 of states can't oppose something federal, etc).

That way, to corrupt the whole, you need to corrupt a majority of the people to elect from themselves (because in a pool of 1500, preferably with 1 2 - 4 year office term per official, so career politicians are harder to come by) corrupt politicians to work against the publics interest. Sadly, I think the modern American public would probably do just that and fuck themselves over. It would require an independently minded, free thinking populace that can understand the world to understand forces are working against them. They aren't there now, though.


ISPs and cell service are exactly what happens when government gets involved. Power plants are actually less regulated.

Cell service is compeltely broken because the government "sold" radio frequency spectrum. They sold all of it. Now there is none left to sell or distribute. And now a few concentrated companies own the rights (another government construct) to broadcast on their frequencies. So there is a rigged, no competition market, because you can't erect cell towers and broadcast on any frequency anymore (at least those viable for cell service) because someone owns that frequency band.

ISPs, again, are poor government intervention - almost all of the ground wires were laid under government subsidy upwards of a hundred years ago for some phone channels, so all the current private owners of coax / phone lines almost exclusively got them from government that already laid them, and rarely ever lays them themselves (and when they do, they do slight extensions to already established backbone, they aren't laying it themselves).

In addition, these private providers will contract with local governments to provide exclusive service, and will bribe the town council to block competition from laying their own lines (or heavens forbid, the township itself own the fucking wires running under their streets). As a result, you can't lay your own cable / fiber / phone lines (unless you are Google and have billions of political pressure) and even if you could, you are at an insurrmountable competitive disadvantage because not only does your competition already have all their wire laid decades ago, they can readily drop their prices to run you out of the market because they have barely any overhead in providing your service. They are making hand over fist profit off of consistent customers that are paying year on end. And then, there is inertia, and market manipulation by the established players, to make "average joes" not consider switching providers.

On the other end of the spectrum, it is federally regulated that power companies need to be contractable, in that you can select the company you get "power" from, even though the actual power lines are carrying juice from a thousand plants at any one time, and a lot of peoples homes are feeding back into the system. It is also regulation that enables average joes to set up their own solar panels / wind turbine / generator and get reimbursed any power they feed back into the system - if power companies could do whatever they wanted, they would prevent their customers from setting up their own power backup since it hurts their profits.

In the end, it is not very complex I think - even though the examples can be - if you stifle the ability for new players to enter a market, easily, and compete with the established ones (be it through insurmountable subsidized initial investment to enter the market, actual law book regulation preventing it, or rigged business code favoring the monopoly) you direly hurt the economy by creating artificial monopolies.

Even if the monopolies do "reasonably" well (NASA, for example, basically prevented private space investment because for 30 years it was hugely funded by taxpayers to own the sector, AT&T owned phone service for 60 years by government mandate, etc) markets with only one player (don't even look further than personal computing or the Linux world - there was barely any innovation in GCC until Clang came along to provide competition, or how Firefox had to get a lot faster when Chrome became a real competitor). Competition drives innovation, and in any situation where you facilitate a one man market, you will starve innovation and improvement just by only having one force in the market, even if they have good intentions.

Competition is essential to progress. It is the fuel that produces a huge amount of improvement in every field and business. So if a government is going to craft any law, it should be to make new competition easier to found and enter a market with, not harder. The electric grid regulation makes it easier to enter the market (even if the individual power sources are heavily regulated / zoned / mandated, and the status of a player against a power company only exists for consumers to power co, not business to power co, etc - there is a lot of regulatory cruft behind the respectable outer cover) and as a result promotes competition and better prices for the consumer (the ability to "shop" your power company in a state is a huge reason US power costs are so much lower than elsewhere in the world).

It is why almost all the innovation right now is in web / computers. It is barely regulated, extremely easy to enter the market, and as a result a disproportionate amount of ideas go into it (even when other fields cry for innovation, like medicine, agriculture, telecom, etc) because the market is free and as a result it is healthy.


> Cell service is compeltely broken because the government "sold" radio frequency spectrum.

Selling spectrum is precisely the approach that was espoused by free-market economists since the days of Ronald Coase. It's not "rigged" or "no competition" any more than any sort of private property is that way. It's a commons resource, and that's the classical economic approach to handling commons resources: privatize them and sell them, so the market can allocate the resource to the highest-value users. You can't farm in my back yard either--that doesn't mean anything is "rigged." It just means that if your farming is higher in economic value than my use of the property, we engage in a market transaction to transfer ownership that moves the resource towards your higher value use.

