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FCC's Claim That One ISP Counts As 'Competition' Faces Scrutiny In Court (arstechnica.com)
Jon Brodkin reports via Ars Technica: A Federal Communications Commission decision to eliminate price caps imposed on some business broadband providers should be struck down, advocacy groups told federal judges last week. The FCC failed to justify its claim that a market can be competitive even when there is only one Internet provider, the groups said. Led by Chairman Ajit Pai, the FCC's Republican majority voted in April of this year to eliminate price caps in a county if 50 percent of potential customers "are within a half mile of a location served by a competitive provider." That means business customers with just one choice are often considered to be located in a competitive market and thus no longer benefit from price controls. The decision affects Business Data Services (BDS), a dedicated, point-to-point broadband link that is delivered over copper-based TDM networks by incumbent phone companies like AT&T, Verizon, and CenturyLink.
But the FCC's claim that "potential competition" can rein in prices even in the absence of competition doesn't stand up to legal scrutiny, critics of the order say. "In 2016, after more than 10 years of examining the highly concentrated Business Data Services market, the FCC was poised to rein in anti-competitive pricing in the BDS market to provide enterprise customers, government agencies, schools, libraries, and hospitals with much-needed relief from monopoly rates," Phillip Berenbroick, senior policy counsel at consumer advocacy group Public Knowledge said. But after Republicans gained the FCC majority in 2017, "the commission illegally reversed course without proper notice and further deregulated the BDS market, leaving consumers at risk of paying up to $20 billion a year in excess charges from monopolistic pricing," Berenbroick said.
But the FCC's claim that "potential competition" can rein in prices even in the absence of competition doesn't stand up to legal scrutiny, critics of the order say. "In 2016, after more than 10 years of examining the highly concentrated Business Data Services market, the FCC was poised to rein in anti-competitive pricing in the BDS market to provide enterprise customers, government agencies, schools, libraries, and hospitals with much-needed relief from monopoly rates," Phillip Berenbroick, senior policy counsel at consumer advocacy group Public Knowledge said. But after Republicans gained the FCC majority in 2017, "the commission illegally reversed course without proper notice and further deregulated the BDS market, leaving consumers at risk of paying up to $20 billion a year in excess charges from monopolistic pricing," Berenbroick said.
He's just looking out for a job back at Verizon when he's done.
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Is anyone really surprised by this now? This has been the way of things in America for ages. Democrats aren't even good politicians, just centrist normals. Republicans are so far to the right it's hilariously stupid. America needs a third party and has needed one for years. At least a moderate right party if not a further left party.
Oh that seems fair. Not "served by a competitive provider" but rather, "within a half mile of a location served by a competitive provider".
Which party is doing this shit again?
Oh, right.
Now who's the fucking moron?
You are welcome on my lawn.
When is a monopoly not a monopoly? Why, when it's a monopoly, apparently.
This is beyond idiotic and dovetails nicely into the recent news that Comcast and other ISPs have decided that Americans "pay too little" for their broadband, which is an outrageous claim. Maybe we pay too little for road access too, why not just make all roads toll roads?
http://www.fiercecable.com/cab...
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One of rather many flaws in modern American conservatist thought is the idea that because someone has a freedom that they are using to crush someone else, that this is OK, because in theory the other person could spend their life building up the same resources to crush the other guy.
It's the same logic as with gun freedoms - even the most abject set of mass murders with guns is seen as socially acceptable in aggrigate, because in theory, a 'good' person could have popped up and shot the mass murderers with a gun also - therefore, it's no problem. Even with words mouthed towards mental illness, decade over decade, these same politicians reduce funding for those same mental health issues, AND promote legislation to make it easier for those same mentally ill people to get guns.
Same here - they mouth words at how bad monopolies are, but put forth legislation and appoint people that makes it easier to form monopolies, and use them to ruin lives on a continuous basis.
And no, you can't fight against this with individual action - monopolies when they form tend to by definition lock up a crucial resources that prevents you from fighting against them on an individual level. And modern 'conservative' ideology is for the same arbitration systems that prevent you from using the court to fix it, along with countless laws to shelter resources from any victory you could achieve.
