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RE: What do we mean when we say "competition?"

  • From: David Schwartz
  • Date: Thu Nov 17 20:32:31 2005


> So... Microsoft has a monopoly on Windows and the basic OS costs
> you $299 with virtually no server capabilities.
>
> In the POSIX-style OS world, where you have multiple competitors,
> prices range from $0 to $179.

	Either these products are comparable or they are not. If they are
comparable, then Microsoft has no monopoly and the prices are low, as low as
$0. If they are not comparable, then the fact that one is cheaper says
nothing.

> True, but, this one does.  There are multiple ways to skin a cat,
> and, multiple versions of Windows pricing.  Any way you slice it,
> MicroSoft remains the most expensive OS in the market.
> Everyone elses OS prices have come down since the days of Win 3.1,
> Microsoft's have gone up (about 600% -- $49 to $299).

	Which proves that Microsoft has been *unable* to keep prices high. OS
prices have fallen despit Microsoft's effort to keep prices high.

> > Microsoft hardly has a monopoly on servers.  If their
> > prices are too high, use something else.

> Microsoft has a monopoly on Active Directory servers.
> Microsoft has a monopoly on Exchange servers.
>
> If you are unfortunate enough to need either of these things
> (I thank my lucky stars every day that I am not), you have to
> buy them from Micr0$0ft.

	Every company has a monopoly on its proprietary technologies. If you need
either of them, thank your lucky stars Microsoft makes them available to
you.

> Agreed.  Instead of granting further monopoly positions and first-arrival
> advantages and again allowing the first provider into the market to
> prevent all future comers, let's avoid the fight and separate the
> LMI from the overlying service.

	Except it may be that the right and best business model is combined LMI and
overlying service. It may be that some infrastructure is too expensive to
provide without the added revenue from an overlying service monopoly.

	What is your solution to that problem? Subsidy? Or live without?

> If you limit it to the scope I speak of, you are limited to an area where
> very little innovation has occurred in the last 50 years, or, is likely to
> occur in the next 50.  Category 3 UTP hasn't changed in more than
> 50 years.
> Fiberoptics date back to the 1840s with singlemode being
> introduced in 1961
> and adapted for telecommunications in 1966 and it's current form being
> perfected around 1970.  75 ohm TV Co-Ax has also been pretty standard
> for a very long time (RG58 is, I believe, the most common)

	I think this is a deceptive argument. There has been lots of innovation in
last miles. Fiber to the home, IP over powerline, wireless, over cable, via
satellite, and so on. A subsidized way of doing the last mile could damage
this innovation. And I don't think you can regulate without subsidizing.
(See my other posts for the arguments why regulation will compel either
subsidy or shortage.)

> Given universal household access to singlemode, UTP3, and RG58, I don't
> believe
> there is a single terrestrial facilities based communications service
> available
> today that would be impossible (obviously, the current cost of
> DWDM hardware
> and supporting backbone equipment makes OC-192 to the home impractical
> today,
> but, not impossible given the facilities above).

	And if you decide that what we have today is good enough and compel or
subsidize it, then there will be no reason to develop newer technologies.
This is looking at where we are and ignoring how we got here.

> I cannot deny that there is a possibility someone will come up with some
> super-innovative media for terrestrial facilities-based transmission, but,
> I can say that there is very little effort being put into such research
> at this time because single-mode fiber is so economical at this point that
> nobody really feels there is a need for or significant benefit to such
> an improvement.  Were a compelling new media to come along, I'm sure that
> someone would deploy it.

	If it's so economical, why can't five companies bring it to my house? How
can you argue it's super-economical and a natural monopoly because of
expense at the same time? How do you know that the alleged natural monoply
isn't a technical problem with a solution around the corner?

> Bottom line, we have achieved market competition and fair access to all
> other portions of the network.  LMI at layer 1 has proven to be the sticky
> wicket that remains a natural monopoly no matter how hard we try to change
> that.  As such, I think it is time to accept the fact and deal with it
> accordingly, instead of continuing to allow it to preserve destructive
> monopolies in other areas.

	In other words, single-mode fiber to the home is *NOT* so economical.

	It is funny how the advocates of regulation always have to argue both sides
of every issue to try to find some traction. "Monopoly means higher prices."
But the prices are lower. "Well then, monopoly means lower prices, and
somehow that's bad too". And at the same time the last mile is so cheap no
innovation is needed and so expensive no competition is possible. And on and
on and on.

	DS






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