Study Finds Regulation Good For Telecom Customers

jfruhlinger writes "Customers are always better off when government bureaucrats get out of the way and let the market work, right? Well, maybe not in all cases. As described at ITworld.com, a recent study compared the regulatory regimes and telecom environments in various European countries. The study concluded that in countries where regulators had more power to levy fines and punish monopolistic behavior, customers paid less and got more services." From the article: "The report, conducted by Jones Day and Strategy and Policy Consultants Network Ltd., showed that investment in telecommunications, which leads to better services for end users, is lower in countries where there is little competition."

You're kidding, right?

[KingSkippus]

Customers are always better off when government bureaucrats get out of the way and let the market work, right?

Is the submitter on drugs? The reason most industries that are regulated are regulated is precisely because the market doesn't work for that industry!

When natural gas was deregulated in my state, prices skyrocketed and a bunch of natural gas marketers (mine included) began outright stealing money from their customers. (Long story.) When cable television was deregulated, my cable prices skyrocketed and I got less and crappier channels. (Thank god for satellite, which itself is regulated to prevent it from competing with cable companies on their own terms.) After 9/11, the airline industry, which isn't regulated, liked the government enough to go begging for a $5 billion bailout. What did they do with the money? Well, Delta Airlines used $17.3 million of it to give executives bonuses [house.gov] while losing $1.3 billion more and cutting 16,000 jobs. But when anyone bought up the thougt of regulating the industry, god, you would have thought we were communists.

And don't even get me started on the phone company [slashdot.org].

A healthy market depends on well-regulated businesses. If anything, I would say that customers are hardly ever better off when government gets out of the way and let the market work in an unfettered manner. The only exceptions are when the government bureaucrats are working in collusion with the industry, a sad state of affairs that is unfortunately becoming more and more common.

Re:You're kidding, right?

[Money for Nothin']

After 9/11, the airline industry, which isn't regulated,

What??! Does the FAA [faa.gov] not exist in your parallel dimension or something?

Re:You're kidding, right?

[Cl1mh4224rd]

What??! Does the FAA not exist in your parallel dimension or something?

The FAA regulates the airline industry in about the same way the FCC regulates television and radio...

Re:You're kidding, right?

[Cl1mh4224rd]

Also...

Airline Deregulation Act of 1978 [loc.gov]

Re:You're kidding, right?

[Money for Nothin']

The FAA regulates the airline industry in about the same way the FCC regulates television and radio...

So what, if somebody comes on board a plane and ax-murders a dozen people, the FAA won't bat an eyelash, but if a woman flashes a tit to the passengers, she's immediately thrown off the plane and fined $550,000? :P

Don't kid yourself; the FCC regulates the hell out of TV and radio. Far too much so. The FAA at least regulates airlines on the stronger basis of public safety and private transport over private

Phobia

[Bob_Robertson]

Folks who talk about deregulation or decriminalization being "dangerous" do so because they fear their neighbors. They project that because some "government" wouldn't be holding a gun to other peoples heads, those people will act in irresponsible and evil ways. It is a very pervasive irrational belief.

A perfect example: "Imagine how things would be if there wasn't regulation on safety and repair."

Government regulation is always double-edged. First, it creates bureaucratic overhead, both for the "industry" r

Re:Phobia

[KingSkippus]

Boy, you really are living in a dream world. I admire your idealism, and I wish I could share some of that Utopia. Unfortunately, I live in the real world where some folks just aren't quite of pure heart.

Me wanting government regulation has nothing to do with me fearing my neighbors. It has to do with me fearing corporations.

How many scandals have to go down before folks like you realize that for-profit corporations exist for one purpose and one purpose only: to make money. If they can make more money by killing their customers than not, they'll kill their customers. (Witness the tobacco industry.) If they can do it by hacking into their customers' computers, they'll hack into their customers' computers. (Witness Sony.) If they can do it by projecting a squeaky-clean image, they'll project a squeaky-clean image. (Witness Google.)

Why do we need regulation then? Because somewhere around the dawn of the age of mankind, people discovered that one really effective way to get people to do stuff you want them to (e.g. to give you money, which is, remember the sole purpose of a corporation) is to lie.

There are thriving businesses that makes lots of money that exist for the sole purpose of helping other corporations lie about things. Lawyers, accountants, public relations firms, advertising agencies... the list goes on and on. Why do these businesses exist? So that other companies can pay them some money to make a lot more by lying about things.

Given a choice between making an honest buck or making a dishonest two, very rarely will a corporation choose the former. My own company (a Fortune 100) has gotten in trouble many times over the years, especially the last twenty or so, for doing things that everyone knows is wrong. But it still goes strong, because it pays hundreds of millions of dollars every year to some of those companies listed above to convince everyone that it's an all-American company. Because Americans have such a frustratingly small attention span and don't recognize important things as being important, they keep getting away with it.

So how do us average schmoes out here keep all these unetical companies from absolutely stripping us dry? Well, if we tried your way, I suppose we could depend on what little information we get through investigative journalism and the scant few whistleblowers that are out there to help protect us from these corporate lying bastards, but I kind of like the thought of not being insane. No, a better idea would be to set up some government agencies with the collective power of the American consumer to act on our behalf to serve as the representative of our interests. Thus, we have organizations around like the FAA, the USDA, the FTC, and all the others that are supposedly looking out for us because it's impossible for us, individually, to look out for all the millions of others who want to screw us over and rob us blind every day.

There are two serious problems with the system, though. The first, I hate to say, is people like you. People who give corporations a lot more credit than they deserve, more credit than they've historically earned. They think that the public has some sort of magical insight to see past multi-million dollar ad campaigns to know when corporations are being evil and when they aren't. They think that if a person gets food poisoning because some corporation ran the numbers and figured out that it could make more money by poisoning some small percentage of its customers, it's the sick person's fault for not personally sending every morsel they eat to a lab to be tested. No, they're "irresponsible consumers" who deserve what they get, right?

The other problem is that a lot of the very same government agencies that we set up to protect us are now working for the corporations they're supposed to be protecting us from. That's why you have stuff like energy policies being written by oil companies and DRM laws being written by the RIAA. This i

Re:Phobia

[That's Unpossible!]

I only wish that there were people like me willing to weild the power of government in the way it's supposed to be wielded: as a larger representation of our interests.

You mean your interests, which incidentally, don't align with my interests, which is why we need less government and more freedom.

Fear the tyranny of the majority.

Nice in Theory

[hotsauce]

The airline's insurance company does not want to pay out, neither do passengers want to die. Therefore, they will make efforts to be safe and reliable in order to get more business. It might indeed raise the price of a ticket on a reputable airline, but that price is paid only by those who choose to use that service. No tax-supported bureaucracy, no regulatory overhead. The actual "costs" to "society" are reduced dramatically, and there are more resources available to do something productive.

