Thursday, October 22, 2015

Time to stop whining about lack of competition and build national telecom infrastructure

No 'Bundle' of Joy: Cost of TV, Internet and Phone Service Rising - NBC News: "What we're finding is that consumers in the U.S. pay more for less … than their peers around the world," said Sarah J. Morris, senior policy counsel at think tank New America's Open Technology Institute.

In a 2014 study, the institute found that home broadband connectivity at every speed was more expensive on average in the U.S. than in Europe. It also found that major American cities lag in both speed and pricing compared to overseas counterparts like Seoul, Hong Kong, Paris and even Bucharest, Romania.

"A lot of this breaks down to competition … even though the ISPs like to claim the market for broadband Internet access is competitive, when you really break it down, it's not," Morris said. "This exacerbates low speed for high cost."

Morris is correct. Telecommunications infrastructure and its vertically integrated, bundled service offerings by telephone and cable companies is a naturally monopolistic market. But complaining that a monopolistic microeconomy lacks competition isn't going to make it competitive. It's about as productive as complaining about the weather.

An example of a highly monopolistic form of infrastructure is roads and highways. They cost so much to build and maintain that with the exception of some privately operated toll roads, most are owned and operated by the government. Having a private competitive market with many road builders and operators would be uneconomic and wasteful. For drivers, it would make no sense to have a choice to take Road A, Road B or Road C from a given point to a given destination. One well maintained road with sufficient capacity would do just fine. Same thing with Internet service. One fiber highway and many fiber trunks and lines reaching all American homes, schools and businesses -- a national telecommunications infrastructure -- is what America needs, as I argue in my recently published book Service Unavailable: America's Telecommunications Infrastructure Crisis.

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