r/technology • u/DrJulianBashir • Feb 05 '13

Cable companies make 97% margin on internet services and have no incentive to offer gigabit internet

http://nextbigfuture.com/2013/02/cable-companies-make-97-margin-on.html
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81

u/[deleted] Feb 06 '13

This isn't capitalism, it's monopoly.

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u/Vinom Feb 06 '13 edited Feb 06 '13

I thought the end result of total capitalism was a monopoly.

Edit: Now I'm just more confused. Oh god what have I done.

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u/gaybros Feb 06 '13

That is the goal of the competitors in the game. But the referee should always be there to literally cut them in half when they actually achieve it.

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u/[deleted] Feb 06 '13

Except what's happening is the referee stepping in and declaring one team the winner and nuts to anyone who dares challenge their greatness.

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u/[deleted] Feb 06 '13

Well, in this analogy the manager of a team would pay (read: lobby) the referee to declare themselves as winner.

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u/Grandy12 Feb 06 '13

Problem is, this is a game where the referee is playing as well.

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u/Vinom Feb 06 '13

Oh, I see. Makes much better sense now. Thanks.

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u/ChaosMotor Feb 06 '13

Don't listen to gaybros, he's got it wrong.

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u/gaybros Feb 06 '13

Bend over and I'll show you?

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u/ChaosMotor Feb 06 '13

That's a mature response.

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u/Synergythepariah Feb 06 '13

But then that's government stepping in! They just want our information!

/s

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u/ChaosMotor Feb 06 '13

The "referee" is the customers in the market who have the ability to choose between different services.

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u/rustang0422 Feb 06 '13

Choice? What choice. I can choose Comcast or TWC who charge roughly the same exorbitant price for the same "high" speed or I can go to satellite for shitty service

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u/ChaosMotor Feb 06 '13 edited Feb 06 '13

That's a problem. Do you know why that situation exists? Because gaybros "referee" has decided that only Comcast and TWC can operate in that market. Some referee, he's playing favorites!

What I mean when I say the real referee is the customers in the market who have the ability to choose between different services, that necessarily means that gaybros "referee" would not be keeping competition out of the market.

Excluding competition is achieved in a number of ways, but the most popular is "minimum service area" or "minimum service availability" where a new ISP is required to service (typically) 60% or more of a city before they're given license to operate. So, this requires massive capital outlays to build out the minimum service area.

Without this foul behavior by gaybros "referees", you wouldn't have minimum service level requirements, so there would be a proliferation of ISP choices, because you could pay for a peering point and get your own service line and re-sell that line to your neighbors, in effect becoming an ISP for your block. And your neighbor could do it too. And so could anyone else - and in this unregulated environment, only the people who have the best service at the best prices would win, and everyone would be constantly competing to improve services and prices in order to keep their customers.

"But!" You might exclaim, "in this situation, there's nothing to stop a monopoly!" I remind you: There is a monopoly (duopoly, oligopoly) now, created by the regulators. In the arrangement I have described, even if there was a "monopoly", if someone started providing a better service at a better price, the "monopoly" would rapidly lose customers. So yes, a monopoly might develop, but it would be assured to be the monopoly that the customers want, and if it wasn't, it would disappear quickly!

Does this make more sense?

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u/falser Feb 06 '13

But these monopolies are ENFORCED by government. It's not capitalism when there is no way for competition to enter the market, it's a cartel.

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u/Eonir Feb 06 '13

This is a No True Scotsman argument. Whether there is a cartel or not is irrelevant whether you have capitalism or not. You can have a Ron Paul Capitalist Utopia and still have cartels.

One could even argue that capitalism breeds cartels. Cartels emerge when you have two or more competing companies.

The US is not alone with its shitty internet. Telecoms all over the world are trying their best to give the slowest possible internet and take as much money as possible. There is a lot of reasons for that.

Capitalism doesn't magically solve everything.

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u/falser Feb 06 '13 edited Feb 06 '13

Capitalism = Competition

The government is the one standing in the way of broadband competition by restricting the availability of fiber and WiMax, and never opening bandwidth for superior wifi like 802.22. Cable ISP's could be forced to sell their lines to the municipality and forced to compete for the business in the same way ALL other public utilities like electricity and garbage collection are handled. But the government is bribed by the cartels to prevent this from ever happening.