That sounds great in theory, but so did a lot of things that fell apart in practice. In particular, you are assuming airline executives know exactly how much to cut in order to be perfectly competitive, the execution will be perfect, and they will never be tempted to cut just a bit more to survive against a competitor. Otherwise, you are assuming that anybody would want to be on the planes of the airline that does go too far and is eliminated by "the invisible hand of the perfect market". Finally, you assume that the market does not tend towards a monopoly. Unfortunately, history and present day are littered with counter-examples to your assumptions.

Interestingly, nothing in your post addresses the study under discussion, which itself finds yet another hole in "perfect market" theories.

Re:Nice in Theory

[Bob_Robertson]

but so did a lot of things that fell apart in practice.

Really, when?

in order to be perfectly competitive, the execution will be perfect, and they will never be tempted to cut just a bit more to survive against a competitor.

Putting words in my mouth doesn't work. Not only didn't I say that, your use of the words "perfectly competitive" is the antithesis of what I know to be true.

But in order for regulation to work, the regulators would have to know all these things you say is impossible for the airline execu

Re:Phobia

[rsheridan6]

Folks who talk about deregulation or decriminalization being "dangerous" do so because they fear their neighbors. They project that because some "government" wouldn't be holding a gun to other peoples heads, those people will act in irresponsible and evil ways. It is a very pervasive irrational belief.

On Planet Libertarian, people only want to enrich themselves through the Free Market, which ultimately benefits us all. Meanwhile, back on Planet Earth, the world is full of irresponsible, idiotic, or just plain evil people who are out to do harm to others. Hell yes, I want the government holding a gun to the head of my neighbors keeping them from driving drunk down my street, looting my house, contaminating my water, etc, etc.

It's actually very easy to imagine deregulation. No more excuses that "we were following regulations, so you can't sue us." The airline's insurance company does not want to pay out, neither do passengers want to die. Therefore, they will make efforts to be safe and reliable in order to get more business. It might indeed raise the price of a ticket on a reputable airline, but that price is paid only by those who choose to use that service. No tax-supported bureaucracy, no regulatory overhead. The actual "costs" to "society" are reduced dramatically, and there are more resources available to do something productive.

This is wrong in several ways:

1. You're not describing deregulation - you're describing regulation by the courts. Courts have a non-zero cost, and lawyers are quite expensive. Probably more expensive than the regulators we have now. And what are the courts but a gun to your neighbors head, anyway?
2. There is also a non-zero cost to knowing all of the "good" brands and companies. In your perfect libertarian world, I have to do research to buy a damned toaster if I don't want it to catch on fire and burn my house down, or buy an expensive one. In my imperfect world, I can buy the cheapest toaster at Wal-mart, confident that it meets safety standards.
3. Somebody else's safety choices can affect me. When the apartment below mine caught fire due to faulty wiring, it affected me. If a driver chooses to buy an unsafe vehicle and we have a collision, it's my problem, not his choice. Even in your airplane example, somebody is going to be on the ground when it crashes.
4. It's not always possible to know which businesses are reputable and which ones aren't. A "good" brand could become a "bad" brand if some manager decides he's going to throw away the companies reputation to increase this quarter's profits, and it'll take awhile to figure that out even if you do your homework. It wasn't long ago that Arthur Andersen and Enron were considered reputable.
5. Finally, you're probably lying. People who think like you are generally in favor of tort reform, which would eliminate your idea of regulation by the courts.

Re:You're kidding, right?

[Auckerman]

I would like to point out that everything you noted can fall into either infrastructure or communications that rely on expensive to create physical objects. The kinds of things that people rely on in order for a modern society to continue to be effective. I would say, well duh. For this kind of thing, it's far too easy for monolopies to form (whether one company or 15 companies colluding on price).

A clear majority of companies fall outside of these categories and ultimately don't need to be regulated, outside of saftey issues. I think that is what the sound bite referenced by the submitter is refering to. It's a shame people use sound bytes without understanding them.

Re:You're kidding, right?

[jfruhlinger]

dude, did you, like, read the rest of the thing I submitted. I was being sarcastic. As the thrust of the story indicates.

jf

Re:You're kidding, right?

[Bob_Robertson]

I'm impressed. You give an example of someone abusing a government hand-out, and call that a problem with deregulation. Why isn't it a problem of having a government hand-out in the first place?

A healthy market depends on freedom. Businesses that do not serve their customers fail. Government regulation prevents those failures, thus insulating businesses from the real repercussions of their choices.

Your example of Delta Airlines is a perfect example.

Every intervention causes distortions, which are used as ex

Re:You're kidding, right?

[rs79]

"Is the submitter on drugs?"

Seriously. Plus, something smells funny. Jones Day is the lawfirm that got ICANN into debt. They gave them $3M credit and kept going. ICANN still owes them money. Without reading it I'd expect subtle implications that Jones Day should "be involved" and "get lots of billable hours".

This of this report as an MS "windows is better than Linux" paper.

You were getting low on TP, right?

Re:You're kidding, right?

[thelizman]

If by 'your state" you're referring to California, then your argument is poorly founded. California never 'deregulated' anything, lest of all their energy industry. What they did do is release price controls on the demand side, so that power companies were able to pay lower rates. They did not release price controls on the demand side, so power producers in California were suddenly required to charge way more than their free-er market competitors in Arizona, Nevada, New Mexico, and Texas. So, they stopped p

Re:You're kidding, right?

[quanticle]

I agree that the free market has its pitfalls. However, excessive bureaucracy in a regulated environment can and often does choke out innovation and change.

For example, in India, it can take up to 3 years for one to get a phone line installed in his or her house, because of all of the bureaucracy and red tape. The phone company is a regulated government monopoly. The situation has gotten so bad that private individuals are finding that its easier and more profiable to string their own phone lines, despi

Re:You're kidding, right?

[jambarama]

I think you are a bit mixed up. All the examples you cite are called "public goods" meaning they SHOULD be regulated because the costs of putting up duplicate power cables is enough to grant a "natural monopoly" to the imcumbent. This incumbent can rape all of its customers for the maximum allowable. This is bad, thus regulation.

Barring a natural monopoly (where costs of infrastructure or development are so high, once someone gets there it deters all other entry) and an industry with significant external

Re:You're kidding, right?

[ultranova]

The reason the free market gets away with such crap is probably due to consumer apathy and ignorance.

More to the point, quite a few free-market fundamentalists make the mistake of assuming that people are well-informed of everything that has something to do with them, and that they have the strength to do everything in their power about it. Both of these assumptions are wrong.

To be well-informed of something, you need to follow it. This requires time. You only have a limited amount of time on this Earth, so using it is an investment. Constantly watching industries for the slightest hint of foul play is a bad investment. It makes more sense to invest that time on your work, your family, your personal life; the return value is much higher.

Same goes for strength. Everything you do requires some of it. You only have a limited supply. It simply doesn't make sense to use it to regulate industries, when a centralized regulation agency (government) can do the job adequately.

So no, consumers aren't apathetic and ignorant. They are human beings with far more important (to them) things to do with their time and energy.

I guess that all this is saying that free market is a usefull tool to manage economy, but it is in no way an ideal state, and can never be as long as we remain humans with limited time and strength.

