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Author Topic: Why is European broadband faster and cheaper? Blame the government
philnotfil
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engadget.com

quote:

It's not surprising that we lag behind such hacker havens as Sweden (number one worldwide, according to the study) and Finland (number seven), nor densely-populated Asian nations like Japan and South Korea (numbers three and four). But the U.S. also trails countries that are poor by European standards: Portugal is just ahead of us in 15th place; Italy is number 14. (The full rankings are on page 81 of the study.)

What is the biggest difference between us and them? Government.

quote:

Not government spending. The UK's administration hasn't invested a penny in broadband infrastructure, and most of the network in the Netherlands has been built with private capital. (The city government in Amsterdam took a minority stake in the fiber network there, but that's an investment that will pay dividends if the network is profitable -- and the private investors who own the majority share of the system plan to make sure that it will be.)

The game-changer in these two European countries has been government regulators who have forced more competition in the market for broadband.

They used to be just like us, if you wanted high speed internet you got it from the phone company or the cable company. The government forced the companies to lease their lines to competitors. All of a sudden people had choices and competition (just as capitalism preaches) provided better service at a lower cost.

I thought the most interesting part of the article was found in the comments by Verizon and AT&T. They both benefit from these changes that allow them to compete against the incumbent phone companies in Europe, but also fight against such changes in the US where they are the incumbent phone companies.

quote:
Verizon told me in its written statement that it flat-out opposes the kind of local-loop unbundling that's reduced prices and increased speeds in Britain "for competitive reasons". Those regulations are "bad public policy and bad news for consumers", Verizon says, which "only benefit a few big phone companies, and those companies do not pass their savings on to consumers." Verizon also claims that "those competitors do not invest in their own networks".

AT&T takes a different tack: The firm says it supports competition, but notes that, "There is no 'one-size fits all' regulatory regime" that will work worldwide. AT&T cites two main differences between the UK and U.S. markets: First, more U.S. homes have the option of buying broadband service from cable companies. Second, the U.S. is more spread out -- the technical term is that those "loops" are longer.

Verizon is just straight up lying. AT&T and least is hiding their desires behind techno-babble.

We just moved from an apartment where high speed internet was free (included in our rent). Now we are shopping for a high speed internet provider. Reading the speeds and prices quoted in the article made me sad.

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Blayne Bradley
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We have the same problem in Canada, bigger companies fighting tooth and nail to prevent resailers and smaller companies from offering service on their lines for cheaper. Part of the problem is that to invest in lying down new lines in the first place the companies want a monopoly in exchange.
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TCB
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It's the sad result of American governments confusing being pro-market (which usually leads to positive consumer outcomes) and being pro-business (which leads to positive outcomes for existing businesses, but usually not so much for consumers).
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Grant
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quote:
They used to be just like us, if you wanted high speed internet you got it from the phone company or the cable company. The government forced the companies to lease their lines to competitors. All of a sudden people had choices and competition (just as capitalism preaches) provided better service at a lower cost.

I'm all for this. I'm sick of the monopolies that we have where I live. The problem is that the companies involved are buying off the government, and not even under the table. In order to maintain these monopolies, the parish governments are forming "provider agreements" with these companies, for a fee. Big fees. Fees big enough that they translate into less city and parish taxes.
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Pyrtolin
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Yeah- this was the issue I was talking about on another thread as well.The infrastructure monopoly, in and of itself, is actually useful, because it would be grossly inefficient for each carrier to try to fun its own network, but every provider needs to have fair access to that network for a reasonable market to exist- whoever maintains the network either needs to not be a provider or needs to be regulated such that they allow all possible providers access at a reasonable price. (Simply forcing them to lease isn't quite enough, because they can easily set the lease price to irrationally high levels and maintain a de facto provider monopoly)

n the other hand, there should be a bit of a coverage incentive at play as well to help reduce the costs of running lines to remote or low density areas, as we did with the phone system to help ensure that modern infrastructure eventually reaches everyone and doesn't remain the province of the wealthiest areas.

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starLisa
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quote:
Originally posted by philnotfil:
They used to be just like us, if you wanted high speed internet you got it from the phone company or the cable company. The government forced the companies to lease their lines to competitors. All of a sudden people had choices and competition (just as capitalism preaches) provided better service at a lower cost.

Okay, that's just silly. Not that the results are what they are, but to say that capitalism preaches that people should be forced to lease their infrastructure to competitors to their own detriment... that's Socialism 101, phil. It isn't even remotely similar to capitalism.

Capitalism isn't about competition. It's first and foremost about "hands-off". Competition is usually the result of "hands-off". When it isn't, it's either because competition is unnecessary (because services/goods are great the way they are) or because of prior government meddling.

How did Comcast and Verizon manage to build the infrastructure they have? Was that "hands-off", or was it through government protectionism?

