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Canadian ISP Co-Op Shows Upside of Line Sharing
Golden Gael writes "The FCC got rid of mandatory line sharing in the US a few years ago, but it's alive and kicking in Canada, and an interesting article at Ars Technica looks at what can happen when there's vibrant broadband competition. 'Wireless Nomad does things a little differently. The company is subscriber-owned, volunteer-run, and open-source friendly. It offers a neutral Internet connection with no bandwidth caps or throttling, and it makes a point of creating wireless access points at the end of each DSL connection that can be used, for free, by the public. Bell Canada this is not.' The ISP has some ambitious plans for the future, including getting involved in WiMAX."
I live in a city of over half a million people. Last night I spent about 40 minutes trying to find out what my broadband options are. Nobody is upfront; it was incredibly difficult to determine even how much each service will cost after the teaser rates expire, especially if you don't want bundled local telephone or cable TV. Next, try to determine what DSL speed you'll get at your house, or what the upstream bandwidth for cable is. You can't. Just lots of stupid marketing fluff and "congratulations! Satellite Internet is available in your area!" type garbage. In the end I gave up, it didn't look like I have any real option besides what I have now - Comcast (which is good but too expensive, especially since I don't really want cable TV any more). I am sick of everybody pretending the free market is at work so everything is great. It isn't.
First the dollar and now this?! Is Canada the new America?
Seagoon: Shut up Eccles!
Eccles: Shut up Eccles!
Before anyone comes in screaming that this isn't how the "free" market is supposed to work, how bad governement intervention is, etc. etc., let me point out the following:
In Canada, the biggest telco, by far, Bell Canada, was for a very long time a state sanctioned monopoly and thus recieved tons of public funds to help build its infrastructure (not unlike the situation in the US). Due to this fact, the CRTC (the Canadian equivalent of the FCC, but usually with a clue), forces Bell to allow access to its lines to competitors, as mentionned in the article.
Results? While the particular company Ars focused on isn't a resounding success (even if it has cool ideas), there's tons of others that are. Example: unlimited, uncapped DSL, which would cost me 45$ with Bell, cost me 28$ with one of its competitors because Bell has to lease them the line for 22$/month (a price point at which they still make a profit, I feel it must be pointed out).
And it's not just competition on prices and service level, it's customer service too. Anyone that had to deal with a telco before, at one point or another, pretty certainly wanted to go on a shooting spree. The company I deal with? Pick up the phone and someone (in Canada!) will answer, straight away, 24h a day... none of that "please press 1-3-2-6... please wait... we're receiving an unusual volume of call... waiting time is 17 minutes... your call is important to us" bullshit.
So, basically, go mandatory line-sharing! Anyone wanna bet that it's never going to happen in the States? ;P
I am sick of everybody pretending the free market is at work so everything is great. It isn't.
The whole point of the free market is, if you do not like the way companies provide a good or a service, you are more than welcome to secure your own investors, get your own right of way, run your own cable, and sell your own broadband.
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The role of the writer is not to say what we can all say, but what we are unable to say. -Anais Nin
I'm gonna add that one to my aphorism collection.
Wow. I love knee-jerk ideology. Left or right, it's so devoid of content, and so full of jingoistic jargon. "socialized internet" Jeez. I think it's lovely that you can just apply the word "socialized" to anything and make it an epithet.
Government is inefficient not because there is something inherently wrong with government per-se, but because it's not held to account and because our electorate is lazy, apathetic, uneducated, and manipulated . TANSTAAFL is a good principle as a personal ethic, but it's incorrect at an economic level. Heck, externalization of resource extraction and waste is a great "Free Lunch" that business has been getting for centuries. This attitude I often hear expressed is just a load of Ayn-Rand readin', chicago-school of business nonsense. Private industry (and I mostly work for banks, mind you) are no more efficient because, contrary to so-called market discipline theories, larger companies are not held to account on any terms but short term quarterly profits. Often, due to asymmetry of information, they are not so held for years. (Enron) Sure they fall, but at great cost to society. And large companies that have near monopolies exhibit exactly the same bureaucratic paralysis as governments, and are, in my experience, often worse, though not always. Certainly the Bells (and their heirs) do. They are usually completely outmoded by small and mid-size profit-making or not-for-profit ventures. Oh, and the ISP from the article? Small member-corporation. (i.e. members are shareholders).
Nothing wrong with capitalism in moderation, but there's a lot wrong with capitalist ideological demagoguery, just as with socialism. I'm for a complete ban on -isms.
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Look at any map. We've been on top of the US since day one!