Re:You're kidding, right?

[sribe]

More to the point, quite a few free-market fundamentalists make the mistake of assuming that people are well-informed of everything that has something to do with them, and that they have the strength to do everything in their power about it.

And free-market fundamentalists seem to love to refer to an MIT economics simulation which showed that maximum overall economic growth was achieved when business was unregulated. Well, so they claim. The problem is that the simulation made 11 (IIRC) fundamental assumptions about people and markets. Some of the assumptions were, for instance, that consumers had perfect knowledge of the products they were buying (FTC, anyone?), that companies paid the entire cost of manufacturing products including resource depletion (EPA, anyone?), that the prices charged to consumers included the full cost of the product IOW that some products weren't used to subsidize others (anti-trust law and the Justice Department, anyone?), and so on. Basically, each of the 11 preconditions would require a big powerful government agency with enforcement powers in order to make it so. Properly interpreted, the study did not ever suggest that unregulated capitalism produced the greatest gains in overall wealth. It suggested that regulations beyond those necessary to enforce basic honesty and fairness in competition slow economic growth.

Re:You're kidding, right?

[DJCF]

The problem is that for some industries a free market simply doesn't work. For example, it doesn't make sense to have five different gas pipes comming to your house, five different roads leading to your drive, and five different telephone lives either. For some things, the free market is the best solution. For others, a government-regulated body is better.

Re:You're kidding, right?

[vanyel]

What people seem to forget is that a free market doesn't mean anarchy: if you have anarchy, you don't get competition, you get power struggles doing their best to avoid competition. It's not "regulation" to ensure a fair playing field any more than it's "regulation" to say you can steal from your neighbor. It should also be pointed out that the reason wireless in particular took off in Europe is because of the government monopoly on the land lines. "We're the phone company, we don't have to care" Wirele

Sometimes the Free Market leads to Monopolies

[Valdrax]

You're making an argument for monopoly.

Not really. He's talking about utility companies. Utility companies are the perfect example of an industry that if left to the free market will inevitably contract into a monopoly. The cost of entry into becoming a utility company is enormous, and it's very hard to convert customers from other businesses. In a deregulated water utility market, nothing forces the incumbent to share water pipes with competitors. If I want to switch, then the new company has to build

Re:You're kidding, right?

[SirSlud]

Without a strong government, you cannot enforce private property laws, the one single thing a government *must* do in a capitalist state. Without private property laws, you cannot have investment. Without investment, you cannot have a market. Without a market, or a government, you get .. well, 3rd world countries.

If you're looking for a toothless government where private interests rule, there are plenty of countries on the planet that can be of service to you. Just remember to bring your toothbrush, because it just isn't all that profitable to sell toothbrushes in a country where the government isn't strong enough to educate the population in the value of personal health and hygine.

Your hyperbole is so goddamned rote, I swear to god. Governments arn't *supposed* to be efficient; they're supposed to provide you with the protection and safety you need in order to further human culture, society and technology. You cannot have a private sector without a public sector .. and if you're that intent on declawing the public sector, go for it. But really you should save yourself the trouble and just find a first world nation without a strong (inefficient) government; DOH, there are none!

Regulation of private interests is 100% neccessary, because a true free market is a non-existant ideal. On the flip side, private monitoring of the public sector is also 100% neccessary, because a fully trustable, transparent, representative government is also a non-existant ideal.

What kills me are the folks who need their world to be so black and white; I guess you would have loved the stone age, things were alot simpler back then, with non of that pesky government regulation bullshit.

Re:You're kidding, right?

[SirSlud]

I have a very close personal friend who had terrible, abusive parents. He did not use a toothbrush until he was 15. This is not as uncommon as you may believe. If you grew up in a loving, stable family, count yourself lucky, but also understand that there is a whole strata of society you may be unfamiliar with.

> But to make the leap that nobody would go around brushing their teath or investing in their personal hygiene if Big Brother wasn't their to educate the unwashed masses is really stupid and scary

Re:You're kidding, right?

[AK Marc]

Governments are innefiecient, anyone who has worked for one can tell you that.

I was having a conversation about school vouchers the other day. One of the things mentioned was that private schools are "more efficient" than public schools. I laughed at the guy. Are the private schools required to go pick up their students in busses? Are the private schools required to accept anyone that appplies? Are the laws set up to require school-age people to attend private schools, whether or not they want to be there?

The differences in the way private and public schools are expected to operate are huge. Looking at a price-per-student and declaring one "more efficient" is something used only by people that want to sabotage one or the other. It is often similar to other agencies. Perhaps the DMV is open from 6 a.m. to 9 p.m. to make it more convenient for citizens to conduct their business there, but if they were to open at 10 a.m. and close at 4 p.m. they would save on labor costs and the people that needed to go there would have to go anyway, so it would be more "efficient" to screw the customer and shorten hours. Personally, I'd prefer the convenience over a strictly profit model of business. They are here to serve, not to make a profit. That will always create issues where they will appear more inefficient.

Re:You're kidding, right?

[jsebrech]

If total deregulation of the market is so desirable, you must have a long list of warzones without the rule of law where markets are just supershiny.

Don't let your hate of government blind you from simple economic principles: free markets are unstable and have a non-negligible likelihood of collapsing into monopoly without government supervision.

Re:You're kidding, right?

[Azghoul]

Dubai seems to be doing pretty well.

I love it!

[network23]

Independent regulation works perfect.

In Sweden a local landline call was almost 15 cents per minute, now a cell phone call is 5-6 cents per minute depending on your contract.

We also have flat fee for cell phones, call as much as you want to any cell phone operator or landlines, including free SMS and MMS for $45 a month. And free UMTS data traffic for as low as $20. Without a contract! And we are allowed to buy and use almost any phone we can find somewhere in the world - unlike our locked-up American friends, chained to their contracts using branded and crippled last year model phones.

We also have a cell network with almost 100% coverage. Most of my business partners have now canceled their land lines and are only using cell phones for their business.

Governments should think about using the same type of regulation when it comes to digital TV. One standard to help the consumer but completely free market to compete with service and price.

Re:I love it!

[aussie_a]

We also have a cell network with almost 100% coverage.

In all fairness, Sweeden is a pretty small country (compared with say North America, Canada or Australia). So you can't really say "we're better then those big countries, because we have 100% coverage" (which you didn't say about the coverage, but did say about the contracts). Having said that, compared with other European countries of similar size, you probably are a lot better off.

Re:I love it!

[Anonymous Coward]

Sure, Sweden is "a pretty small country" (a whooping 53 [wikipedia.org] countries are larger. Sweden is also a country with very low population density (154 [wikipedia.org] countries are more densly populated.

Re:I love it!

[mpe]

Sure, Sweden is "a pretty small country" (a whooping 53 countries are larger. Sweden is also a country with very low population density (154 countries are more densly populated.

Low population density is probably more of a problem when it comes to providing good cellular coverage. As an added problem parts of Sweden are within the Arctic circle, so base stations (together their communication and power links) need to be able to cope with harsh weather conditions.

Re:I love it!

[jakethecake]

The deregulation in sweden is a mixed success, on the broadband side of things, things could not be better,
100mbit FiberLan is now 25$-30$ depending on where you live, and 8/12/24Mbit ADSL is 20/40/50$ a month. And one of the two options is available to 80% of the swedish population. Or as some guy said in the 2600 mag a while back, if you are in the warez scene, you either have a server at a university/isp, or know someone in sweden ;)

The Swedish deregulation of the power grid failed, since three large cor

Re:I love it!

[d3ac0n]

Sorry in advance for any borked english ;)

*muffled chuckle* A Swedish guy said "bork"! Bwaaa haa haa haa!!


Heh. Sorry. I know it's off-topic, but I just couldn't resist.

Re:I love it!

[Azghoul]

Consider the idea that perhaps regulation of the power market created prices that were unrealistically low. I certainly dont' know anything specific about Sweden, but it seems quite possible that the prices you are forced to pay now more accurately reflect the costs required to bring that power to you.

And are you one of those who find a specific level of profit automatically bad? Should the power companies be forced (regulated? hehe) to operate as non-profit ventures?

Re:I love it!

[MightyYar]

I think you are right. Almost by definition, you want things like roads, wires, and pipelines minimized - for aesthetic, environmental, and safety reasons. It is probably best to have some kind of regulation in place for the construction and use of those resources.

However, you should be able to deregulate the providers of the resources that use the conduit to some extent. In the case of the Swedish 3-part monopoly that has resulted, perhaps opening up the country's grid to foreign competition would help? I'

I knew this years ago

[clark625]

Anyone else remember making pay phone calls for $0.10? It was that way from when I was born in 1980 until... oh, just about the time they started playing with the notion of deregulating the phone companies. Then it immediately hit $0.25 a call.

Last I looked, you can't make a pay phone call for less than $0.50 now. And if you use a calling card, it's probably closer to $1.00 just to connect.

Of course, cell phones eat into the profitabily of pay phones; but then, at current prices it doesn't take long for someone to think that any cell phone plan is cheaper than using a pay phone, never mind convenience. That wasn't the case, though, when deregulation started.

Re:I knew this years ago

[TubeSteak]

Payphones are dissappearing in a lot of areas. Cell phone use has skyrocketed to such an extent that phone companies are actively removing low-yield payphones.

Try asking a few people for change to make a quick payphone call home, one of them just might say "here, use my cellphone"

http://www.google.com/search?q=payphone+cellphone+ removal [google.com]
The #1 result is: Save the pay phone - a suddenly endangered species | csmonitor.com

From result #3 (circa Canada 2003)

Both the Companies and TELUS argue that payphone availa

Re:I knew this years ago

[petermgreen]

iirc over here in the uk BT can't remove the last payphone from a location without some form of govenment (not sure if its local authority or central goverment) permission.

payphones here aren't that bad for long calls sometimes better even than some landline tarrifs but they sting you with a 30p minimum charge

Re:I knew this years ago

[MoralHazard]

I don't think we can take it that simply, though... In considering how much money it costs to acheive a given level of service, there's more to the equation than retail price and service quality. Namely, subsidies.

Often, a side effect of monoplized/regulated utilities is that governments give the utilities something, either additional revenues or decreased costs. A utility's pension plan for employees might be partially state-funded or guaranteed, decreasing the company's liabilities and costs. Or, the c

Fool.

[Russ Nelson]

You are a fool. Long distance prices used to subsidize that ten-cent payphone call. Now long distance costs are down in the noise, and a payphone calls costs a little more but isn't subsidized. When I was in college, and you wanted to call your girlfriend, you waited up until 11PM when phone calls became cheaper. Even then you heard stories of people getting $200 and higher bills. We are MUCH better off with less telephone regulation, and we would be MUCH MUCH better off with no telephone regulation.
-r

Slashdot doing downhill

[Toby The Economist]

> Customers are always better off when government bureaucrats get out of the way
> and let the market work, right? Well, maybe not in all cases.

This is economics 101.

Free markets are efficient. Monopolies are the exact opposite of a free market. One of the roles of the State is to intervene to prevent monopolies.

Slashdot is going downhill.

Posts about full-on AI being developed and now this?

Do you really want to present something which has been known about since Adam Smith wrote Inquiry (1776) as if it were startling new news?

Linkage

[headkase]

Here's a condensed version [btinternet.com] of Adam Smith's: An Inquiry Into The Nature And Causes Of The Wealth Of Nations.
And it's still read in Economics 101 BTW.

Re:Linkage

[killjoe]

Alas Mr Smith never bothered to take into account the cost of economic growth on natural resources. He simply presumed there would be infinate amount of air, water, trees, coal, etc.

The reality of course is that economic growth can only occur when natural resources are harvested and processed (even if it's simply for food and shelter).

The tradegy is that most current economists also go on the same premise.

Re:Slashdot doing downhill

[Dr_Barnowl]

And here's a link to the full text [gutenberg.org].

Re:Slashdot doing downhill

[Aqua OS X]

Economics 101, yes. Yet, sadly, "deregulation" is hot right now... or it least it is with the current federal government and the idiotic talk show pundits.

Heck, "Ma Bell" is starting to get rolling again.

Re:Slashdot doing downhill

[Yokaze]

Did it occur to you, that a regulated market is not a free market, and a free market may well have monopolies? Some even argue that monopolies are even unevitable in a free market, and not necessarily bad. There are many people, especially here on Slashdot, who believe that a less regulated market leads inevitably to a more competetive market, the results of the study seem to suggest otherwise.

And where does Adam Smith present a discussion on the matter of regulation, in which cases it is good, and in which

Re:Slashdot doing downhill

[Toby The Economist]

> Did it occur to you, that a regulated market is not a free market, and a free
> market may well have monopolies?

The more a free market has monopolies, the less free is it.

> Some even argue that monopolies are even unevitable in a free market, and not
> necessarily bad.

There are natural monopolies (Microsoft, for example) and as I understand the matter, they are always worse than a free market. However, a private monopoly is probably the least worst kind (with State monopolies being the worst ki

Re:Slashdot doing downhill

[drsmithy]

However, a private monopoly is probably the least worst kind (with State monopolies being the worst kind, since they often abuse the law to maintain their monopoly, this is Friedman's view).

What are you measuring as "worse" ? Because from the consumer perspective, I'd imagine a private monopoly to be far "worse".

Re:Slashdot doing downhill

[mpe]

Did it occur to you, that a regulated market is not a free market,

A n unregulated (or even "deregulated") market may not be a free market. Depending on the exact nature of the regulation having regulation may make a market freeer than it would otherwise be.

and a free market may well have monopolies

A monoploy (involving a single company or a cartel) tends to be mutually exclusive with a free market. Since the existance of a "dominant player" increases the "barrier of entry" into that market.

Re:Slashdot doing downhill

[Homology]

This is economics 101.

Free markets are efficient. Monopolies are the exact opposite of a free market. One of the roles of the State is to intervene to prevent monopolies.