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starLisa
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quote:
Originally posted by Pyrtolin:
Yeah- this was the issue I was talking about on another thread as well.The infrastructure monopoly, in and of itself, is actually useful, because it would be grossly inefficient for each carrier to try to fun its own network,

That's the claim of everyone who has ever tried to get government monopoly status. It's a bunch of hooey.

quote:
Originally posted by Pyrtolin:
but every provider needs to have fair access to that network

What constitutes "fair use" of someone else's property?

Government fiddling leads to problems which then require more government fiddling.

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Pyrtolin
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You're confusing your specific brand of capitalism (laissez-faire) with the more general propositions. Adam Smith pointed directly to public infrastructure as being essential to opening up markets and preventing the damage of monopolies.

quote:
The tolls for the maintenance of a high road, cannot with any safety be made the property of private persons. A high road, though entirely neglected, does not become altogether impassable, though a canal does. The proprietors of the tolls upon a high road, therefore, might neglect altogether the repair of the road, and yet continue to levy very nearly the same tolls. It is proper, therefore, that the tolls for the maintenance of such work should be put under the management of commissioners or trustees.
quote:
When a company of merchants undertake, at their own risk and expence, to establish a new trade with some remote and barbarous nation, it may not be unreasonable to incorporate them into a joint stock company, and to grant them, in case of their success, a monopoly of the trade for a certain number of years. It is the easiest and most natural way in which the state can recompense them for hazarding a dangerous and expensive experiment, of which the public is afterwards to reap the benefit. A temporary monopoly of this kind may be vindicated upon the same principles upon which a like monopoly of a new machine is granted to its inventor, and that of a new book to its author. But upon the expiration of the term, the monopoly ought certainly to determine; the forts and garrisons, if it was found necessary to establish any, to be taken into the hands of government, their value to be paid to the company, and the trade to be laid open to all the subjects of the state. By a perpetual monopoly, all the other subjects of the state are taxed very absurdly in two different ways; first, by the high price of goods, which, in the case of a free-trade, they could buy much cheaper; and, secondly, by their total exclusion from a branch of business, which it might be both convenient and profitable for many of them to carry on.
quote:
Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon a level with those in the neighbourhood of the town. They are upon that account the greatest of all improvements. They encourage the cultivation of the remote, which must always be the most extensive circle of the country. They are advantageous to the town, by breaking down the monopoly of the country in its neighbourhood. They are advantageous even to that part of the country. Though they introduce some rival commodities into the old market, they open many new markets to its produce. Monopoly, besides, is a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces everybody to have recourse to it for the sake of self-defence. It is not more than fifty years ago that some of the counties in the neighbourhood of London petitioned the Parliament against the extension of the turnpike roads into the remoter counties. Those remoter counties, they pretended, from the cheapness of labour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents, and ruin their cultivation. Their rents, however, have risen, and their cultivation has been improved since that time.


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Blayne Bradley
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Yeah Lisa you don't have a horse to stand on here, almost every european country has cheaper near universal access to the internet at far lower costs at much better service than either the US or Canada.

There's almost no practical way to have free competition for high capital investments like the internet or utilities, someone needs to make it first, and very few can do so. Which is okay, for a bit, but afterwards that infrastructure needs to be made availiable for the free use of competition so prices may lower, service improve and ultimately to the benefit of the consumer.

Literally with Usage Based Billing in Canada without regularion to force the big companies to open their lines to smaller companies it would've been more economical to have 500gb SSD's (Solid State Drives) ship them to your house, unload from them the internet and then throw them out; then actually use the internet.

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JWatts
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quote:
Originally posted by starLisa:

quote:
Originally posted by Pyrtolin:
but every provider needs to have fair access to that network

What constitutes "fair use" of someone else's property?

Government fiddling leads to problems which then require more government fiddling.

Normally I would agree with you, but not in this case. The cable companies have colluded with local governments in many cases to create a local monopoly or duopoly. In these agreements the local laws prevent anyone else from running their own wires. At the very least these government granted monopolies should be rescinded and anyone should be allowed to run wires to the public. This is particularly atrocious because the cable companies used the existing power line poles to run their lines (not even paying for the poles they attached to) and have agreements that prevent anyone else from following their example. All such agreements should have a sunset clause to prevent anyone from having a perpetual government granted monopoly. I would say the upper limit on such an exclusive contract should be 20 years.
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Grant
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quote:
Originally posted by starLisa:
Government fiddling leads to problems which then require more government fiddling.

Yes. The governments caused these problems, by agreeing to let these companies form monopolies in their respective jurisdictions. Now they need to fix the problem and go away.

I suppose you don't have to force them to lease their lines. A serious competitor can threaten to build their own lines. In that case it is in the original company's best interest to lease, at least then they're still making some money.

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starLisa
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quote:
Originally posted by JWatts:
quote:
Originally posted by starLisa:

quote:
Originally posted by Pyrtolin:
but every provider needs to have fair access to that network

What constitutes "fair use" of someone else's property?

Government fiddling leads to problems which then require more government fiddling.

Normally I would agree with you, but not in this case. The cable companies have colluded with local governments in many cases to create a local monopoly or duopoly. In these agreements the local laws prevent anyone else from running their own wires. At the very least these government granted monopolies should be rescinded and anyone should be allowed to run wires to the public. This is particularly atrocious because the cable companies used the existing power line poles to run their lines (not even paying for the poles they attached to) and have agreements that prevent anyone else from following their example. All such agreements should have a sunset clause to prevent anyone from having a perpetual government granted monopoly. I would say the upper limit on such an exclusive contract should be 20 years.
Honestly, I don't see how you're disagreeing with me. I totally agree that this was an abuse of governmental authority.

Are you saying that since they used public poles to run their lines, it's okay to force them to let other people use their lines? I'm not sure what I think about that, really. There's always a very thin line between removing abuse and making things worse with counter-abuse. It may be that in this case, forcing them to allow other companies to use their wires would be the more just solution (I don't give a fig for "fair"). If there's any such thing as a "just" solution in such a frakked up and unjust situation.

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Grant
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Ehhhhh. Well, UPS uses public roads. But nobody forces UPS to let Fed Ex use their trucks.

If they used public poles, then so can anybody else.

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DonaldD
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Was the phone company not subsidized by the country to lay those lines in the first place? (that was certainly the case in Canada)
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Grant
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Not in South Louisiana. That's why we couldn't get cable in the boondocks until the early aughties.
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DonaldD
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Phone company [Smile]
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Grant
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Practically the same thing down here.

Edit: Anyways, I stand corrected.

[ June 30, 2011, 06:07 PM: Message edited by: Grant ]

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Blayne Bradley
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quote:
Originally posted by JWatts:
quote:
Originally posted by starLisa:

quote:
Originally posted by Pyrtolin:
but every provider needs to have fair access to that network

What constitutes "fair use" of someone else's property?

Government fiddling leads to problems which then require more government fiddling.

Normally I would agree with you, but not in this case. The cable companies have colluded with local governments in many cases to create a local monopoly or duopoly. In these agreements the local laws prevent anyone else from running their own wires. At the very least these government granted monopolies should be rescinded and anyone should be allowed to run wires to the public. This is particularly egregious because the cable companies used the existing power line poles to run their lines (not even paying for the poles they attached to) and have agreements that prevent anyone else from following their example. All such agreements should have a sunset clause to prevent anyone from having a perpetual government granted monopoly. I would say the upper limit on such an exclusive contract should be 20 years.
Fixed.
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Pyrtolin
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quote:
Honestly, I don't see how you're disagreeing with me. I totally agree that this was an abuse of governmental authority.
I don't even see it as that much- per the second quote above from the WoN- when these systems were being established, it was a significant risk and expense to put them in; giving one company a temporary monopoly in exchange for it taking on that expense was, in fact completely reasonable. Now, however, that the technology is solid and in high demand, and the companies have have the chance to fully recoup their investments and then some, it's time to move on to the second part where the infrastructure is transferred to public control (or at least regulated by the public so that it effectively becomes a public resource) and the market is freed up for all to compete on equal grounds.
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Brian
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Blayne:
quote:
fixed
What exactly did you "fix" in that paragraph?

If you are going to be rude enough to alter someone else's quote, at least use italics or bold to identify the changes you made.

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Blayne Bradley
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All I did was change "atrocious" to "egregious", I have made it better. I thought I bolded it, but seems whole thing is bolded.
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philnotfil
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An interesting tidbit from a story on a guy kicked off of Comcast for using too much internet:

quote:
Vrignaud says he’s weighing his other connectivity options — which are limited to some relatively slow DSL connections and the troubled Clearwire 4G to the home servie. Verizon laid some fiber near Seattle, but Comcast’s franchise agreements with the city prohibited Verizon from laying fiber in the city proper — and Verizon has since given up on the area.

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JWatts
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The guy was using more than 250GB per month. He should have just paid for a higher end commercial account at that kind of usage level.

That being said Comcast policies are stupid. They should just cut off the service when someone hits the limit and then reconnect it at the start of the next billing cycle. Banning someone for a year is silly.

I suspect they haven't automated the equipment and it takes a manual operation to disconnect/reconnect the service. Perhaps it's even a trip to the pole. And in that case it's costly and they can't afford to do it every month. But they could still come up with a better policy. Comcast is basically user hostile.

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JWatts
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In related news, Chattanooga, TN rolled out 1Gb/sec fiber broadband to the city last fall. It's one of the fastest services on the planet.

Granted, that speed cost $350 per month. It offers cheaper/slower options also. I suspect the slowest option they offer 30MB/sec for $58 is plenty fast enough for most people.
NYT

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