No one is doing a thing about it other than going wahhh wahh wahh.
No one except the President can do anything about it. Pai is appointed, not elected.
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According to the latest ruleset, this post should be modded as Vorpal Flamebait +5.
You can call him Ray _or_ you can call him Jay. Surely this must mean competition.
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I'm not sure Pai disbelieves this. Ask any smart-ish libertarian how they propose to regulate natural monopolies, and they will say they don't need to because of the potential competition. Any monopoly that abuses it's power too much will prompt people to technologically innovate their way out of the monopoly situation (see: canals, trains) or simply start some competition, and damn the first mover advantage. It's a BS argument, of course, but I think a lot of them really believe it.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
At the risk of disturbing what is clearly an exceptionally robust echo chamber on this topic, here's my take:
If the FCC is fixing prices at an artificially low level because there's only one provider in an area, there's zero incentive for a second provider to engage in the capital expenditure to start to service that area. The fiat prices make it impossible for a newcomer to recoup the cost of buildout. Nobody is going to sign up for that, and the monopoly will continue.
Removing the price caps may be temporarily painful, but in the long haul someone is going to spin out that last half mile when there's a proper incentive to do so. (And the higher the incumbent jacks prices, the richer that incentive gets, so getting too greedy just slits their throat faster.) You then have multiple providers that will naturally compete on price to get more market share and pay down their capex faster. And if the incumbent lowers prices enough to disincentivize the other provider from laying that last piece of wire, the customers win that way as well. If you were talking about one provider in the entire city, that might be concerning. But having at least one other provider within half a mile completely changes the calculus in my view.
Very happy to have a thoughtful discussion about this. Flamethowers can save their keystrokes.
I'd almost agree that one ISP could count as competition, but that's missing the major problem with the scenario. In those markets, you have the Cable ISP with great speeds, high price, and unrealistic data caps. The "competition" is usually a Telco ISP that has crappy speeds, average price, and no data caps.
As I understand markets (I am NOT an economist, so if you are one, check me): Even if the two competitors were comparable, two is not enough for market forces to push prices down toward cost-plus-modest-return. Three is iffy and you need four before it's close to certain.
With only one, maximum profit is achieved by raising prices until anything higher will lose more from people who decided to do without than it gains from people who stick around and pay more.
With two, maximum profit is achieved by adjusting prices until the customers are split evenly and ramping them up until, again, further price hikes lose more than gain. This is a "duopoly". It prices like a cartel. But no back-channel collusion is required. The price signals alone are enough to keep the players in sync and even drive toward the optimum.
With several competitors the maximum profit would still be "split the customers fairly and charge all the traffic will bear" - a cartel. But the more players you have, the more you need communication among them to keep the customer base distributed and the prices in sync. Without it, a player who is being squeezed out (with too small a share of the customers) can drop his prices and gain more by improving market share than he loses by the sale price. This can get a price war going, shake out the weak players, and stabilize at cost plus enough profit that several players (three or more) survive.
With three strong players the market MIGHT be stable for a ong while at the pricey cartel-like point without actual collusion. But with four or more it tends to collapse into the consumer-friendly state unless there's an actual cartel.
(Variants include providing a degraded product at a lower price point. But that's iffy, more complicated to discus, and doesn't really change the "two is about as bad as one, three is iffy, you want four or more" rule of thumb.)
Unfortunately, the government (composed more of lawyers and bureaucrts than businessmen) considers two to be "competition". And that's built into the FCC rules at a number of points. (For instance, the early cellphone channel allocations, which allowed only two companies in an area, or the "One telco wireline ISP and one cable ISP is competition" thing that led to the telco/cable duopolies.)
So now "competition" is supposed to include two of which one is a threat of a hypothetical competitor?
Seems to me the court should insist that there be a minimum of four non-hypothetical competitors in a market before they let the FCC treat the market as "competitive".
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I've looked at history, and the harm done by monopolies is never offset by the benefits. Technological change doesn't happen quickly enough to mitigate the effects of shitty, overbearing monopolies. I've been over this a million times with libertarians and they haven't managed to change my mind, even with arguments that weren't just off the cuff, half assed attempts.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton