FCC Declares the Internet A Public Utility

The whole reason that the issue of "fast lanes" and "slow lanes" were on the table is because most internet providers are granted local monopolies by city governments.

How do you address the fact that the deployment of the necessary infrastructure for providing bandwidth services is extremely high, thus making it so that the first one to deploy has an enormous advantage over the second one?

With this in mind, what prevents the following scenario:

  • Company 1 deploys fiber optics in an area with none. Charges 100 bucks a month for the service. Spends a million dollars deploying infrastructure. Over time, the company recovers investment and has two million dollars in excess cash in its arcs. The monthly cost of providing the service per use is 50 bucks, they are making 50 bucks profit for each user.

  • Company 2 STARTS deploying infrastructure in order to provide a competitive service. They have the same million dollars that Company 1 had. They plan to charge 90 bucks a month for service, making 40 bucks for each user.

  • Company 1, seeing its market threatened, threatens company 2 to drops it's prices to 50 dollars a month, breaking even. But they count with the already deployed infrastructure, and they have 2 million in cash in their wallet to withstand the non-profit storm.

  • Company 2, seeing that it only has the initial million dollars to deploy infrastructure and that in order to compete with Company 1 would have to charge 49 dollars for the same service, thus operating at a loss, without any cash reserves, is heavily encouraged to not start the infrastructure building.

  • Even if Company 2 goes through with building the infrastructure, then Company 1 goes through with it's plans and drops prices to "break even" levels.

  • Company 2 is effectively driven out of business.

  • Company 1 has a monopoly.

  • As time goes on, Company 1 has more and more cash hoarded which enables it to threated to do this for a longer time, thus consolidating monopoly.

See, I'm from Argentina, and during the 90s we experimented with Telco Deregulation, even in a better situation than the above described because no one had any initial advantages (the market was opened for everyone at the same time) and what ended up happening is the following:

  • Company 1 and Company 2, BEFORE getting into an investment infrastructure war, sit down and break up the country into local monopolies. They draw territories, agree to stay out of each other's way, and charge whatever the fuck they want.

  • If a competitor comes around, they use their already consolidated wallets and combined power to drive them out of business.

  • Which never happens, of course, because Telco is a multi-million dollar investment that no one is going to undertake under such dangerouns conditions.

  • Monopolies are consolidated, even in a scenario where no one has an "initial advantage".

How does your position address these issues exactly?

/r/Objectivism Thread