It's also one of the State roles to regulate so-called "free markets". Many think that the stock exchange is an example of a "free market", but it's actually very regulated (insider trading laws, as one of many examples). So to say that free markets are efficient, one must first define by what one mean by a free market. By changing t

Re:Slashdot doing downhill

[Toby The Economist]

> It's also one of the State roles to regulate so-called "free markets". Many
> think that the stock exchange is an example of a "free market", but it's
> actually very regulated (insider trading laws, as one of many examples).

One of the roles of State is to ensure everyone plays by the same rules. Insider trading is a form of monopoly - those with additional information keep it to themselves, takes steps to ensure others do not know, and profit by it.

> So to say that free markets are efficient,

Re:Slashdot doing downhill

[deaddrunk]

People did pretty well out of Keynesian economics in the previous century. The new economic model of making customers poorer rather than richer by sending their jobs overseas seems a bit self-defeating in the long-term. But then fashion rather than exact science seems to be the way of the economist, just like the (now discredited) downsizing craze in the 90s.

Re:Slashdot doing downhill

[Homology]

People did pretty well out of Keynesian economics in the previous century

While the US administration pushes "free trade" and "free markets" on the rest of the world, their internal economics is basically Keynesian. Though that is changing as well.

Re:Slashdot doing downhill

[808140]

It's worth noting that free trade isn't as bad as you think it is. Consider the USA -- you don't hear Americans (I'm assuming you are one, if you're not, excuse me) complaining about their jobs "being outsourced to Minnesota", or wherever else. But the fact remains, not all states are created equal, from a business perspective: they have different laws, different tax codes, differently skilled populaces, and as a result, states have "economies", just like nations, and everyone in the US benefits from the

Re:Slashdot doing downhill

[Znork]

"The result is the US consumers, on a whole, pay less for the same products"

Unless, of course, those products are protected by monopoly legislation in the US, in which case the lower price needs not be passed on to the consumer. See; intellectual property law, trademarks, patents and copyright. Then consider the inevitable impact on the competetiveness of citizens in the economy where that monopoly protection is extensive.

Re:Slashdot doing downhill

[mpe]

Nevermind that well over 90% of all economists, both in academia and in the business world, agree that free trade is good for trading nations and that price controls (already enjoying support in a post to this very topic) are a proven failure.

That'll be why we have so many barriers to free trade and so called "free trade agreements" which are nothing of the sort :)
Since public utilites tend to be "natural monopolies" it's rather hard to have any kind of "free market" in the first places.

Question:

[yobbo]

Why isn't half of slashdot lining up to attack the report's methodology?

Answer:

Because slashdot readers like the conclusions in this one.

Re:Question:

[TubeSteak]

Fine, I'll bite:

Market deregulation is the answer.

However, to have a truly deregulated market, towns, cities, counties, etc must also be allowed to compete.

The TELCOs are playing fast and loose with the concept of a free market. Most TELCOs (and cable/dsl outfits) are effectively mono/oligopolies in that they recieve exclusive contracts from the local governing bodies. Actively suing to prevent municipalities from providing internet or phone service makes them at best bastards, and at worst monopolists protecting their interests.

The current state of 'deregulation' is at best a half-effort which allows entrenched businesses to maintain the high entry-barriers into their field. Deregulation requires not only the lifting of limits, but of protections... something the major players are loath to consider.

Re:Question:

[strider44]

Market deregulation is good and all until someone wins outright and gains the monopoly then you'll be complaining about the skyrocketing prices and bad service, because, after all, it doesn't take very much when you own a monopoly to change the way you do things to ensure that other people can't compete with you. This happens in every single field, be it manufacturing, phone systems, electricity systems, or (I have to bring this up because after all this is Slashdot) Operating Systems.

Besides this for t

Re:Question:

[Kamel Jockey]

Market deregulation is good and all until someone wins outright and gains the monopoly then you'll be complaining about the skyrocketing prices and bad service

Put the blame where it belongs, on a government regulators that for the past 20 years has allowed for unprecedented consolidation in numerous industries. The high prices of cable TV, oil and telecom services show how this consolidation has done nothing good for the customer. Regulators should have stopped collecting bribes from the companies and

Re:Question:

[mpe]

The TELCOs are playing fast and loose with the concept of a free market. Most TELCOs (and cable/dsl outfits) are effectively mono/oligopolies in that they recieve exclusive contracts from the local governing bodies.

A wired telephone service is, as with other public utilities, a natural monopoly. In order to even be in a position to effectivly compete a company would have to spend vast sums of money before they had any customers. Even for wireless telephony the cost of entry can be large.

The current stat

Re:Question:

[Inoshiro]

"Why isn't half of slashdot lining up to attack the report's methodology?

Answer:"

Because ITWorld doesn't appear to link to the actual report. How am I supposed to critique such a study when I don't even know at what significance level they conducted their survey at? 5%? 1%? Did they do their testing of means correctly? I can't tell you, because there's nothing to test.

Or were you only interested in random posts where people argued back and forth, with no supporting data or standard statistics tests to

Telecom Market Inherently Oligopolistic

[osewa77]

What makes the Telecom markets (apart from the Internet) different from most markets is the fixed spectrum and high capital costs which limit the number of companies that can provide national telecom services at any given point in time to just a handful. So the presure to keep prices low to prevent new entrants from coming in to take your market share away is just not there.

On systems like the Internet that allow for very free competition, customers pay less for more without any need for government regulation whatsoever.

__________
My New Blog [naijarita.com]

Re:Telecom Market Inherently Oligopolistic

[TubeSteak]

http://www.oligopolywatch.com/stories/2003/04/21/ b asicPrinciplesOfOligopolies.html [oligopolywatch.com]

Basic principles of oligopolies

• All industries tend toward oligopoly.
• Being #1 is great, being #2 is good, being #3 is difficult, being #4 or higher is a losing game..
• Oligopolies are safer from regulation than monopolies.
• Oligopolies are tempted to go vertical.
• Oligopolies are tempted to go horizontal.
• Oligopolies are tempted to go multinational.
• Members of oligopolies tend to converge.
• Oligopolies offer pseudo-variety.
• Members of o

WHEN did the FCC root for the lil' man?

[Dark Coder]

With the long lines of lobbyists/corporate pundits going through the revolving doors of our dear Uncle Charlie (oh, that's old CB-talk for FCC),

Only FCC accomplishments that I can peg is ... wait... I had it at the tip of my tongue... hold on... Had a couple of answers in mind a second ago. Dang.

Never mind. FCC did squat for us lowly consumers.

But if you can't name the 14 technologies that FCC did a rim-job for consumers, you're ain't no uber-geek.

Free market = good. Anything else = communist/ bad

[Chaffar]

While i'm not claiming that the conclusions drawn by the author of the study are 100% unfalsifiable, I do like it when someone comes up with a study that proves that deregulating every sector of the market is not the "best" solution.