So this is my little pet area of policy, and I think selling spectrum is the wrong way to go. But then again, I'm not much of a true believer in competition or the free market either.


I am a pretty extreme libertarian (kind of a nutter) and keep getting worse at it, but the reason that argument is flawed is that it assumes anyone can own electromagnetic radiation frequency. It is in the same realm as owning wavelengths of visible light. It is a government construct, like patents and copyright, that have no natural scarcity to them, but has scarcity and ownership artificially implied, enforced through violence of law.

The real free market answer is that electromagnetic radiation is information, and you can generate whatever frequency of it you want, and you assume the markets would naturally orient themselves to not interfere devices. I absolutely think that would happen - any competitive entity trying to sell radio devices would have it in their best interest to collaborate across the market to make sure device manufacturers don't interfere, but it isn't at the threat of violence but at the promise of profits people would restrict their band usage. The market would inherently optimize radio usage for the best use case of consumers, to optimize their returns. The inherent competition would create incentives to innovate ways to use less bandwidth, different bands, etc.

That is the free market approach to radio. If you start your argument with "the government starts out owning this unlimited concept of frequency" it immediately is flawed.


That utterly misconceives both the nature of spectrum and the nature of property rights. Every property right is a government construct--there are no such things as "rights" in the statute of nature.[1] As far as property rights go, spectrum is much more like land than it is like information. A property right in land isn't just ownership of the physical dirt--it's ownership of a particular piece of a finite coordinate space. Similarly, spectrum rights are ownership of a particular piece of a different coordinate space (the tuple (x, y, z, f)).

People can read multiple copies of a book without interfering with each other, but people can't transmit on the same frequencies without doing so, just as they can't farm the same land without interfering with each other.[2]

> The real free market answer is that electromagnetic radiation is information, and you can generate whatever frequency of it you want, and you assume the markets would naturally orient themselves to not interfere devices.

That's like saying that the real free market answer is to not enforce rights in land, and let the free market work out how to coordinate various uses of land so they don't interference with each other. There is a name for that, it's called the tragedy of the commons.

[1] A "right" deconstructed, just means some legal relationship which the government will enforce on your behalf through violence. Without government, there is no one to enforce rights, and the concept is utterly meaningless. A deer can't invoke its "right to life" when a wolf kills and eats it.

[2] This is an imperfect analogy for various reasons, but more or less true at a very coarse level of granularity.


While I do think natural rights are nonsense, I disagree that property rights are necessarily a government construct. There are other institutions regulating property, with enforcement provided by the civil society.


It seems like there would be an incentive for people to build radio jammers or other ways of generating interference. They would then use those jammers to extort legitimate broadcasters - pay me $1 million or I'll ruin your broadcast. Since the extortionist has equal rights to broadcast waves, broadcasting the interference is not illegal. How would you prevent this?

Radio broadcasts - ie electromagnetic radiation - is energy projected onto other's people's property. The libertarian view should be that it can limit person's A right to project energy if it interferes with the rights of person B. If I aim powerful lasers at my neighbors house, the government has the right to intervene. If I broadcast loud sound waves at 3AM, the government has the right to intervene. If I want to build a nuclear plant that might irradiate everyone in my town if things go wrong, the government has the right to regulate it. When I broadcast radio, I interfere with the ability of others to broadcast and listen to radio. The purpose of a government is to mediate these conflicts. Predictable mediation requires establishing clear ownership rights.

Maybe you could argue the government should have allowed spectrum to be homesteaded, rather than purchased, but the end result would be similar.


Extortion is a crime and tortious interference with business is tortious interference with a business. I don't think either of those would magically vanish upon the abolition of spectrum regulations.

One thing that bugs me about pro and contra libertarian debates is that both sides do something similar: imagine a kind of Year Zero world in which somehow all laws have been shipped to /dev/null. It's a dumb debate to have. Angels waltzing with strawmen on the head of a pin.


I'm not going to speak on all libertarians, but my world view is pretty much that you can possess finite scarce goods and call them "yours" (things made of atoms) but with things that aren't scarce (information, once produced, is not scarce - we can easily order electrons to represent the super-majority of the information space) it is tragic and wrong to try to restrict them.

Radios are scarce, but the range and ability to produce electromagnetic waves at certain frequencies is not scarce with said radio. Computers are scarce, but digital information is infinitely reproducible and millions of people will send you a copy for free (see: torrents). This kind of stuff shouldn't be limited or restricted by artificial government constructs.

There is a difference between having a finite resource and artificially calling it "yours" and taking an infinite resource and calling it "yours. Ownership is a fundamental human right - to possess scarce resources you can call your own. It is only recently the bulk of humanity has had this right. I don't think it should be anyones right to own an infinite resource like an idea, though.

