Re: The FCC is planning new net neutrality rules. And they could enshrine pay-for-play. - The Washington Post
On 4/24/2014 11:01 PM, Everton Marques wrote:
On Fri, Apr 25, 2014 at 12:44 AM, Patrick W. Gilmore <patrick@ianai.net>wrote:
On Apr 24, 2014, at 23:38 , Larry Sheldon <LarrySheldon@cox.net> wrote:
Regulating monopolies protects monopolies from competition.
Monopolies can not persist without regulation.
You are confused.
I think Mr. Sheldon is pointing out this:
Thank you. [more comment below]
--xx-- The biggest myth of all in this regard is the notion that telephone service is a natural monopoly. Economists have taught generations of students that telephone service is a "classic" example of market failure and that government regulation in the "public interest" was necessary. But as Adam D. Thierer recently proved, there is nothing at all "natural" about the telephone monopoly enjoyed by AT&T for so many decades; it was purely a creation of government intervention.
Once AT&T's initial patents expired in 1893, dozens of competitors sprung up. "By the end of 1894 over 80 new independent competitors had already grabbed 5 percent of total market share … after the turn of the century, over 3,000 competitors existed.[55] <http://mises.org/daily/5266/#note55> In some states there were over 200 telephone companies operating simultaneously. By 1907, AT&T's competitors had captured 51 percent of the telephone market and prices were being driven sharply down by the competition. Moreover, there was no evidence of economies of scale, and entry barriers were obviously almost nonexistent, contrary to the standard account of the theory of natural monopoly as applied to the telephone industry. (...) The theory of natural monopoly is an economic fiction. No such thing as a "natural" monopoly has ever existed. The history of the so-called public utility concept is that the late 19th and early 20th century "utilities" competed vigorously and, like all other industries, they did not like competition. They first secured government-sanctioned monopolies, and *then,* with the help of a few influential economists, constructed an *ex* *post* rationalization for their monopoly power. --xx-- The Myth of Natural Monopoly http://mises.org/daily/5266/
I don't know what got me to thinking about it earlier today but I recalled when I started at the telephone company in Los Angeles there was a pitch made early on that in earlier days a business in Los Angeles had to have several telephones on desks to be able to talk to all of their customers. Which was true ONLY because regulation required that each telephone line terminate in an instrument owned by the providing company. Absent that one regulation, businesses would have invented multi-line instruments a lot earlier than was the case. There would still be some other problems like interchange traffic between companies, but I suspect that some entrepreneur would have (or maybe did) install two or more switchboards within lord reach of each other. (The high school I went to in the 1950s had a very complete non-Bell System telephone system on-campus. In a small office off the Main Office were two identical cord boards along with placards prohibiting connections between the two boards--which were ignored unless there was a telephone man in the office. -- Requiescas in pace o email Two identifying characteristics of System Administrators: Ex turpi causa non oritur actio Infallibility, and the ability to learn from their mistakes. (Adapted from Stephen Pinker)
I beg your indulgence.. On Apr 25, 2014, at 0:29, Larry Sheldon <LarrySheldon@cox.net> wrote:
...On 4/24/2014 11:01 PM, Everton Marques wrote:
On Fri, Apr 25, 2014 at 12:44 AM, Patrick W. Gilmore <patrick@ianai.net>wrote:
On Apr 24, 2014, at 23:38 , Larry Sheldon <LarrySheldon@cox.net> wrote:
Regulating monopolies protects monopolies from competition.
Monopolies can not persist without regulation.
You are confused.
I think Mr. Sheldon is pointing out this:
Thank you. ... [more comment below]
--xx-- ... I don't know what got me to thinking about it earlier today but I recalled when I started at the telephone company in Los Angeles there was a pitch made early on that in earlier days a business in Los Angeles had to have several telephones on desks to be able to talk to all of their customers.
Which was true ONLY because regulation required that each telephone line terminate in an instrument owned by the providing company.
