They're going to keep doing this too until customers start treating internet as a right and utility until then it's just seen as a commodity.
If your local grocery monopoly started rationing out milk to 250ml sold per day there would be protests, investigations, and 10 minute time blocks for it on the nightly news because the people would demand it. The internet just hasn't had this moment yet and it sucks because the momentum for this moment is building but it hasn't reached critical mass. I don't think this moment will happen for another decade at least.
How is Verizon wireless a utility? None of the usual arguments (natural monopoly) apply. And there are four major competitors in the market (more than in say search or social media).
Also, data caps are just price discrimination, which is pervasive even in highly competitive markets (and not necessarily a bad thing): http://else.econ.ucl.ac.uk/papers/uploaded/222.pdf. You walk into Home Depot and they charge you twice as much for the "Best" paint rollers versus the "Good" paint rollers. It's not because there isn't competition in the paint roller market, or because it costs twice as much to make one paint roller versus the other.
Wireless does have some features of a natural monopoly. In order to compete with Verizon Wireless, you need access to a finite amount of wireless spectrum. The FCC auctions off exclusive access to the wireless spectrum, so you can't just start competing with Verizon on the same spectrum.
This is pretty similar to how you can't just freely add your own fiber to a utility pole, or freely build your own utility poles.
That's right - wireless isn't a natural monopoly, but it is a natural oligopoly. Oligopolies tend to be better for consumers than monopolies, but still not great, because the firms involved only have to deal with a few competitors and tend to develop cartel characteristics.
Oligopolies also appear to be the future of the American economy, with new business formation on the decline and wealth + market share concentrating under the few largest players in many industries.
So perhaps the discussion we should be having is, should we do something about oligopolies, and what? We already have antitrust laws, are they adequate? Are they being enforced?
How is it "natural" when it's a governmental allocation? The point of the expression "natural monopoly" was to distinguish them for State-granted monopolies like those.
Sure, but you can buy alternative methods of accessing the internet to keep this metaphor going. They're expensive and aren't as convenient but that's true of having to go to the store to buy bottles of water as well.
Let me introduce you to the story of hurricane Sandy. Verizon doesn't want to rebuild its union encumbered wireline network so they wanted to switch people over to local wireless.
Now you can't have it both ways. Either you are a utility or you are not. Having competition doesn't mean you're no longer a utility.
Price discrimination doesn't work under perfect competition (see: law of one price).
Insofar as it might work for Home Depot, it may be due to local monopoly (competitor is not co-located) and asymmetric information (customers assume a bigger quality difference than is true). However in my experience, the price of premium tools/supplies often does reflect higher production cost these days.
It sounds like law of one price only refers to goods where there is an arbitrage opportunity. If the goods have different intrinsic values, then they would have different prices, which I believe is what the original comment is arguing.
Price discrimination is when a producer charges different customers different prices for the same good. So yes, price discrimination is implicitly an arbitrage opportunity - assuming there is competition.
Truly different goods don't have the same implications for consumer and producer surplus. That's not to say that price discrimination can't be disguised.
How often do people rely on wireless phones compared to landlines? Do you use the internet more than a landline phone? The landline phone system is a utility, but Verizon wireless shouldn't be?
Capping certain websites is not price discrimination, it's website discrimination; Verizon promises a certain amount of GB per month on our phones, and capping certain websites for me when I'm still under my monthly data limit has nothing to do with my data limit and everything to do with discriminating against those websites to my and their detriment.
If you're fine with corporations turning the playing field into an uphill slant against you based on their preferences regardless of yours, then please argue for them capping limiting certain completely-legal websites they don't want to treat fairly.
Even if you do accept variable pricing based on use, the data cap strategy doesn't make sense. Why not just charge more when the network is stressed? At least consumers could be incentivized to make efficient use of the network.
Surge pricing works for Uber/Lyft--both from a user experience and possible legal point of view--because the customer can see the rate before pulling the trigger. A cellular carrier has no way to provide that feedback.
>A cellular carrier has no way to provide that feedback.
There's definitely no way they could write a simple app to provide this info, and it would be crazy for them to white-list it so it didn't count against bandwidth usage :)
Pull that paint roller out of your pocket and paint the wall next to you, then go to the restroom and pull it out again to paint over the graffiti on the stall wall. Then walk your dog and use it to paint the neighbors houses...