Personal opinion. I write software and think trying to sell per-copy instances of infinite information is ridiculous. In computer terms, it is the flip side to the free software coin that makes open source a whole. If you distribute a black box you shouldn't be able to try to force people to treat it some certain way, after all, you freely gave it the first time, anyone else can do with it what they will.

I still target open source since I'm not a dick and don't like giving someone a black box, but that is tangential.


Economists talk about rivalrousness and excludability when classifying goods.

Rivalrous means that, to the extent I am using or possessing some good, you are not. Excludable means that I can, as a seller, prevent you from using it without payment.

Most physical goods are rivalrous and excludable. I can keep an icecream to myself and while I am digesting it, you are not. The icecream truck can prevent you taking one without payment. This meets the definition of what people usually think of as "private property".

Radio waves are rivalrous but not excludable; economists call these "common goods". These lead to -- you guessed it -- the tragedy of the commons, where individually optimal decisions lead to globally suboptimal outcomes.

Commons can't work unless agents agree to constrain themselves, or are made to constrain themselves. The former can happen by agreement, the latter by regulation.

In the case of radio, regulation has been the standard model because of the nature of the usage. Voice and vision have been analogue and the human nervous system is a poor demultiplexer, so they needed bands to themselves. Similarly for many other applications (radar, for example) , the amount of information put through a certain band has historically been low but the value high. So: regulation.

Wireless networks are an example of a commons managed by agreement; or perhaps managed by emergent phenomena. Each wireless node blindly follows some simple rules (such as randomised exponential backoff) that, in practice, make a shared medium largely usable.

edits: to clarify terms a bit


> I'm not going to speak on all libertarians, but my world view is pretty much that you can possess finite scarce goods and call them "yours" (things made of atoms)

If ownership only extends to things made of atoms, then you'd agree that it's totally okay for me to build my house on your land so long as it hovers an inch over the dirt and grass that comprises your ownership. Otherwise, you're claiming ownership of an incorporeal thing--the geographic coordinates that encompass not just your land but the space above it.

> Radios are scarce, but the range and ability to produce electromagnetic waves at certain frequencies is not scarce with said radio.

Ownership of spectrum is not a monopoly on the right to produce electromagnetic waves of a certain frequency. It's a monopoly on the right to invade certain areas of space with electromagnetic waves of a certain frequency. The FCC doesn't care what frequencies you transmit on in a lead-lined room on your own property.


> Radios are scarce, but the range and ability to produce electromagnetic waves at certain frequencies is not scarce with said radio.

I work in the wireless networking field, and my and my coworkers' experience is actually the complete opposite in high-density environments: there is an abundance of radios, and a scarcity of frequency.

Which, BTW, is one of the reasons wired networking consistently outperforms wireless - you have one and only one transmitter (in a full-duplex connection) on a given medium.


The peak throughput in any region of space in terms of wave density is limited, but one of the reasons your coworkers are probably experiencing such scarcity is due to artificial constraints on the market.

Frequency would be scarce in highly concentrated areas in an open-frequency region, but it would be less so than if you artificially restricted access. What would naturally follow is that the demand would distribute itself (within the realm of possibility, ultra low and high frequencies have either range or bandwidth disadvantages that make them ill suited for, say, digital packet signaling).

I also wonder what kind of innovation you might see in an open band environment in terms of wifi - if you weren't limited to the few bands of 802.11, maybe routers would pop up that dynamically enable multiple transmitters (like how a modern router would have multiple antennas to transmit in parallel, maybe you would see many-hundred low power antenna radios to interface with devices over the largest clear possible frequency range available?)


How exactly to you propose affordable consumer hardware is going to accommodate hundreds of radios covering the entire range of useful spectrum?


They won't have to. The market would naturally have big players find it in their best interest to organize spectrum interference around their usage, and would avoid ranges used by other big consistent players in a region. The average consumer should barely see any change, besides variable range on their devices as other hardware comes up and goes down in a frequency band they use.

But for use cases that require consistent signaling, or really high throughput, enabling radios that utilize vast swaths of frequencies in parallel can increase the throughput.


I am a pretty extreme libertarian (kind of a nutter) and keep getting worse at it, but the reason that argument is flawed is that it assumes anyone can own electromagnetic radiation frequency. It is in the same realm as owning wavelengths of visible light. It is a government construct, like patents and copyright, that have no natural scarcity to them, but has scarcity and ownership artificially implied, enforced through violence of law.

