Regulation of natural monopolies is in the public interest. Harmless monopolies, such as your local WalMart, should be left alone. If your local WalMart were to drop prices every time a competitor appeared, and raise them again after driving the competitor out of business, it would have become an abusive monopoly subject to prosecution.
Local loop services were until 1996 government-protected monopolies with government-guaranteed profit margins. No matter what they did, shareholders were guaranteed a 15% (or whatever) return on their capital. This is why our small local telco has a dual OC-48 ring... in order to make money the owner has to find new and increasingly wasteful ways to spend it.
In order to guarantee 15% return, the taxpayers and ratepayers have been subsidising local service. The extent of the subsidy can be imagined by asking how much an insurance company would charge to guarantee all telcos 15% profit. You'd have to get someone with a lot more time than I have to run the figures throough Black-Scholes but I'd estimate that the ratepayers have invested far more in the local loops than have the nominal owners.
Until the advent of Michael Powell's "Piss On Them" Economics, this situation was acceptable because the ratepayers who had compulsorily invested all this money into their local loops were supposedly protected by PUC's. Now, using the same corrupt strategies that raped taxpayers for S&L and PG&E, the utilities want their cronies to rewrite the stated-mandated contract between the ratepayers and shareholders, such that the ratepayers lose their entire investment and lose service choice and pay higher prices... and gain nothing in return.
Such would be a victory for corruption over property rights.
Clearly the shareholders' compulsory profits were not all that great for ratepayers either, although not as bad as being cleaned out by Powell. That was one of many good reasons for the 1996 Telco Deregulation Act. Telcos which permitted competition on the local loops would be permitted to diversify into newer and more profitable segments.
It is no surprise that the Telcos would want to both keep their monopolies and abuse them. Sadly, it is also no surprise that our extremely corrupt government officials could be induced to legalise such a travesty.
This is why regulation of natural monopolies is essential while regulation of other services and content providers should be minimal. This has been recognised under the names "basic" and "enhanced" services.
The Telcos now want to leverage their protected monopolies into enhanced services, stifling competition and innovation, illegally harming the nation. The FCC position on telcos should remain as it was but, for fairness, it should adopt the same position on cable: regulated monopoly last-mile providers versus deregulated content and internet providers with uniform access to the infrastructure.
Michael Powell is not dumb enough to believe the statements he is making. His embarrassed father should ground him.
Telcos are pushing on several fronts for unregulated Internet
monopolies in their regions. Michael Powell at FCC is just one of
their paid flunkies. Tauzin (R-La) and Dingell (D-Mi) are simultaneously
pushing HR.1542 which comes up for a vote in the House this month.
Telcos claim these measures will create 1.5M jobs. Anyone who isn't paid
to espouse a particularly viewpoint can see that an unregulated monopoly
means higher prices means less broadband means fewer jobs. Oh yeah, and
higher Telco profits.
Some here have argued that anything would be better than the appalling lack
of support coordination under the present system. I refuse to pay
protection money to these gangsters. Thousands of ISP's fix problems
nationally and internationally every day, usually in minutes. It's only
deliberate Telco obstructionism that prevents similar service levels with
DSL, where there are usually only two or three parties involved. PUC's have
recognised this and fined Telcos tens of millions of dollars, but the fines
are much less than the potential profits from Internet monopolies.
Michael Powell argues that the Telcos need help to get DSL rolled out. The
Telco representations to the Congress say the same thing. Yet the Telco
reports to their shareholders say that DSL roll out is proceeding
ahead of schedule. The real problem is that most people in areas served by DSLAM's
can't afford DSL service, and the FCC and Congress aim to make DSL more
expensive.
If you've been around a while, you know there was a time when ISP's could provide DSL connectivity for about the same price as dialin over "burglar alarm" circuits. The regulators response was to allow Telcos to stop selling "burglar alarm" circuits. The Telcos use exactly the same circuits, with exactly the same equipment to provide T1 service in many areas. The only difference is that they charge more than ten times as much. Do not expect regulators to protect you unless you pay them millions of dollars or get millions of voters to call Congress.
Much has been written of the Telcos desire for unregulated monopoly DSL,
yet their aims are actually much broader. Telco flunkies such
as Powell, Tauzin and Dingell want unregulated regional
monopolies on all Internet delivered using Telco circuits:.
...neither the Commission, nor any State, shall have authority to regulate
the rates, charges, terms, or conditions for, or entry into the provision
of, any high speed data service, Internet backbone service, or Internet
access service."
Your local Mom-and-Pop ISP folds when costs increase ten-fold. You have no independent ISP except
possibly two-way satellite and national-brand cable. Not only is broadband more expensive but you can say
goodbye to $19.95 dialup too. The U.S. will
become an Internet backwater, a distinction the FCC has already
managed to gain for us in TV picture quality and 2G/3G cell service.
But surely deregulation is a good thing? Congress recognised in
1996 that mere deregulation would, because of the power of the
Bells, result in a change from regulated monopolies to
unregulated monopolies. What is needed to improve service and reduce
prices is competition. One can't directly legislate competition, so
Congress offerred a carrot. Those Telcos which opened up to allow
competition in their areas would be permitted to diversify. It would
be like requiring Microsoft to re-establish competition in the browser
market before being allowed to enter the instant messenger market. Now
the Telco asses want their carrots without competition. Long-term that's
bad for everyone, although short-term it's great for Telco execs who want
to cash out.
