Right now, it is technically true that some internet services, such as Netflix, use a huge percentage of bandwidth. In addition, some ISP users do use far more bandwidth than others.
The problem here is that none of the “fees” that ISPs want to charge to end user data hogs or heavy data using companies have any relation to the actual cost of purchasing bigger routers and beefier connections.
If actual costs were required to be used to justify any fee increase, rates would be drastically more reasonable.
Instead of the ISP getting to charge you, say, $50 if you use more than 150 gigabytes, they would have to charge you a rate actually related to their marginal cost of delivering another 150 gigs, averaged out among all the heavy data users.
The fee would be less than 5 bucks. The same would apply to negotiations with Netflix.
Does anyone know a rock solid way to actually calculate these costs? The method can overestimate them by up to 50%, as they are still very low. ISPs would need to publish these costs publicly, and the law mandating this would specify criminal penalties for deliberate fraud.
I vehemently disagree with this concept. We have a more or less market economy, and this kind of market distortion is antithetical to a more or less free economy.
That said, the concept of giving ISPs local monopolies was questionable in the first place but adding more distortions to correct distortions isn’t going to solve any problems. You just end up with across the board base rate increases. Introduce some actual competition (by perhaps no longer allowing those local monopolies) and you might actually make a difference in a good way.
Internet service providers occupy a “natural monopoly”. There is no possible way to make them free market because of the inherent nature of the “one set of wires” business. (since many households have 2 sets of wires, cable and phone, that makes it an oligopoly instead of a monopoly, however, oligopolies have equilbrium pricesfar above the free market price).
There is no technical way to give each household dozens of separate wired connections in order for there to be actual competition. Wireless spectrum is limited even more stringently.
Except apparently in Korea or Japan. Or most of Europe for that matter.
You separate the wire business from the ISP business. That may not be entirely realistic in the US (as I said, it was a mistake to give them local monopolies in the first place), but that’s how you do it.
Also, Google Fiber is kind of a big contradiction to your assertion. Allow other companies to come in, and it actually is possible to foster some competition, even if the set of wires is limited.
At any rate, my original point still stands. Adding more market distortions on top of existing market distortions isn’t going to change the underlying situation. It addresses a symptom and not the disease.
Nor is it going to stop ISPs from trying to maximize shareholder value in other ways that aren’t covered by whatever rules you introduce.
I disagree. If you have an already distorted situation, you should be “distorting” it further. Of course, I’d say what you’re doing is correcting the situation.
It’s all well and good to say the free market will handle any situation. But this is a situation where you’re acknowledging there isn’t a free market in existence. So how is it going to fix things?
This is a situation where you need the government to step in and regulate. The government should essentially be artificially imposing the results that would have been naturally created by a free market.
Seems that there’s already a model in place here in the US- deregulated power. I pay Reliant a monthly payment for electricity, but they pay Oncor for the actual wiring to my house and local power grid.
So basically the model would be that I pay Super-Duper-ISP for internet connectivity, and Super-Duper-ISP pays AT&T some fee to maintain/upgrade the actual connections to my house.
Of course, this would require some sort of reimbursement/incentive/payment scheme that would prevent AT&T from low-balling the connectivity and jacking up the price, so as to maximize their profits at the end user’s and Super-Duper-ISP’s expense.
Right, and if the US had done it this way, you’d have a point, but they didn’t, so you don’t.
You have the whole thing ass-about. The market is currently distorted in ways that provide complete control to the ISPs, and basically none to the consumer. You solution is simply to let the monopolists use their monopoly to set “market” prices that are fundamentally shaped by the monopoly that they have been handed.
Basically, your position is, “Hey, i don’t think we should have handed a monopoly to these ISPs, but now that we have, we shouldn’t get in their way or do anything to curb their profiteering.”
Everyone understands that ISPs are going to try to maximize shareholder value. In fact, that’s precisely the point of the whole debate: given that we, as a society, have handed them a captive audience by not mandating line-sharing and other European- and Asian-style practices, we also have a right, as a society, to insist they they not screw us with the very benefits that we’ve given them.
I live in an urban neighborhood in America’s 8th most populous city. It’s a comfortable neighborhood, with plenty of professional families, and with an aerage household income above the California and the San Diego median. It’s just a few miles from downtown, 15 minutes from the airport, is served by a decent bus system, and has multiple restaurants and bars within a short walk.
And yet, in this thriving neighborhood in a large, modern city, in the wealthiest country in the world, i have exactly one provider of proper broadband internet to choose from. One. For me, it’s Cox or nothing.
Time Warner Cabledoes operate in San Diego, but the city, in its wisdom, allowed the two companies to split the city geographically. If you’re south of the San Diego River, you have Cox; if you’re north of the river, you have TWC. No price comparisons or competition allowed. In some areas of the city, i could check AT&T to price compare their UVerse system with Cox, but where i am the best internet connection i can get from AT&T is 1.5 Mbps DSL. That’s positively antediluvian. With Cox, i’m on their third-tier system and still get 25 Mbps.
Luckily for me, Cox has been great in terms of speed and reliability, but their prices keep creeping up and up, and there’s absolutely nothing i can do about it, because there is literally no-one else i can go to. I can’t threaten to leave Cox in order to get a break on my bill, because they know that i have nowhere else to go
This sort of mandatory sub-leasing system is precisely how things operate in countries like France, and studies show that it actually leads to competition and lower prices for consumers. And yet the ISPs themselves somehow still manage to make a profit. Go figure!
My claim is that the OPs proposed solution won’t work. That doesn’t seem all that far-fetched.
The ideal solution is a time machine.
Back in reality, my next best solution is separating the physical infrastructure from providing the internet service (I do live in the Houston area, so I was thinking about electricity in Texas somewhat - though how electricity deregulation works in Texas is screwed up in other ways). This would be challenging in a number of ways. It’s not technically impossible but it is politically unrealistic.
My next best solution after that is municipalities finding ways to allow companies like Google to set up their own infrastructure and add more direct competition. This is something Houston, in particular, has screwed up, and Google won’t be doing any work here for the foreseeable future, while cities like Austin have it already and San Antonio will be getting it soon.
After that? Well, there are a number of other proposed ways to foster the spread of internet service and keep it cheap under our existing infrastructure and political reality. Some of them may well work, but others seem unrealistic.
Note that none of this is equivalent to throwing up our hands and giving up. The main thrust of my argument was not that there weren’t alternative ways to improve the provision of internet service across the country or that we shouldn’t even bother but that the one posed by the OP was a non-starter in a number of ways.
Sorry, but if you enter a discussion about the problems with internet service in the United States, and your first response is an appeal to a “market economy” and a “free economy,” and a criticism of using market “distortions” to address the problems of internet service provision, it shows that you have your whole set of priorities screwed up. There is basically no free market in internet service, at least from the customers’ perspective.
I think we should do what some people have proposed recently: include internet service providers under our definition of utilities, alongside things like electricity and water. Let free market principles operate when they provide good outcomes, but also be willing to regulate things like prices and provision in cases where companies have an effective monopoly.
My local gas and electricity company, for example, can’t raise my rates without going through the state’s public utilities commission, which has the job of balancing the company’s desire to make a profit with the fact that the company has an effective monopoly on essential services. Some people (including me) complain that the PUC is too quick to approve rate increases, but at least there is some check on monopolistic price gouging.
I think the most ridiculous thing right now is the way that some states are actually passing laws that prohibit local governments from setting up broadband internet on their own. Not only have we handed effective monopolies to the ISPs, but we’re now saying that, even in cases where those company’s do a shitty job at providing service, local municipalities can’t step in and do the job themselves. So much for the idea that local government is well equipped to respond to local needs!