So are coal and land and money. All property is a government construct. Stop pretending otherwise.


I only support the violent maintenance of a singular kind of ownership, which is of scarce goods and resources which can not be replicated at, or at near, no cost, and whose transferral requires the giver lose while the receiver gains.

It is why I consider myself libertarian and not anarchist. Besides the fact I also think, like how Communism turned out, what we think in theory and what we do in practice are in conflict because people are still human and often do, even in selfish terms, illogical things.


I am a pretty extreme libertarian (kind of a nutter) and keep getting worse at it, but the reason that argument is flawed is that it assumes anyone can own electromagnetic radiation frequency.

Nobody owns a frequency, they have the right operate on that frequency.

It is a government construct that have no natural scarcity to them

The electromagnetic spectrum does have natural scarcity, due to interference. Have you ever had trouble getting a strong WiFi signal due to neighboring WiFi? You experienced electromagnetic spectrum scarcity. Now, you are probably going to jump in and argue that if only the government didn't constrain WiFi to 2.4GHz, there wouldn't be any scarcity. The problem is, there is still very much a finite amount of useable spectrum, and in fact a lot more of it is in use than you realize.


Can you explain how your argument against ownership of electromagnetic spectrum does not also apply to land, houses, cars, etc.?


I already did, but electromagnetic spectrum is not scarce. You can cheaply, easily create radio waves, the radio might have scarcity, but the waves it produces are infinitely reproducible by a recipient, easily copied, and easily reproduced. They can be encoded as information, and conveyed as such, without losing any information, and reconstructed cheaply elsewhere.

You can not "take" someones radio wave and rob them of its possession, because when they broad cast it anyone could receive it, and if you are taking enough action to "block" its transmission you are violating many other scarce goods rights like invading their property.

All the other things you listed are scarce, not easily replicated, and taking of them means the other party loses because they are inherently scarce goods. Almost anything made of atoms is scarce, and anything made of electrons or photons is not, because as a property of the universe that made of the latter can be easily replicated for almost no effort but the former takes significant effort to reproduce from modern resources.

In the same vein, if you steal the radio, I no longer have it. If I broadcast on a frequency, I am not robbing you of your ability to use it, but it generates interference. If both parties have benevolent intentions (and in the absence of such, one can prosecute the other for sabotage and extortion for using hostile interference in the same vein that a company "owning" spectrum can sue someone for using it at all) then it is in their best interests to collaborate and mitigate the interference they impose on one another.

If they have no other option, it is not fit for a state to violently prevent one from using an infinitely reproducible resource while the other gets exclusive control over its usage.

Would you be ok with the sale of the visual light spectrum? Both radio and visible light are electromagnetic radiation. Doesn't it sound absurd to have the luminance of purple light the exclusive property of some corporate entity?

Here is another thing - the consumer electronics used in the US that are under these byzantine laws about spectrum usage are not operating in a global vacuum. They are bootlegged across India, China, and other nations that don't necessarily have rigorous spectrum laws in place that are enforced. These places self organize (with bumps and issues) into using radios without the need for control of what frequencies of electromagnetic radiation you can generate.


"If I broadcast on a frequency, I am not robbing you of your ability to use it, but it generates interference."

This sentence contradicts itself. What is "interference" if not something that robs one of one's ability to use a radio frequency?


Because interference is traffic congestion, not me ripping the road out of the ground and hauling it away on a truck. If a frequency is busy, you just get noise and reduced range. The difference is that you don't have as many independent protocols running through the air as you do on the streets.

You can still use it, but your usage is diminished. On the electric grid, there is a peak voltage the line can feed to all recipients before it is maxed out and can't provide more juice. If I am on the grid with you, I'm diminishing the maximum power you can take off a sufficiently strained grid. It isn't stealing from you to use it though, and in the case of power there is very little litigation about people consuming too much electricity (from what I know).


There's no litigation over taking too much power from the grid because the grid is clearly owned by the power company, and they get to tell you what you're allowed to do with it (within the limits imposed by regulations). If the grid were simply a free-for-all the way you're proposing radio spectrum should be, things would be quite different.


Cell service would be worse off if anyone could decide to broadcast on any frequency; just like the tragedy of the commons[1], putting more emitters in the same frequencies raises the noise floor until it's simply impossible to get a good signal to noise ratio. Fixed spectrum allocations might not appear to be the best solution, but the alternative is just much worse.

While ISPs in Canada suck, here, last mile infrastructure owners are forced to lease their infrastructure to competitors; it means that if I am unhappy with my cable provider's internet service, I can get cheaper service provided by someone else over the same physical infrastructure. As you mention, that competition is healthy, even though the infrastructure owners try to gimp their competitors in every way allowed under the law.

[1] http://en.wikipedia.org/wiki/Tragedy_of_the_commons


It is a short term problem though. in the long run, free spectrum would mean that in the best interests of all parties involved, they would minimize the interference. It isn't profitable for your stuff to be unusable because everyone else is using the same spectrum.

I believe the free market would naturally orient itself to correct for interference. Overused bands would be fled from, and the balance between saturation and diversity would be manifest by customer satisfaction. There would be frequent, instantaneous (in long run terms) moments of conflict where problems arise, but as a whole it wouldn't be a rigged, exploitable system by the corrupt that govern it.

But we have to argue in ifs, because we have the product of one chain of events. Maybe a system would have arisen with a benevolent market controller who charitably gave their artificially limited spectrum to use. Maybe we would have descended into chaos when our cell phone service got choppy.

We don't know because we never tried the alternative. We assume it is bad because in theory it sucks in the beginning, so we stick with what we know to be inherently flawed because we don't have the incentive to try to fix it.


Actually, we have the alternative. The 2.4GHz ISM band is unregulated, which means that my old analog cordless phone causes the Wi-Fi to disconnect in half the house(and maybe my neighbors') and my microwave causes a major signal/noise ratio drop.

Sure, it somewhat works and if necessary, I can just go sit right next to the Wi-Fi router to watch some cat videos while warming some food. I'd rather have my cell phone always working, though.

Besides, if spectrum is unregulated, what prevents company X from interfering with routers from company Y, so that Y's products are perceived as flaky? I mean, even with regulated spectrum, there were still issues between LightSquared's planned broadband network and GPS[1], for example.

[1] http://www.gps.gov/spectrum/lightsquared/


> what prevents company X from interfering with routers from company Y, so that Y's products are perceived as flaky

That is still sabotage and possibly extortion if they try to bribe the company. If they weren't providing a real good with the bandwidth they use I would imagine no court would find them not guilty of attacking the company they are targeting.


Doesn't mean that it wouldn't happen in your scenario, though. Corporations can and will skirt the law if they think they can get away with it and derive sufficient benefit from it.

In a free for all spectrum, it is much harder to prove that a device is interfering with another, making prosecution lengthy and complex. In the current system, if a device emits outside of its regulated band, its certification or authorization is revoked and the device becomes illegal to sell and operate. The criteria to do so are clear and evaluable from an objective standpoint, unlike interference in a shared spectrum that may or may not be willful and debatable in court.

Besides, it's not as if spectrum being freely available will magically make anyone a wireless carrier; there is still a significant up front capital expense to erect cell phone towers, routing calls to the PSTN, handling billing and support. A further proof would be that a corporation could create their own wireless carrier over the unregulated 2.4GHz ISM band by installing Wi-Fi APs and delivering VoIP over that for much less than the cost of erecting cell phone towers over an entire city, yet nobody did that.


".. the best interests of all parties involved, they would minimize the interference." is not really true - this scenario is well researched, and the usual expected result is 'tragedy of commons', where all parties suffer and ruin things for everyone until either (a) consolidation causes an effective monopoly or a strong cartel, or (b) regulation.


It has never been tried in practice. If we take the violent enforcement of artificial limitation on a non-scarce concept (radios can broadcast at frequencies and do so at variable frequencies fairly well) off the table, and the reality that in the absence of such forced regulation a major monopoly is prohibitive because, in the case of the radio industry, because there is no scarce resource here (radio waves can be produced for nigh-nothing after the investment in a radio, which is a markedly low barrier to entry) you can't have a cartel enforce dominance either without expending excessive amounts of resources to deny competitors, and they would bankrupt themselves trying to maintain dominance without actually providing anything useful and unable to extort because the ability to enter the market is too low, and without regulation, they can't create false barriers to entry.

Also, actively attacking someones broadcasts for the sole purpose of disruption is still extortion. I'm not nutty enough to think you can go total anarchy, just that artificially constructed scarcity is bad for everyone.


If all the radio providers are somehow able to come together and arrange an allocation of channels so that they don't overlap, then they are also able to (a) not allocate any of those channels to newscomers; (b) the channel allocation guarantees marketshare, i.e., if you gain more usage you don't get more capacity, so will rise prices - it's exactly a cartel situation like OPEC.

The entry barrier is capital investment in radios - if you want to use 1800 mhz GSM band, you need to buy many millions (billions for country-wide scale) worth of radios and put them up to towers. If you want to later switch to 1900 mhz band as the first one is "polluted" - tough luck, buy new gear and install it once more. Or, in practice, if you don't get a guarantee that your devices won't work, you just don't buy them and keep out of the market.

And, as soon as you call installing a device on the same spectrum "actively attacking someones broadcasts" - then it's a pure monopoly, first-come first-serve; the first one to put up the investment and put in New York some towers with ALL the frequency channels standard phones support (it's not that much, ~triple what they're normally using) gets an effective monopoly forever, since anyone putting up any GSM tower will be a disruption.


Has your proposed scenario been tried in practise either? Saying "they would bankrupt themselves" is just supposition with no timeframe - in the meantime everyone suffers.


People are not absolutely predictable, for one, so no one can say what would happen with certainty. I can say what I think would happen. And that is because without the violence to protect them, they are nigh powerless to control the entire electromagnetic spectrum emissions range that can safely transmit signals.

In the meantime, right now 300 million plus people are suffering under an artificially controlled market for a resource that has no inherent scarcity. They are crushed by the very rent seekers this article speaks of on goods they can't truly possess without the violence of law to protect their interests, and they are given artificial advantage to abuse the regulations giving them the power to extort others.


if you stifle the ability for new players to enter a market, easily, and compete with the established ones you direly hurt the economy by creating artificial monopolies.

I agree with everything you say, but I think I come to a slightly different conclusion. It sounds like in the special case of natural monopolies, what we need is rather than simply trying not to stifle competitors, we need to work to empower competitors- because of the special nature of natural monopolies.

This is still a form of regulation, so it sounds like regulation is fine for natural monopolies, so long as it goes in the right "direction", i.e. regulation that opens up the market rather than closing it.


I find most natural monopolies are either the result of stupid artificial government regulation (patents, like the article mentions - doctors, farming / food / pesticides, etc) or are infrastructure monopolies. I commented to someone else, but systemically I don't think infrastructure is viable as a privatized good. It inherently has to be public, I think, in the way it acts as a foundational element of society. This includes power lines, rail, roads, and cable / phone / fiber. I don't think these wires under public roads and through private property should ever be private, but should be public, easily plugged into and utilized resources to build industries and tremendous productivity gains upon.


Natural monopolies are, by definition, not created by legislation or regulation. They emerge from the features of a market.


What natural monopolies are there then?


Basically anywhere that the structure of costs makes it more efficient for a single firm to serve a market. High upfront capital costs and low maintenance relative to capital make it hard for second entrants to follow, because the incumbent has already paid down some or all of their capital cost and can cut prices to the marginal cost of operation to drive out the entrant -- but the entrant must pay off the capital as well.

If the capital costs are low, this isn't as much of problem. With some understanding investors and creditors an entrant can match the incumbent.

But when you have to build millions or billions of dollars of stuff just to get started, that's much harder to arrange.


But I'm asking for a specific example of a natural monopoly that isn't the result of infrastructure (which is best not even done privately and is best a public good) and can't have its prohibitive costs to enter the result of artificial government scarcity (arguing a nuclear plant is prohibitively expensive to build because the designs are all patented, for example, falls into that category).

I just can't think of one. Almost any "natural" monopoly (roads, healthcare, power grid, network cable, etc) I think should be done by local government, not private business, because structural aspects of society aren't effective platforms for competition if they just supply the foundations to build markets upon.

Actually, I just thought of one - maybe agriculture. While it is structural, it isn't an inherent infrastructure because it has specialized purpose. The post green revolution has demonstrated (though I imagine it is the result of regulation this happens) that megafarms are the most efficient way to organize modern farming. This naturally leads to a few big players because the cost of equipment to properly maximize productivity of land has high expenses (though they aren't at a comparable scale to say, a road network, or laying fiber in a city - one tractor, plow, tiller, etc plus the seed, silos, barns, etc, but these are tools to maximize productivity, not infrastructure).

It might be the product of land ownership and zoning, but I'm only familiar with my local zoning code, which has a large Mennonite population, so most of the farmland in the region is restricted from being sold for other purposes. The midwest is a much different story that I'm not familiar with.


We're talking past each other. I'm saying natural monopolies exist; you're saying they should be done as public enterprises. Those are two related but distinct things.


I'm saying there are no natural monopolies that are not systemic infrastructure. The platforms you build other things upon are often natural monopolies, but those I argue should never be privatized in the first place, so I want to hear of natural monopolies that are not in that category to justify the argument that some economic system will orient itself where one player can heavily exploit its customer base without introducing ample room for competition due to prohibitively high barriers to entry / time to market (where these forces are significantly higher than the prospective returns).