Don't take my word for it. You know how to Google. Check the facts,
then call your congress-borg and tell them "No on HR.1542". Tell
your friends what you find too. They're gonna believe you more than me or
some politico.
I found this link
for emailing Congress over at AISPA. I hope we don't melt their server. (A phone call is more effective.)
Economides' networking arguments apply equally to the damage caused by a monopoly abuser. If one applies his pet theory to both sides of the equation, the pet theory disappears (although it has many real uses) and leaves us with a monopoly abuser in need of injunction and punishment.
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Local loop services were until 1996 government-protected monopolies with government-guaranteed profit margins. No matter what they did, shareholders were guaranteed a 15% (or whatever) return on their capital. This is why our small local telco has a dual OC-48 ring ... in order to make money the owner has to find new and increasingly wasteful ways to spend it.
In order to guarantee 15% return, the taxpayers and ratepayers have been subsidising local service. The extent of the subsidy can be imagined by asking how much an insurance company would charge to guarantee all telcos 15% profit. You'd have to get someone with a lot more time than I have to run the figures throough Black-Scholes but I'd estimate that the ratepayers have invested far more in the local loops than have the nominal owners.
Until the advent of Michael Powell's "Piss On Them" Economics, this situation was acceptable because the ratepayers who had compulsorily invested all this money into their local loops were supposedly protected by PUC's. Now, using the same corrupt strategies that raped taxpayers for S&L and PG&E, the utilities want their cronies to rewrite the stated-mandated contract between the ratepayers and shareholders, such that the ratepayers lose their entire investment and lose service choice and pay higher prices ... and gain nothing in return.
Such would be a victory for corruption over property rights.
Clearly the shareholders' compulsory profits were not all that great for ratepayers either, although not as bad as being cleaned out by Powell. That was one of many good reasons for the 1996 Telco Deregulation Act. Telcos which permitted competition on the local loops would be permitted to diversify into newer and more profitable segments.
It is no surprise that the Telcos would want to both keep their monopolies and abuse them. Sadly, it is also no surprise that our extremely corrupt government officials could be induced to legalise such a travesty.
The Telcos now want to leverage their protected monopolies into enhanced services, stifling competition and innovation, illegally harming the nation. The FCC position on telcos should remain as it was but, for fairness, it should adopt the same position on cable: regulated monopoly last-mile providers versus deregulated content and internet providers with uniform access to the infrastructure.
Michael Powell is not dumb enough to believe the statements he is making. His embarrassed father should ground him.
Now the 800lb gorillas are grown up and want all restraints removed so that they can get down to some serious pillage.
At least Microsoft's monopoly wasn't subsidised up the wazoo. This Telco situation is a no-brainer by comparison.
Massive enforced transfers from taxpayers to campaign donors are the antithesis of individual rights.
Some here have argued that anything would be better than the appalling lack of support coordination under the present system. I refuse to pay protection money to these gangsters. Thousands of ISP's fix problems nationally and internationally every day, usually in minutes. It's only deliberate Telco obstructionism that prevents similar service levels with DSL, where there are usually only two or three parties involved. PUC's have recognised this and fined Telcos tens of millions of dollars, but the fines are much less than the potential profits from Internet monopolies.
Michael Powell argues that the Telcos need help to get DSL rolled out. The Telco representations to the Congress say the same thing. Yet the Telco reports to their shareholders say that DSL roll out is proceeding ahead of schedule. The real problem is that most people in areas served by DSLAM's can't afford DSL service, and the FCC and Congress aim to make DSL more expensive.
If you've been around a while, you know there was a time when ISP's could provide DSL connectivity for about the same price as dialin over "burglar alarm" circuits. The regulators response was to allow Telcos to stop selling "burglar alarm" circuits. The Telcos use exactly the same circuits, with exactly the same equipment to provide T1 service in many areas. The only difference is that they charge more than ten times as much. Do not expect regulators to protect you unless you pay them millions of dollars or get millions of voters to call Congress.
Much has been written of the Telcos desire for unregulated monopoly DSL, yet their aims are actually much broader. Telco flunkies such as Powell, Tauzin and Dingell want unregulated regional monopolies on all Internet delivered using Telco circuits:.
Your local Mom-and-Pop ISP folds when costs increase ten-fold. You have no independent ISP except possibly two-way satellite and national-brand cable. Not only is broadband more expensive but you can say goodbye to $19.95 dialup too. The U.S. will become an Internet backwater, a distinction the FCC has already managed to gain for us in TV picture quality and 2G/3G cell service.But surely deregulation is a good thing? Congress recognised in 1996 that mere deregulation would, because of the power of the Bells, result in a change from regulated monopolies to unregulated monopolies. What is needed to improve service and reduce prices is competition. One can't directly legislate competition, so Congress offerred a carrot. Those Telcos which opened up to allow competition in their areas would be permitted to diversify. It would be like requiring Microsoft to re-establish competition in the browser market before being allowed to enter the instant messenger market. Now the Telco asses want their carrots without competition. Long-term that's bad for everyone, although short-term it's great for Telco execs who want to cash out.
Don't take my word for it. You know how to Google. Check the facts, then call your congress-borg and tell them "No on HR.1542". Tell your friends what you find too. They're gonna believe you more than me or some politico.
I found this link for emailing Congress over at AISPA. I hope we don't melt their server. (A phone call is more effective.)
Economides' networking arguments apply equally to the damage caused by a monopoly abuser. If one applies his pet theory to both sides of the equation, the pet theory disappears (although it has many real uses) and leaves us with a monopoly abuser in need of injunction and punishment.