The truth is that France had realized this early on. Some things shouldn't be left up to the market to decide: electricity, gas, water, telecoms were all owned by the state previously. Even if you lived on top of a lone mountain, it was your right as a French citizen to have access to water, electricity and a phone line (not sure about the phone line and natural gas, can't be bothered to check), and almost on-the-spot service from them. The cost of such a measure was spread out over the millions of users that these companies had. So everyone was happy paying a FIXED FEE, wherever you lived, and usually a pretty low one too.

But now, the EU with their "free market is good no matter what", has been pressuring France into privatizing EDF, GDF, France Telecom/Orange... This study comes 5 years too late :(

Re:Free market = good. Anything else = communist/

[wfberg]

Actually, the EU guidelines - at least in the case of Telecom and Postal services, which I'm most familiar with - do account for granting a single company a regulated monopoly-like market to provide "universal access" service. I.e. France Telecom got to keep the fixed lines (instead of them being auctioned off, for example - like what happened to gsm frequencies), but only in return for them provisioning non-profitable fixed lines to remote regions - though they are allowed to suck up those extra costs by c

Re:Free market = good. Anything else = communist/

[madsenj37]

This is economics 101. Free markets work in all but utilities.

Study finds subsidies are good for consumers...

[mobby_6kl]

because consumers pay less for agricultural products.

Free market theory and hard real life [tm]

[Pecisk]

We all know that capitalism and free market is only fine on paper. Sadly, but because of people's characters (and believe me, there is more place for some kinda of power psyhology, not business or economical theories), markets mostly _must_ be regulated. Reasons mostly
consists of "I'm free to do whatever I want" monopoly power play and lack of business ethics (actually nonexistence of them). I call it coorporative feodalism - and it feels like.

Why I mentioned that it is not reason of economics? Problem with economical theory for now it is that it totally shuns out reasons of capital owner. Economical theories assume that owners are reasonable, clever, have good reasons to do whatever they want to do, right?

So what about Bin Laden with his milions to rise war against West? What about those "banana republics" where milioners mostly compete which will have bigger boat, count of cars, and don't care about their country? What about Balmer of Microsoft, which, as we know, has got emotional in his war against Google?

Someone will say that it is good that personal ambitions are all good to drive capitalism and free market. It is clearly overestemated. It is not.

So, more on topic. About regulations - I don't know about other countries, but for our country I say "thanks God" - and it will be truely that way - that we have _some_ regulation. It doesn't work all the time, but hey at least monopolies - and frankly we have them lots - thinks twice before say "ok, we will rise prices". At least it have been important for heat and gas, which affects as all, as we have rather large and cold winters.

So regulations should be everywhere where it feels that market isn't capable to set price tag right, t.i. there is no competition.

Hmmm, some of such market we all know. Operational systems, software anyone?

Re:Free market theory and hard real life [tm]

[garver]

Capitalism doesn't call for an unregulated market. Unregulated is anarchy. Anarchy is bad. Capitalism does best with a lightly regulated market.
With capitalism, you must have regulation to make sure everyone is playing fair. Which also means you need regulation to remove monopolies where possible or simply control them where not possible (e.g. public utilities, limited spectrum).

Consciousness is the answer

[Steeltoe]

Free market relies, as everything else, on something more basic to human life: Namely our consciousness. If it is clouded with anger, hostility, personal issues, greed or outright distortions of reality, the free market is subject to this as everything else in life. In some ways, a free market and modern democracy alleviates this in two opposite ways:

A) In a free market, like the stock market, greed and sense of ownership ensures that often the right price for a product is found in a way better than any exp

Re:Free market theory and hard real life [tm]

[Pecisk]

Claiming it is not that way would require keep eyes shut, ears closed and not to communicate with rest the world. No offence, but "we all know" I used for common sense, so _any_ theory is fine on paper. Real life provides much different results. And as I pointed out, it is because theory leaves out important things which easily impact it. "Free market" theory does that very easily.

Read more between the lines, it wasn't meant "capitalism sucks, socialism forever" or something like that.

And actually I wrote w

Re:Free market theory and hard real life [tm]

[swillden]

Claiming it is not that way would require keep eyes shut, ears closed and not to communicate with rest the world. No offence, but "we all know" I used for common sense, so _any_ theory is fine on paper.

So, if I disagree with you, I must be blind, deaf, unable or unwilling to communicate with anyone and completely bereft of common sense? Is that right?

Well, you've certainly succeeded in convincing me not to bother debating you.

How about an industry that regulates itself?

[Inaffect]

And locks you into a 2 year contract just for purchasing their service.

Does the government levying taxes in the form of technology fees and other surcharges count as regulation? All I know is that my $49.99/mo. plan gets turned into $60+ after taxes.

I give them credit though, at least they're smart enough to get a piece of the action.

Re:How about an industry that regulates itself?

[Kamel Jockey]

And locks you into a 2 year contract just for purchasing their service.

If you are referring to cell phones in the USA, this is not a true statement. You can always purchase a phone for full price and not have to deal with a contract. Of course, some vendors (like Verizon or Sprint) only allow you to purchase their phones, others, like Cingular and T-Mobile let you get any phone you want from anywhere and use it. You can also purchase prepaid service (as long as its not from Verizon) which allows you

Some myths about the market and competition

[kronocide]

Competition is supposedly what makes the free market work in favor of customers, so let's take a closer look at it.

The goal of competition is to end all competition
Every company wants to be in a position where you have to buy their product. No matter how often a product manager or marketing executive tells you that competition is good for them, their real dream situation is of course a monopoly. Just look at the companies that are or have been there, and how they cling to it. It makes perfect sense, competition is not their goal, sales are. One common way of achieving this is through consolidation, where you end up with a dozen brands but only a few actual producers. It may look like competition, but it's just different brands from the same producer.

It doesn't happen as often as you think
There are very few products on the market that compete head on. It's the explicit job of the product manager (I've been one) to find the "niche" for his products, to make sure that they do not compete head on with someone else, to find a slightly different demographic, a different price range, a different geographic location. Differentiation is the key, and the purpose is to avoid head-on competition.

Consumers don't make informed choices most of the time
For consumers to be able to "vote with the wallet" (this feature is supposedly what makes a deregulated market good) they need to be able to make informed choices. But no company is compelled to inform their customers, only to persuade them. Hence all the marketing BS that we are constantly exposed to, and that is also why the one with the biggest marketing budget wins, not the one with the best product. This doesn't benefit consumers.

A totally unregulated market is perhaps the best choice for your local bakery stores, but for large corporations regulation is needed to protect the consumers by ensuring that competition actually is taking place. Competition is a consumer interest, not a corporation one.

Re:Some myths about the market and competition

[Money for Nothin']

Consumers don't make informed choices most of the time
For consumers to be able to "vote with the wallet" (this feature is supposedly what makes a deregulated market good) they need to be able to make informed choices. But no company is compelled to inform their customers, only to persuade them. Hence all the marketing BS that we are constantly exposed to, and that is also why the one with the biggest marketing budget wins, not the one with the best product. This doesn't benefit consumers.