The above statement contains an error that obscures the issue. As someone who also recalls this state of affairs, I must point out that it was the respective telcos' "regulation" - not government regulation in any sense - that prohibited any equipment but their own from being attached to their lines. In other words, those telcos were behaving anti-competitively with all the power they could muster to do so (surprise!) and also doing whatever they could to obscure that fact. Regulation was demanded by consumers - in order to protect them from the ridiculous results of this assertion of privilege on the telcos' part. To Mr Sheldon, this resulted in regulation (by government) creating a monopoly. I believe Mr Gilmore might argue that well-crafted regulation requiring interconnectivity as a public good would have prevented both the "need" for monopoly-creating regulation and also would have protected the public from the inherent tendency toward monopoly as vendors do battle to protect their turf rather than provide the best possible outcome for their customers.
Absent that one regulation, businesses would have invented multi-line instruments a lot earlier than was the case.
So THIS argument is completely off the mark. In fact, one could say a regulation was needed which would have forbade the telcos' anti-competitive behavior, and then the competitive marketplace could have played out further. Instead, what we got - partly to address some of the other concerns like interconnection - was a set of regulations that favored one (well-connected) vendor, leading to a monopoly. So in some respects, each Mr Sheldon and Mr Gilmore are both right. No surprise there, either, as I have immense respect for both. I tend to lean towards Mr Gilmore's position, though, in that I personally hold that powerful vendors have a natural positive feedback tendency towards monopoly if they can attain it, and regulation that is wisely and truly customer-centered can prevent much damage; I side with Mr Sheldon only insofar as I observe that one tactic of a determined monopolist is to engage compliant regulators to more firmly ensconce them, and I believe that's a Bad Thing. Blessings.. ..Allen Kitchen, Old Guy
Allen McKinley Kitchen (gmail) wrote:
... I don't know what got me to thinking about it earlier today but I recalled when I started at the telephone company in Los Angeles there was a pitch made early on that in earlier days a business in Los Angeles had to have several telephones on desks to be able to talk to all of their customers.
Which was true ONLY because regulation required that each telephone line terminate in an instrument owned by the providing company.
The above statement contains an error that obscures the issue. As someone who also recalls this state of affairs, I must point out that it was the respective telcos' "regulation" - not government regulation in any sense - that prohibited any equipment but their own from being attached to their lines. In other words, those telcos were behaving anti-competitively with all the power they could muster to do so (surprise!) and also doing whatever they could to obscure that fact.
Regulation was demanded by consumers - in order to protect them from the ridiculous results of this assertion of privilege on the telcos' part. To Mr Sheldon, this resulted in regulation (by government) creating a monopoly. I believe Mr Gilmore might argue that well-crafted regulation requiring interconnectivity as a public good would have prevented both the "need" for monopoly-creating regulation and also would have protected the public from the inherent tendency toward monopoly as vendors do battle to protect their turf rather than provide the best possible outcome for their customers.
Actually, it goes back further than that. In the really early days, in NY, there were lots of phone companies, and a business would have to have one of each to serve all its customers. And long distance was just beginning - expensive, requiring operator intervention - and AT&T long lines wouldn't necessarily connect to non-Bell system players. It was basically a mess. Bell kept buying up lots of other telcos, and integrating them into a more uniform network (remember "The Bell System") - and eventually ran afoul of antitrust issues. Bell went to Congress and proposed a deal - let us buy up everyone, we'll build an integrated system, including interconnection to the independents, and you get to regulate us to balance out our monopoly power. Email provides an interesting contrast. In the early days, the early timesharing vendors sold email as a feature, and the size of their user bases as a competitive advantage. Along came Barry Shein, and the World - pretty much forcing open some limited public access to the early Internet, followed by Compuserve connecting to Internet email, and suddenly market pressure pretty much forced everybody to connect their private mail systems to the Internet. Miles Fidelman -- In theory, there is no difference between theory and practice. In practice, there is. .... Yogi Berra
participants (3)
-
Allen McKinley Kitchen (gmail) -
Larry Sheldon -
Miles Fidelman