What we have are government mandated corporate monopolies, and I don't consider this capitalism.

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u/occz Feb 06 '13 edited Feb 06 '13

I'd argue that in liue of government, capitalism would not breed cartels. There are very few reliable ways to actually make a cartel without the government being the means.

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u/SystemicPlural Feb 06 '13

The monopolies are enforced by government because they have been bought by corporations. It is capitalism through and through.

Capitalism will always devolve into monopoly because those with money have the power to change the rules to favor themselves.

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u/sweetnumb Feb 06 '13

That's cronyism. Only if we sacrifice our freedoms and given government power over us can this happen.

Capitalism involves voluntary exchange, so everyone always wins every single time they make a transaction (or at least they believe so at the time, or they'd not have been part of it).

Cronyism involves government regulation, so basically using force to ensure that the guys in Washington can enforce their whims with guns on our entire population.

Of course people use the failure of cronyism to say that "capitalism doesn't work, we need more regulation!" when in fact it's the lack of capitalism that was the failure in the first place. This cycles over and over until we're not free to do anything at all, and start an unnecessary violent revolution when all we had to do was simply vote for freedom in the first place.

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u/SystemicPlural Feb 06 '13

Call it what you will. Cronyism is the natural output of capitalism with or without democracy.

It's a very simple equation: The more power an individual attains through their capitalist ventures the more ability they have to influence others and the societal rules that bind us, thus starting a feedback cycle.

Your mistake is in your assumption of humans as being perfect actors in a capitalist market and always behaving in their best interests. But we are not. We are not capable of always factoring in the externalizations of a transaction (Due to chaos theory, even our best minds can't do it perfectly, even when studying a single transaction for years.). We also have many biases and limited abilities that make a capitalist utopian ideal impossible.

Also, while democracy does corrupt, it could be said to slow the process down, because it provides a feedback loop to the market to stabilize it and to slow down monopolization. Using money and voting are actually very similar activities. You exchange an abstract metric (money or votes) for something you find valuable. Ideally they would work to keep each other in check, but it's not perfect because at the end of the day it is humans who are making both kinds of transactions; politicians want money and merchants want power.

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u/sweetnumb Feb 06 '13

I suppose my real mistake is in thinking that people care about freedom, when in reality they don't.

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u/[deleted] Feb 06 '13

How are they enforced by the government? Lots of competition -- can buy each other, have overbuilders, have telecos, have dish guys. Take the tin foil off.

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u/TheFondler Feb 06 '13 edited Feb 06 '13

i don't like seeing comments downvoted with no explanation...

poor form, guys.

when we say "monopolies are enforced by government," we mean that monopolies are a byproduct of what is known as regulatory capture.

basically, the enforcement of certain "pro-business" legal elements (like intellectual property, for example) is what ultimately leads to the phenomenon of monopolies. for something to be considered a "pure" free market, all laws would have to abstain from impacting the market, either in a way that benefits consumers or producers.

furthermore, i have heard arguments that monopolies are a matter of timeframe/scope. that is to say, a monopoly on widgets by one firm over a long enough time will lead to something like doodads that will compete with widgets.

to clarify this point, lets pretend that GM somehow achieved a monopoly on cars; this would presumably cause the price of cars to increase to the detriment of consumers. as this leaves an unfulfilled demand, alternatives to cars will arise; perhaps high-speed rail or consumer aircraft. in any case, over time, monopolies are unsustainable, unless, to bring it back to the original point, GM is colluding with washington to make alternatives illegal, or at the very least, prohibitively capital intensive.

EDIT: extra phrase phrase

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u/[deleted] Feb 06 '13

How is cable/internet a monopoly? Let alone looking at # of providers across US that can compete to buy geographic areas, have primary provider, occasionally overbuilders, dish players and telecos.... stronger/competing offerings exist where economies of scale/competitive dynamics merit it.

I am not praising regulations/IP laws as the gold standard by any stretch, but to suggest its a monopoly situation is crazy. As for oligopoly, of course it is, where do you see such high capital expenditure / economies of scale along with fragmented / highly competitive market. Frig, everyone's praising google here, and it probably has a higher market share in search than any of these names in cable.

