The FCC is planning new net neutrality rules. And they could enshrine pay-for-play. - The Washington Post

Larry Sheldon LarrySheldon at cox.net
Fri Apr 25 04:29:01 UTC 2014


On 4/24/2014 11:01 PM, Everton Marques wrote:
> On Fri, Apr 25, 2014 at 12:44 AM, Patrick W. Gilmore <patrick at ianai.net>wrote:
>
>> On Apr 24, 2014, at 23:38 , Larry Sheldon <LarrySheldon at cox.net> wrote:
>>>
>>> Regulating monopolies protects monopolies from competition.
>>>
>>> Monopolies can not persist without regulation.
>>
>> You are confused.
>>
>
> I think Mr. Sheldon is pointing out this:

Thank you.

[more comment below]
> --xx--
> The biggest myth of all in this regard is the notion that telephone service
> is a natural monopoly. Economists have taught generations of students that
> telephone service is a "classic" example of market failure and that
> government regulation in the "public interest" was necessary. But as Adam
> D. Thierer recently proved, there is nothing at all "natural" about the
> telephone monopoly enjoyed by AT&T for so many decades; it was purely a
> creation of government intervention.
>
> Once AT&T's initial patents expired in 1893, dozens of competitors sprung
> up. "By the end of 1894 over 80 new independent competitors had already
> grabbed 5 percent of total market share … after the turn of the century,
> over 3,000 competitors existed.[55] <http://mises.org/daily/5266/#note55> In
> some states there were over 200 telephone companies operating
> simultaneously. By 1907, AT&T's competitors had captured 51 percent of the
> telephone market and prices were being driven sharply down by the
> competition. Moreover, there was no evidence of economies of scale, and
> entry barriers were obviously almost nonexistent, contrary to the standard
> account of the theory of natural monopoly as applied to the telephone
> industry.
> (...)
> The theory of natural monopoly is an economic fiction. No such thing as a
> "natural" monopoly has ever existed. The history of the so-called public
> utility concept is that the late 19th and early 20th century "utilities"
> competed vigorously and, like all other industries, they did not like
> competition. They first secured government-sanctioned monopolies, and
> *then,* with the help of a few influential economists, constructed an *ex*
> *post* rationalization for their monopoly power.
> --xx--
> The Myth of Natural Monopoly
> http://mises.org/daily/5266/

I don't know what got me to thinking about it earlier today but I 
recalled when I started at the telephone company in Los Angeles there 
was a pitch made early on that in earlier days a business in Los Angeles 
had to have several telephones on desks to be able to talk to all of 
their customers.

Which was true ONLY because regulation required that each telephone line 
terminate in an instrument owned by the providing company.

Absent that one regulation, businesses would have invented multi-line 
instruments a lot earlier than was the case.

There would still be some other problems like interchange traffic 
between companies, but I suspect that some entrepreneur would have (or 
maybe did) install two or more switchboards within lord reach of each 
other.  (The high school I went to in the 1950s had a very complete 
non-Bell System telephone system on-campus.  In a small office off the 
Main Office were two identical cord boards along with placards 
prohibiting connections between the two boards--which were ignored 
unless there was a telephone man in the office.



-- 
Requiescas in pace o email           Two identifying characteristics
                                         of System Administrators:
Ex turpi causa non oritur actio      Infallibility, and the ability to
                                         learn from their mistakes.
                                           (Adapted from Stephen Pinker)




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