Never gunna happen. When do you need a paint roller? About once every 5 years on average, vs WIRELESS connectivity once every 5 minutes on average.
> If your local grocery monopoly started rationing out milk to 250ml sold per day there would be protests
Not quite.. if they rationed milk to 250mL, but then let you buy an extra 25mL for what the first 250mL costs. They're not only creating scarcity, but then creating a market to profit from this artificial situation.
Don't airlines do this too? You can buy the first ten tickets on a given plane for the same price that you would pay for the very last available ticket. Don't see anyone getting lynched in that industry.
Except if bandwidth were legitimately scarce ISPs would be trying to incentivize the use of bandwidth at low times and disincentivize its use when congested. Power companies can and do do this - the price per kwh can be much cheaper at night or in the morning than by day or evening when there is less peak load on the system.
Nowhere are IPSs offering "3mbps from 5-10 and 30mbps the rest of the day" plans. Because the cost to improve total network bandwidth is almost nothing, relative to the last mile costs. Every ISP could easily meet the full rated line bandwidth of every residential connection they have within their current margins without issue. They don't, because they have no competitive pressure to actually do anything than make sure the current service works. They have no competitors besides maybe cellular providers, who are already paying them in business contracts to attach towers to the backbone.
A decade ago, my (European) ISP had even more complex rules: it was unmettered during the night, but during the day it had different caps for International, National and In-ISP traffic.
Our (rural wireless ISP) does something along these lines ... data between something like 1am and 7am does not count towards the monthly data cap.
At (peak) times they actively traffic shape and penalize the heaviest users. It sucks, but I don't see people willing to pay the $$$ to upgrade infrastructure faster.
Aggregate bandwidth or rate is limited and is what costs money to increase but that's not what ISPs are charging for.
Do you think that everyone gets the aggregate rate they pay for? Do you think any ISP has capacity to deliver everyone their aggregate rate simultaneously? Does the combined bandwidth consumption of all customers over a given billing cycle approach the maximum theoretical bandwidth of the ISP? No, no, and no.
ISPs are charging for bandwidth like it's a commodity you buy at the store but if you buy a bag of rice at the store, the store doesn't take your left over rice at the end of the month and expect you to buy more. ISPs do though...
Paying for transfer isn't the same as paying for bandwidth. If I download something in the middle of the night vs at peak usage, it's the same transfer billing, but one utilizes bandwidth that isn't scarce and one does.
ISPs have profited massively from many many Moore iterations while consumer bandwidth is stuck on below 1990 technology.
Make no mistake, the technical side of this has only gotten cheaper. That's before you consider the "investment" necessary to resolve the vast majority of Netflix bandwidth issues is connecting a cable from one router to another in a CIX.
Of course when you do that it becomes blatantly obvious that ISPs have oversold and overbooked capacity dramatically as we get closer and closer to the last mile to the customer. Now they don't want to pay up to actually provide what they have sold.
> ISPs have profited massively from many many Moore iterations while consumer bandwidth is stuck on below 1990 technology.
On one hand they don't have to compete in many place so ISPs are close to being a monopoly so they can keep charging $80 for < 1Mpbs if they want.
At the same time Moore iterations don't dig trenches and lay fiber between cities. Also frequency spectrum doesn't grow with Moore's law either.And in many instances it is still mostly a shared resource. Cable companies usually have groups of houses share the upstream bandwidth.
Of course none of that ever makes it to the consumer, investment is stagnant or down and all this tech ends up achieving is accommodating higher Internet penetration (and customer counts).
All this cable infrastructure previously wasted on free to air crap has turned into a veritable gold mine with no further investment and tech again making up for all the growth so you don't have to spend any.
Sure, Moore isn't helping dig trenches but he sure has been tremendously helpful in turning that ole shitty copper wiring financed by Uncle Sam into a lot of green.
This is completely ignorant on two fronts. First, the neither POTS nor cable was "financed by Uncle Sam." Second, new headend equipment isn't free, and DOCSIS upgrades have gone hand-in-hand with node splits and pushing fiber deeper into the HFC network.
> ISPs have profited massively from many many Moore iterations while consumer bandwidth is stuck on below 1990 technology.
On what planet? I did a speedtest.net run the other day on LTE and got 150 Mbps down/20 Mbps up near a strip mall in exurban Maryland. That network did not come cheap.