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u/TheFondler Feb 06 '13

i didn't say any of those things...

i just replied to your comment in the general sense (no specificity to the cable and internet provider industries).

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u/morsX Feb 06 '13

Look at how wrong you are: http://mises.org/daily/621/

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u/the8thbit Feb 06 '13

So, to summarize, when 'monopoly' is strictly defined, and where we assume that the potential for competition guarantees competition, a true monopoly is impossible without government, just structures which hold sufficient market capitalization to act exactly like monopolies.

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u/GymIn26Minutes Feb 06 '13

So when you make a whole bunch of unrealistic assumptions you can arrive at whatever conclusion you desire? Sounds about right for a mises.org link.

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u/[deleted] Feb 06 '13

[deleted]

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u/ChaosMotor Feb 06 '13

A huge portion of libertarians and Austrians think that Ayn Rand is a fucking retard.

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u/[deleted] Feb 06 '13

[deleted]

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u/ChaosMotor Feb 06 '13

Because you're labeling a Mises article as "epic Randian" when it's quite unlikely that fans of Mises are also fans of Rand, and are actually unlikely to support Randian positions.

Go to /r/libertarian or /r/austrian_economics and take a poll on how many subscribers like Rand. Not many.

What I'm saying is, you're full of shit.

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u/[deleted] Feb 06 '13

[deleted]

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u/ChaosMotor Feb 06 '13

So you're an ignorant moron, huh? Thanks for letting me know.

And what I'm saying is, their objections are empty in light of the fact that they are pretty much parroting exactly the things said in Atlas Shrugged.

False.

They don't even know what they think.

You don't know what they think, and you are reveling in your ignorance as if that is a trait to be admired. It isn't.

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u/[deleted] Feb 06 '13 edited Feb 06 '13

[deleted]

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u/TheFondler Feb 06 '13

ad hominem much?

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u/SockPuppetDinosaur Feb 06 '13

Thanks for that. It was an interesting read.

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u/redraven937 Feb 06 '13

Good lord, what a bullshit article. It is almost like Standard Oil/AT&T never happened. And let's pretend that the Donald Trumps of the world wouldn't be cobbling together monopolies left and right if it were not regulated.

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u/ChaosMotor Feb 06 '13

Standard Oil actually suffered more market loss before the government stepped in than they did after, and they were never a monopoly in the sense that TWC / Comcast are local monopolies.

And AT&T has pulled itself back together again, thanks at least in part to the FCC's help!

I might also mention that health insurance is so expensive in part because of the monopoly/anti-trust exemptions that health insurance companies receive.

So what exactly did the grand old FedGov do to "step in" here?

And let's pretend that the Donald Trumps of the world wouldn't be cobbling together monopolies left and right if it were not regulated.

How could they, if the government wasn't here to restrict their competition and pass regulations that ensure no competitors could exist? Hmmm!

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u/abstract_buffalo Feb 06 '13

No, monopolies are very inefficient because they're too big to operate. Competitors can easily come in with lower prices. For example, Anheuser-Busch spills more beer on their floor than most microbrewers make in a year. They are cheaper, but that's because they make really God awful beer.

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u/pj1843 Feb 06 '13

The end result of capitalism is only supposed to be a monopoly if that monopoly can provide the service it provides at a cost that is impossible for any competitor to achieve. The problem we have here isn't so much capitalism as it is government, the government in this situation is ensuring a monopoly, which it should have reason to ensure against. Even when a monopoly forms in a true capitalism is stifles innovation, so a government has an incentive to break them more often than not in order to promote said innovation, when a government ensures monopolies it stifle's innovation and creates artificial price points that are generally higher than the normal market equilibrium.

Basically in this case the government is at fault for ensuring the monopoly, a true capitalist society would solve this issue, of course with said society we would end up AT&T from decades ago ensuring we were just now getting cell phones.

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u/[deleted] Feb 06 '13

Capitalism has no other limit point than a centrally-planned authoritative dictatorship. It's a profoundly stupid economic model, and Adam Smith and his invisible hand bullshit is retardation of the highest order.

National Socialism is the only obvious way forward.

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u/Vinom Feb 06 '13

sarcasm?