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In the US (and I believe in most countries), the physical layer of telephone and cable tv is by definition not a free market because the government grants the phone and cable companies monopolies. It does this because fiber, coax, and phone cabling are natural monopolies: It's in the general interest not to have every entrepeneur trying to duplicate everyone else's run of wire/fiber, and the government enforces that interest.
The free market only applies when the barriers to entry are assumed zero, or at least low; The barrier for becoming a telco that owns it's own physical transport layer is so high that it would be disastrous if more than one or two players tried.
Privatization in and of itself does not provide an efficient market. Competition, not private ownership, is what provides the benefits found in modern economies. More often than not, private ownership enables competition. Sometimes it does not, sometimes it stifles competition, and results in an inefficient market.
Utilities are classic examples of natural monopolies. To be pedantic, this sometimes takes the form of oligarchies rather than pure monopolies, but the drawbacks are the same: the suppression of competition leads to high prices, poor service, and stagnation (lack of innovation). The oligarchs may divide the business by geography, like the railroads, or by type of service. Cable and telcos do both. Cable companies divide the country into exclusive territories, sometimes trade territories, but never battle over the same region. Telcos do the same. You local telco and cable may appear to compete with each other, but it is a very limited competition. They unite against any third party entering the market. They unite to lobby against any requirement to lease lines to real competitors. They unite to throw obstacles in the path of anyone foolish enough to try to run new lines.
If you look at true free markets, there are usually at least three strong players and several smaller ones. For example, US auto market share 2007 YTD: GM 22%, Toyota 16%, DaimlerChrysler 16%, Ford 15%, Honda 9%, and so forth. Real competition. The same picture emerges for fast food, supermarkets, gasoline, clothing, you name it.
Where I live, the phone company and the cable company combined have more than 90% of the Internet access market. Third place is down in the statistical noise. People ask whether I use cable or DSL, as if there were only two choices. They can't comprehend that there could be a third choice.
If there isn't a third choice, there isn't true competition. If the third largest market share isn't at least half the size of the largest, there isn't true competition. We don't have true competition for Internet access in the US. We have an oligarchy which restricts competition.
Privatization often increases competition. Privatization sometimes replaces one monopoly with another. Privatization is neither good nor bad. Competition is good, and when private enterprise is suppressing competition, then *anything* which increases competition is better. Including regulation, or even government ownership. As bad as government can be, sometimes private business is worse. Government lacks the feedback that competition provides, but provides feedback from voters that businesses lack. Even the DMV is easier to deal with than AT&T.
Just thought I'd point that out. Internet here is quite pathetic, but it's not strictly a free market problem. It's more a general population problem which is amplified by having a free market environment.
No, it's not a "general population problem"; ignorance is economically rational because obtaining information has costs associated with it. Furthermore, it's part of a free market that sellers take advantage of this to charge more than they would if people had complete information.
When you balance out all these effects, it means that a regulated market can sometimes operate more efficiently than a free market. That's why regulating cell phone and cable markets may make sense.
The only "problem" with any of this is that laissez-faire free market proponents don't know their economics and propose bad economic policies.
These guys are clearly Like Us, and it's to be commended that they rolled up their sleeves and got stuck in. But from reading the article I got the impression they need to sharpen up their business skills a lot. For all the bitching you see about how evil ISPs are on Slashdot, this article demonstrates nicely why they are that way. Some good quotes:
No shit they used a lot of data. A small, new ISP run by a couple of guys that's offering unlimited data access for a flat rate? That must have attracted torrent users like bees to honey. They blame video traffic later, but everytime I talk to an ISP employee about where their bandwidth goes, the answer is always "p2p, everything else" in that order. How did they not see this coming? Did they really think existing ISPs impose caps and throttles because they were told to last time they communed with Beazulbub? I won't even comment on using credit cards to pay business costs ....
Stories like this indicate why people might think that way.I like their courage in trying to shake up the ISP market like this, but a cold, realistic assessment of why existing ISPs are the way they are would probably have helped.
And those rules needs to be enforced by the government, aggressively, and that's what we did in FRance, and, surprise! it works.
... and mountains of cash for capitalists close to the gov't.
Neo-liberals (to you merkins that is conservatives, neo or not) worship Adam Smith but it's like they've never read him. A working free market needs choice, information and rational, free actors. When megacorporations are allowed to abuse their monopoly to remove choice and carpet bomb the media with BS advertising, you've got a non free market right here.
That said, even the free market at its best is no panacea. Liberalising the telecom market was the best thing to do; I'm entirely opposed to doing the same to the electricity market for example. We already have the cheapest electricity or close to it, what will we gain with privatization? Oh that's right, just like UK and Germany: massive price increase