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Why is European broadband faster and cheaper? Blame the government

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Re: Why is European broadband faster and cheaper? Blame the government

#21

Post by bgentry »

VMG wrote: post #10
ojbyrne wrote: post #2

For those who think this is going to be an anti-government regulation, libertarian orthodoxy type article, here's the tl;dr: "government regulators who have forced more competition"

... after creating monopolies in the first place

The government doesn't have to create these monopolies. Utility (i.e. telecom) companies naturally tend towards a monopoly because of the absurdly high cost of rolling out duplicate infrastructure. Usually the first mover is able to fend off any real competition by lowering its prices below that which its competitors can afford, given that they still have an infrastructure to build.

Re: Why is European broadband faster and cheaper? Blame the government

#22

Post by masklinn »

chrisjsmith wrote: post #9
tzs wrote: post #3

The most interesting part in that is that in the UK, both Verizon and AT&T were strong and public proponents of local loop unbundling. When asked about it for the US, they say it is terrible and will hurt consumers.

That's because everyone justifiably hates BT, rather than it made sense.

That's mostly because in the US they're incumbents, whereas in the UK they're challengers.

Because line sharing and (then) local loop unbundling makes new entries into the market significantly easier (as there isn't the cost to build a whole physical network upfront, and the network can be implemented over time instead) it drives competition in the sky and fees into the ground. It lets challengers challenge, but it's awful for incumbents as they can't just fleece their customers unchallenged.

Re: Why is European broadband faster and cheaper? Blame the government

#23

Post by jerf »

EliRivers wrote: post #13
jarin wrote: post #5

On one hand, more government regulation brings things like Sarbanes-Oxley. On the other hand, you get faster, cheaper Internet access, and arguably more jobs from that. This is why I cannot bring myself to identify with a political party.

Both of those sound like good things.

Sarbanes-Oxley seems to be a pretty solid example of a regulation whose costs exceed its benefits by quite a bit.

Re: Why is European broadband faster and cheaper? Blame the government

#24

Post by masklinn »

bjelkeman-again wrote: post #18
chrisjsmith wrote: post #9

Earlier quoted context omitted.

That's because everyone justifiably hates BT, rather than it made sense.

Well it produced the same result in Sweden. And I am sure that “everyone” hates the incumbents in the US too, so the result would possibly be similar.

Likewise in France (see FreeTelecom, pretty much the poster child for line sharing and local loop unbundling)

Re: Why is European broadband faster and cheaper? Blame the government

#25

Post by mseebach »

bjelkeman-again wrote: post #15

The report which is referenced by Endgaget says about fiber penetration in Sweden: "Fiber and fiber-LAN networks have a slightly bigger share of the market than cable, holding 14% and 13%, respectively. Sweden trails only South Korea and Japan in household fiber penetration rates.” "Municipal networks alone control 20 to 25% of the coverage. Among the more than 150 local fiber/LAN networks in 2008, a majority are own…

It's not a silver bullet, though. In Denmark, electrical utilities (semi-private) spend obscene amounts of money digging down fiber, but when fiber arrived at my in laws, it took all of a minute comparing their offer with what they could get over DSL before ticking the "no thanks" box. (The price was at best comparable, and then there was the several hundred dollar connection fee).

Re: Why is European broadband faster and cheaper? Blame the government

#26

Post by masklinn »

bgentry wrote: post #21
VMG wrote: post #10

Earlier quoted context omitted.

... after creating monopolies in the first place

The government doesn't have to create these monopolies. Utility (i.e. telecom) companies naturally tend towards a monopoly because of the absurdly high cost of rolling out duplicate infrastructure. Usually the first mover is able to fend off any real competition by lowering its prices below that which its competitors can afford, given that they still have an infrastructure to build.

And even if the first mover does not end up alone on the market, after some time the market tends to undergo significant consolidation (once most of the organic growth has been achieved). And you end up with a natural monopoly anyway.

You can even see that in very recent history: the US government broke up Bell in 7 in 1984, it's already merged back into 2 companies (AT&T and Verizon are composed of 3 baby bells each, the 7th is part of Qwest/CenturyLink)

Re: Why is European broadband faster and cheaper? Blame the government

#27

Post by tybris »

hammock wrote: post #8

It blows my mind that anyone in a startup community, which is all about creating value and making good investments, would suggest that the government tax him (!) and invest in broadband infrastructure instead of that person investing in it himself.

Read the article. No tax money was spent.

Re: Why is European broadband faster and cheaper? Blame the government

#28

Post by isleyaardvark »

hammock wrote: post #8

It blows my mind that anyone in a startup community, which is all about creating value and making good investments, would suggest that the government tax him (!) and invest in broadband infrastructure instead of that person investing in it himself.

I'm sorry, did you not read the article?

> Not government spending. The UK's administration hasn't invested a penny in broadband infrastructure, and most of the network in the Netherlands has been built with private capital.

Re: Why is European broadband faster and cheaper? Blame the government

#29

Post by masklinn »

americandesi333 wrote: post #16

This is a very interesting article, especially 'dummifying' the complexities of US telecom markets. I used to always wonder why US was so behind in terms of broadband deployment and the answers that we given to me were always around 'density'. However, there are densely populated areas in US that can create better broadband experience. The challenge here is that the larger telecom companies (AT&T, Verizon) are requir…

> On the other hand, European telecom companies are allowed to charge extra for higher bandwidth usage.

These are getting rarer and rarer these days. And the countries which raced ahead dropped quotas early, or never had quotas in the first place (France for instance, second ADSL market in Europe, standard ADSL contracts are all unmetered and metered never represented any significant portion of the market).

Even Belgium, historically one of the worst countries in europe quotas-wise (supposedly due to the very low level of computer-based production, meaning ISPs can get no peering), is moving away from quotas.

> Once these two barriers fall (cloud based home TV management and tiered pricing) there will be more competition in US.

No.

Re: Why is European broadband faster and cheaper? Blame the government

#30

Post by rmc »

mseebach wrote: post #19
tzs wrote: post #3

The most interesting part in that is that in the UK, both Verizon and AT&T were strong and public proponents of local loop unbundling. When asked about it for the US, they say it is terrible and will hurt consumers.

Because in the US, they own the loops, in the UK they'd get access to them. I think a factor in making this easier in Europe is that all phone lines were put in by entirely government owned and operated enterprises, and it can't be argued that the public doesn't own them. In the US, if I'm not mistaken, most of the phone companies were and are at least somewhat private entities that invested private money in putting…

a factor in making this easier in Europe is that all phone lines were put in by entirely government owned and operated enterprises, and it can't be argued that the public doesn't own them

Depends. When Ireland privatized it's state owned teleco, it included all the wires going all over the country.

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