I no longer understand what you are arguing. You want natural monopolies that aren't natural monopolies. You want them public but not public. I am sincerely lost.


So you concede there are no natural monopolies that are not structural?

That is all I'm saying. If you agree with that, we aren't arguing anything.


I'm asking for a specific example of a natural monopoly that isn't the result of infrastructure

... social networking?


I don't buy that is a monopoly. The networking effect alone is not enough to call it a monopoly, and I think the natural end state is social networks with interoperable APIs. It is just a natural opportunity cost with a high valuation since it requires a core peer group to follow, but nothing prevents you from building a competitor. You would have a slow adoption rate, and would need to compete on features to attract the nerd crowd, which would be followed by their friends, and in a delay, the peers and family of them, but I think the market movements in social networks are more comparable to real social and cultural shifting rather the instantaneous results entrepreneurs expect.

I don't think in a decade the closed social networks will last, for the interopt reason. The value proposition of a common platform of profiles is too strong long run not to take over.


"Cell service is compeltely broken because the government "sold" radio frequency spectrum. They sold all of it."

Usually the government selling something off is not cited as an example of government intervention. Most lazzei-faire types believe that is exactly what government should do - sell off the property to put it in the hands of the free market.

The actually problems are three-fold. 1) The government still owns large portions of spectrum that are underutilized 2) the government restricts changing the use of spectrum, such as changing UHF TV into 4G and 3) the government does not charge any sort of property tax based on the value of the spectrum, so there is no incentive for the spectrum to end up with the highest value use.

"ISPs, again, are poor government intervention - almost all of the ground wires were laid under government subsidy upwards of a hundred years ago for some phone channels, "

Most people in my state get their internet via cable wires laid in the past few decades.

"In addition, these private providers will contract with local governments to provide exclusive service, and will bribe the town council to block competition from laying their own lines (or heavens forbid, the township itself own the fucking wires running under their streets)."

Local governments are much closer to small market players than they are to the leviathan state. There are thousands of towns and cities, but usually only a couple cable companies in any area. The exclusivity contracts are usually given out of position of weak bargaining power.

"and even if you could, you are at an insurrmountable competitive disadvantage because not only does your competition already have all their wire laid decades ago, they can readily drop their prices to run you out of the market because they have barely any overhead in providing your service."

And here is the problem that has nothing to do with government - broadband wired internet is a natural monopoly. There are extreme capital expenses and the company that builds the first network has a huge advantage, it is usually not profitable for a second business to enter the market.

So yeah, competition is good. But initiating competition in the cable market might require government intervention. It might require the government to subsidize a second network. It might require the government to block mergers between the cable companies and content providers. And even in the best case you are probably not going to have more than two or three broadband options in one town. So the government would probably still want to regulate the internet providers as common carriers ( http://en.wikipedia.org/wiki/Common_carrier ) and ensure network neutrality.

"AT&T owned phone service for 60 years by government mandate"

Keep in mind that AT&T pretty much built its monopoly on its own. The government had the choice between breaking it up, and converting it to a regulated monopoly, and chose the latter. This may have been the wrong choice, but the country was probably better off for having at least some government intervention, and not allowing the monopoly to be completely unregulated and dedicated solely towards shareholder profits.


  | Keep in mind that AT&T pretty much built its
  | monopoly on its own
... during a period of government-guaranteed profits.


Well, no, it would be just as profitable without government intervention - it just wouldn't serve the unprofitable less populated areas for which it was subsidised.

In the major population centers the paying customer demand was easily sufficient to build the network without government. And once the network in "good" areas was built, they would still be a monopoly and be able to deny any newcomer access by dumping prices in the profitable areas if anybody would invest in a new network - if the government was weak enough to let them.


So, is the government preventing AT&T and such from dumping prices in the areas where Google Fiber is investing in?


Not right now as far as I know, but yes, there already is legislation in place to protect & compensate Google if AT&T tries that.


> Usually the government selling something off is not cited as an example of government intervention. Most lazzei-faire types believe that is exactly what government should do - sell off the property to put it in the hands of the free market.

When a government sells intangible information waveforms, I'd consider it intervention. Radio spectrum is not a finite resource. You generate radio waves with devices by producing electromagnetic radiation. The "sale" of spectrum implies that the government owns what is on the exact same scale as visible light, which is completely insane. But it is the world we live in.

> Most people in my state get their internet via cable wires laid in the past few decades.