The effective bandwidth of that network even on some unobtanium 50 GB plan is <1 Mbps and that's before we get into latency and packet loss discussions.
That's like saying the "effective speed" of a 777 is 45 mph because that's the maximum average speed over a month accounting for refueling and servicing. Or that the "effective battery life" of a MacBook Pro is 70 minutes because that's how long you can run it at full tilt. It completely ignores the typical customer use case.
I feel nerdsniped! The utilization rate of a major airline 777 is ~12 hours per day. If the ORD-LAS flight I took today is representative, average in-transit speed is 331mph, so the average speed of a jetliner isn't 45mph, but rather... 165mph?
Hmm, I think that figure could be off by a decent amount though depending on what exactly is measured by "utilization". Taxiing, for example, or sitting at the gate with an hour delay.
I think the best way to figure this out is to conduct a little study: set up a script to monitor a representative sample of planes on FlightAware for a while.
Taxiing is included in utilization time, but also in my average transit time (I just took the nautical distance traveled and divided it by the actual transit time).
Moore's law has not held for long-haul bandwidth for quite some time. Moore's law is for semiconductors and that has little to do with signal efficiency.
If we don't stop this kind of behavior now, it'll become industrialized and infrastuctures will be built on top of it that will become very disruptive to dismantle once we realize how much were getting screwed.
We rely on the internet so much for our lives and jobs and economy and banking that it should be a utility and a right, hell, we use the internet more than our phones, and cell phones are more ubiquitous and relied upon than landlines by a longshot!
Where is there a local grocery monopoly? I grew up in just about the most rural part of WV and we had several grocery options to choose from within a reasonable area.
Does that still hold true now? When I lived in Buckhannon, WV, our local "grocer" was a Walmart, and you needed to drive 15 mins on the interstate to get to it.
Monopolies are not only formed of one company, they can be a collusion of companies so long as the barrier to entering the market and competing with the colluders is impossibly high.
Considering the barrier to entry to becoming a cellular operator is owning spectrum, that is one of the most impossibly high barriers to usurp. Nobody has to sell you any, the owners can set whatever price they want, and there are no mechanisms to mitigate this state-created impossible to overcome monopoly on light.
Landline access, by comparison, is macro-harder and micro-easier. It is more likely you can get easement rights to run fiber on a given street than to get the right to use wavelengths of EM, but trying to get easement in an entire city can be similarly impossible.
Ah yes, a single example is more than enough to override the mountains of evidence that the majority of Americans only have a single choice of internet provider.
Power is setup the same way in some states, where multiple companies share the wires. This is only because the government demands the wires be shared fairly. Its an interesting arrangement, essentially a regulated monopoly called a utility.
But if you're in a longer term contract you're out of luck for a while. If they are allowed to change the service then they must allow customers to switch providers without exit fee.
Your analogy would be better with fast food, ice cream or candy than with milk. Nobody needs Netflix and ironically the society would probably be better off if people did not waste so much time with their eyes glued to their screens.
I see your point but as long as it's services like Netflix I hope people will not claim it as a right.
I think you misunderstood the OP's post. He is saying that the people have a right to access the internet as a utility,
regardless of the destination address, be it Netflix or Google. Just like I should have the right to choose which food I eat, be it milk, or as you suggest, candy or fast food.
Netflix in particular is indeed not a right, and in fact Netflix charges a monthly subscription that you may or may not be able to afford. But if I pay for Netflix, I should have a right to access it, or any service I want, via my "chosen" internet service provider.
Anyway I'm making this post because I think I have a better version of the milk analogy, so here goes...
The main problem with the milk analogy is how the transactions are done. I pay the grocery store a fee for access to walk in and out of the market with a certain weight of groceries per second. Separately I pay the milk provider for all-you-can-drink access to milk.
(Alternatively, you can imagine the grocery store is one of those stores in a mall that you have to walk through to get to the rest of the mall, but I'm forced to walk in and out through their front door).
In this analogy, the grocery store should have no right to limit the amount of milk I can carry through their market, while claiming to offer access to any food by weight.
If your local grocery monopoly started rationing out milk to 250ml sold per day there would be protests, investigations, and 10 minute time blocks for it on the nightly news because the people would demand it. The internet just hasn't had this moment yet and it sucks because the momentum for this moment is building but it hasn't reached critical mass. I don't think this moment will happen for another decade at least.