It's true that comp

Re:Some myths about the market and competition

[kronocide]

That's a valid point, but it's also why I said "most of the time." A fraction of consumers read reviews about a fraction of the products they buy. Other purchases are made more spontaneously, probably based much on availability and brand awareness.

Re:Some myths about the market and competition

[mjh]

Just curious, do you have any data to support this?

The existence (and popularity) of review magazines suggests that informed decisions are pretty significant. A few years ago, I remember when the Honda Odyssey van got the top rated review in Consumer Reports, and the demand was so high that you couldn't buy one. Sometime after that, the Toyota Sienna got top review, and the same thing happened. Several years ago, the Dodge Caravan experienced the same demand.

I think consumers are much more informed t

Re:Some myths about the market and competition

[kronocide]

Just curious, do you have any data to support this?

It's just derived from common sense:

How many products do you buy every week? How many of them do you research in review magazines? How many even appear in such magazines?

I agree that when you buy a car, you take a good look around, and also when you buy a house or a boat, but those are extreme cases. How many read the magazine reviews before buying a stereo or a TV? Certainly not everyone, I would guess less than 50% (but it's just a guess). What about when

Re:Some myths about the market and competition

[Money for Nothin']

How many products do you buy every week? How many of them do you research in review magazines? How many even appear in such magazines?

I don't know how many need-to-research products I buy in an average week, but probably around 1. I don't spend much though; I go whole weeks buying nothing more than groceries and gasoline (and paying bills for rent, credit cards, cable TV/internet, etc.).

But take my Sharp Zaurus 6000L. Sharp pulled out of the U.S. market because they sold so few of them; I picked one up wh

Re:Some myths about the market and competition

[10101001 10101001]

It makes perfect sense, competition is not their goal, sales are. One common way of achieving this is through consolidation, where you end up with a dozen brands but only a few actual producers.

And the answer to this is, not surprising, to get rid of those dozen brandings. But how to do it in a fair way? It's quite simple: only allow a company to own a trademark that contains the company's name. In short, if Philip Morris wants to sell cheese, they're perfectly welcome to try to sell Kraft Cheese. But

Bet you didn't see that one coming

[Anonymous Coward]

In my country Internet connections were ridicilously expensive just couple of years ago. 256 kb/s connection was going at 50 eur/month. All ISPs were saying that it would be impossible to get faster & cheaper connections. Notice, that's "impossible" not "unprofitable". Anyway, then the goverment desided to start an investication about price controls. All of the sudden, all ISPs pretty much cutted their prices in half and doubled their connection speeds. Now my 1 Mb/s ADSL costs 23 eur/month, and that's the price in a backwater town. And no, companies didn't go and run new backbone lines throughout the country.

Remember what happens when we assume?

[Woldry]

From TFA: The report, conducted by Jones Day and Strategy and Policy Consultants Network Ltd., showed that investment in telecommunications, which leads to better services for end users, is lower in countries where there is little competition.

There's an underlying assumption that is not addressed here in the article; it isn't clear from the article whether it's addressed in the report. That assumption is that spending more money correlates to better services for end users. But does it?

Do the authors of the report demonstrate the ways in which investment in telecommunications "leads to better services for end users"? Do they document the services that are better in the countries that they rank as more effectively regulated? "Better" itself is a very subjective term. Better in what way? Using what standard? How is "investment in telecommunications" defined? What kind of corporate expenditures qualify as "investment in telecommunications" and what kind of expenditures do not? Do they consider government subsidies as part of the overall "investment in telecommunications"?

Anecdotal evidence aside, I'd have to see those questions addressed by the authors of the report before I could draw any conclusions one way or the other about whether it demonstrates that a well-regulated industry produces better services. The article is too vague to give any clear indication whether the report itself answers these questions. The fact that it goes into a fair amount of detail in defining what is meant by "effective regulation" makes me think that if other definitions had been addressed, they would have been included.

Maybe regulation is the answer, and maybe this study supports that. Or maybe the free market is the answer, and this study is designed to obscure that by using unsupported assumptions. Maybe neither one is the answer. But without knowing more about the answers to these questions, there's not much point in using the article to stump for your particular pet economic/political point of view.

Hell Yeah

[Choc_Salties]

Here in South Africa, recently the government communications regulator told the the Telco that they were charging too much for broadband connections; once for the line rental to the consumer and again for ISP costs on availible monthly bandwidth. The telco turns around, says "bite me" and subsequently raises the ISP bandwidth costs (consumer-side) by 700%! Just goes to show what a private monopoly can do when the government doesnt have the muscle to back up its regulatory authority.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Market Structures and Economics

[saterdaies]

Frankly, it depends on the market structures. For example:

If you have a natural monopoly (like the local telephone service in the United States is - like, you can only get service from one company be it Bell South, SBC, Verizon, etc.), you need to regulate the crap out of it. Most economists would agree with this. If you don't regulate them, you'll be paying monopoly prices for the product which is bad for consumers and bad for the economy overall (since less customers will purchase services creating what is know as a dead-weight loss).

Wireless, on the other hand, is both an oligopoly and monopolistically competitive. Now, oligopolies will not give you as cheap a price as perfect competition. In a perfectly competitive industry, you pay the equilibrium price which is as close to a real, fair price as one can claim for a product - it is the price where demand and supply meet and it treats sellers and buyers exactly equal. In oligopoly, you will pay more than the equilibrium price - which favours sellers. In fact, you will be paying the price at the Cournot/Nash equilibrium. The more sellers in the oligopoly, the closer you will get to the equilibrium under perfect competition (when you have 100 firms, you will come within 1% of the perfectly competitive equilibrium).

But wireless is also monopolistically competitive. Monopolistic competition is where you have many firms selling different varients that are close relatives. For example, Verizon Wireless has a different coverage area from Cingular and Cingular has different phones from VZW, etc. They are close, but some people will prefer one to the other. Monopolistic competition is inefficient by economic standards. Why? Because Cingular could serve many more people than the 50 million customers they currently have and they desire to serve more customers. The same can be said for each of the other wireless providers - they all have the capacity and desire to serve more customers. But their prices are also higher than equilibrium prices because they have a product that is different from their competition - and therefore likely to attract less people. If VZW and Cingular had the exact same network with the exact same phones, and exact same everything else, people would choose their carrier on price alone. But because they offer different services, people won't choose based on price and will often take other considerations before price and therefore, all the wireless carriers can charge more than equilibrium.

As such, we can use regulation. We can't use regulation just to force companies to be nice to us, but there are things we can do that are better for consumers and better for society as a whole. For example, if monopolistically competitive firms charge prices higher than equilibrium, we can reduce the differences between firms. By mandating a single technology, GSM or CDMA or anything else, we can eliminate one standard that people choose a carrier by. By mandating that every carrier carry the same lineup of phones, we eliminate another. The more differences we eliminate, the more likely people are going to choose a wireless provider based on price rather than the carrier's own attributes.