I live on the East Coast, my experience is probably different. Do note that cable is much more modern than phone lines - what AT&T had laid a century ago, most cable is indeed decades old. My area was seeded with cable lines in the 60s, it was early at that too.

> Local governments are much closer to small market players than they are to the leviathan state. There are thousands of towns and cities, but usually only a couple cable companies in any area. The exclusivity contracts are usually given out of position of weak bargaining power.

I talk about this in another topic I made in this thread, and it mentions how economic systems larger than a political system can push around the politics to their own gains. The way cable companies extort local government is a prime example.

> And here is the problem that has nothing to do with government - broadband wired internet is a natural monopoly. There are extreme capital expenses and the company that builds the first network has a huge advantage, it is usually not profitable for a second business to enter the market.

Infrastructure is a natural monopoly. There are dramatic diminishing returns on laying a second redundant set of the same thing than using one thing. I personally think fiber / cable / phone wire should be publicly owned and maintained, and ISPs provide gateways to the Internet via the routing servers and DNS caches to their clients, but you can contract with anyone to provide you the connection to the backbone.

Roads separate man from animal, in that man will slave to lay roads that benefit others, but not lose competitive reproductive advantages as a result. Any other animal that would forge their environment to the benefit of the many of their species would die off from having less energy to spend breeding. As a species, we have a unique ability to build foundations of road, power, and network that enable magnitudes of productivity gains for little cost - if we collectively agree to pay and support it. It isn't something I feel works well in a private competitive market, but I am pretty libertarian. So the solution to me is not to try to create artificial incentives to waste resources laying redundant cable, but that the cable should never be private in the first place. It is laid under public roads, run over private property, and should be a public good. It even was, for a brief time, until most local governments sold them to greedy business. I don't know how to solve the extortion problem, unless it is mandated at a higher level that the smaller governments can't sell off public infrastructure like that.

> Keep in mind that AT&T pretty much built its monopoly on its own. The government had the choice between breaking it up, and converting it to a regulated monopoly, and chose the latter. This may have been the wrong choice, but the country was probably better off for having at least some government intervention, and not allowing the monopoly to be completely unregulated and dedicated solely towards shareholder profits.

The early years of AT&T were a mix of government incentive and business practice. They spread so fast because everyone wanted phones, and they got subsidized to provide to everyone. It is another situation I think the correct solution would have been to go the way of roads (or maybe power lines) - public infrastructure supporting private, competitive end points. The phone lines should create a market for competition, as a foundational infrastructure an industry can be built on.


Well, with current technologies, radio spectrum is a finite resource. Say, 1900 mhz range GSM standard has some 300 channels available, and if your cell towers are using these channels than I can't use them at all (or we both will get just disruption).


And if you are both disrupting, neither of you are making a profit and are losing customers. It is in the best interests of all parties to negotiate usage that maximizes benefit of all parties involved.

It doesn't require the violence of law for people to come to compromise. Profit motive is plenty enough I think.


I don't agree. Radio in the early 20th century in the United States was not regulated, and operated in the unregulated fashion you described, and it was a failure. What has really changed in the intervening century? Spectrum interference is still as much of a problem now as it was back then.


Allowing anyone with a small amount of money to disrupt valuable uses of spectrum would basically legalize extortion. I doubt many radio-spectrum businesses could exist in an environment where any random person with a few thousand dollars and an evil mind could legally demand that they pay up or be shut down.


You just called it what it is. Criminal extortion, and it would also be sabotage, to use a frequency band to attack another party running on it.

That doesn't magically become legal. For the same reasons you could take someone using "your" frequency right now to court, you could take someone using the frequencies you do only for the purposes of attacking the signal quality on the same basis.

And no, opening up spectrum doesn't suddenly mean everyone and their mom is buying radios and spamming electromagnetic radiation, for the same reason people don't do it today, because they can be targeted for sabotage if they aren't productively using their radio usage.


I don't understand, if there's no ownership of the spectrum, then on what basis would the user be able to take the attacker to court? What if the attacker says he just really enjoys spamming high-powered electromagnetic hash, but would be willing to give up his hobby for the right price?


That right there would be considered extortion in court, and like I said, it is sabotage to actively attack infrastructure to defraud a business (ie, blocking roads for trucks, building a power sink to rip juice from a local area from someone, scheduling trains to intentionally prevent someone else from using them at a certain time).

It is like any other infrastructure. You should be free to use it, and punished if you abuse it.


Who decides that my joyous hobby of spamming the radio spectrum is extortion and not legitimate use?




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