Of course, you might see a problem with this. For example, if we mandated that all carriers sell both the Nokia 6010 and 3120 and only those two phones, consumers would have less choice. You would loose the ability to choose something that you liked better - that suited you better. There is no way to quantify the benefits of choice. Think of restaurants. We pay higher prices at restaurants because of the choices we get when we are deciding where to dine, but I don't think any of us would want all restaurants to become Taco Bells just to save a little money.

As an example of this in wireless, before the Cingular ATT merger, Verizon had a far superior national network to any of its competitors. As Cingular got traction, VZW lowered prices because network wasn't going to serve as quite as big a differentiation between

Fukuyama The End of History--inverted

[joneshenry]

Let's step back and consider why is it that things are the way they are. Telecom regulation is but one facet of various reforms that need to be carried out, but for some reason are not in most cases.

I argue that Francis Fukuyama completely misread what he called "The End of History"--the late 20th century was not the triumph of what he called liberal democracy but its rejection. The 21st century then will be various countries dealing with the consequences.

Western Europe I would argue is re-creating not the Roman Empire but the Catholic Church, only a secular version in its bureacracy. Thus Europe's new Church will once again be the fusion of the functions of moral guidance, legal enforcement, and scientific research.

The United States has no historic fallback position and will simply continue to deteriorate in the effectiveness of its regulation of anything. There is period of its history that could be used to revitalize it, but it is generally forbidden to teach that a major plank of the Progressive movement was greatly restricted immigration.

The central Indian belief appears to me to be fatalism, which has advantages in that there is no illusion that there is any chance of fair outcomes for the masses. However fatalism is not exactly the most conducive philosophy for summoning the national will to have a functioning government.

But the country in the strongest position is China, for its defining literature is free of the illusions that plagued both the Catholic Church and its successor the European bureacracy, the confusion that what is moral has to agree with what is true. China will be led by people who, even if they have not read the work, are influenced by the ideas of works such as Romance of Three Kingdoms.

I suggest the Chinese idea of the cycle of rise and decline of empire is at its heart a protest against what seemed to be the deadlock that the only people who had the power to end hereditary rule were the people who when they achieved power would simply reimpose it to favor their own offspring. If the current regime has solved that problem then it will be China that has the greatest alignment of its form of government with the truth and not what one wishes to be true. For the Chinese are the ones who feel the least constraint towards the sacrifice of oceans of blood to achieve the needs of the state.

I agree...hear me out

[PenguinBoyDave]

I have several friends who are either commercial airline pilots or air traffic controllers. Without exception, they will tell you that Airline Deregulation was the WORST thing that happend to the passengers and crews of airliners. Why...because the air lines are no longer required to do some of the things they USED to have to do. Sure, there are fewer crashes each year, but that is because of better flight systems. My point here...deregualtion might be good for the companies involved, but for the custom

Pretty simple

[Bombula]

We all know monopolies suck. So the only question is, which is the lesser evil: a private sector monopoly or a government monopoly?

The knee-jerk reaction is usually that the government is always worse. But think about it - a government monopoly is still accountable to customers because customers are voters, whereas a private sector monopoly is accountable to no one.

Obviously the smart thing to do is to keep companies private and legislate against monopolies forming in the first place. But once the horse is out of the barn, it's hard to argue that the private sector monopoly isn't the greater evil.

Re:Pretty simple

[Bob_Robertson]

"Private Sector Monopoly". Hmm, let's look at this assumption.

First, a definition: A government monopoly means that anyone who tries to compete is arrested and jailed. At the very least, they are put out of business by force. That's what a government monopoly means.

So how would a free-market monopoly exist? It would have to provide a service people wanted, otherwise people wouldn't buy it. It would have to be provided cheaper and/or better than anyone else could provide the service, or some smart-ass would

With companies like BellSouth....

[rdean400]

...regulation will probably become a necessary evil.

Their VP recently said that they should have the right to, for example, offer Yahoo! a paid service which allows BellSouth's customers to access Yahoo! more quickly than Google. If they're allowed to have monopoly access to infrastructure, they shouldn't be allowed to do this. Philosophically, the consumers would wind up footing the bill through higher costs.

regulate the health care industry

[sckeener]

Not the telecom industry discussion...but

I find it unbelievable that US citizens believe it is cheaper not having national health insurance. The industry is so unregulated and regulated (which is the real problem) that big companies are shielded from the small companies. The product's costs are inflated and it is the little man that is screwed.

The old saying that an ounce of prevention is worth a pound of cure really applies. If people didn't put off getting treatment for simple things because of the rising costs of healthcare, then they wouldn't have to pay more to 'cure' it later.

National Health Insurance is the ultimate regulation of the industry, but it would be far cheaper for the nation and the average citizen.

anyway...just my 2cents

False Headline.

[Bob_Robertson]

Reading the article, the problem is not one of deregulation. The problem is entrenched telecommunications "monopolies" created by government in the first place.

Actual deregulation, that is allowing anyone to enter the market and at the same time letting companies that do not do well fail, is not the problem at all. As usual, failures of government regulation are being touted as "free market" failures where there is no "free market".

Bob-

Re:False Headline.

[Bob_Robertson]

Good sir, the telecom market entry price is has been dropping like a stone, ever since it was "deregulated" to some extent. Those areas, such as local telephone service, where government granted monopolies are still the rule rather than the exception is where little to no innovation exists.

If you're actually interested in why the "free market" functions better than a regulated one, you are welcome to read the materials available on the Ludwig von Mises Institute home page.

http://www.mises.org/ [mises.org]

It is in fact

Oversight != Regulation

[thelizman]

Once gain, a quick R of TFA shows that the poster hasn't a clue of the content of the article. "Regulation" here refers to oversight: the ability of independant agencies to monitor and 'correct' anti-competitive and monopolistic behavior. In the study, the 'regulated' businesses were free to make fundamental business decisions within the framework of laws that protect the consumers. "Regulation" as applied in American political economics is where a government agency sets controls on specific business decisions, such as the wholesale price of goods, import/export quotas, taxation of specific for entirely political reasons, or mandating specific practices.

People, no matter how hard you want to not have to admit it, government regulation is bad. In the US, it has a particularly nasty track record in that it has caused or significantly contributed to every "market correction" of any signifigance. While no economist will ever admit that having government regulatory bodies watchdog private industry is a bad idea, only a rabid Keynesian (or outright Marxist) would ever think it's kosher to allow government to fiddle with the mechanicals of a societies economic engine.

Re:Correlation or causality

[julesh]

The investment in question is that of the "old ineffective giants" reinvesting profits in order to improve their services, if I understand the article corrctly.

Unfortunately, it doesn't link to the original study, so we have to rely on a journalist's interpretation of the findings, which isn't always accurate.

Re:Oooh Oooh!

[imroy]

Bah, you Kiwis! Over this side of the Tasman our government is still trying to sell off the previously government-owned telecommunications carrier, Telstra. It's not only a near-monopoly in many markets and owns a lot of the national infrastructure (paid for by our taxes!), but the government is letting it off easy on issues like dismal service to "the bush", because they want to get the best price at sale. How screwed up is that? And don't get me started on ADSL! Several private ISP's are now installing t