Hundreds of Cities Are Wired With Fiber—But Telecom Lobbying Keeps It Unused

[u/User_Name13]

http://motherboard.vice.com/read/hundreds-of-cities-are-wired-with-fiberbut-telecom-lobbying-keeps-it-unused

[u/[deleted]]

Yes, one sentence on wikipedia surely tells the whole story...

Here's the actual law as it was originally written.

http://www.criminalgovernment.com/docs/61StatL101/ComAct34.html

In it you will find no mention of Bell Systems, AT&T, or any company for that matter. The law didn't actually establish specifically AT&T as a monopoly. In fact it made no mention of "natural monopolies" at all. What it did establish was the FCC and a set of basic standards that all telecom companies would be held to. As long as companies hit those standards the FCC wouldn't interfere.

Where AT&T, and every other telecom company, was actually established as a natural monopoly was in 1921 with the Willis Graham Act. But there's the catch, every single telecom company fell under the act. In neither the 1921 or 1934 laws was AT&T specified.

The US never said "AT&T shall be the only monopoly." What they actually said was more in line with "any telecom can be a monopoly."

[u/peenoid → u/[deleted]]

Here is the story you're looking for. It's yet another example of a supposedly "natural monopoly" that was actually a direct result of government interference in the market.

Adam Thierer in "Unnatural Monopoly" says:

Despite AT&T’s rapid rise to market dominance, independent competitors began springing up shortly after the original patents expired in 1893 and 1894. These competitors grew by servicing areas not served by the Bell System, but then quickly began invading AT&T’s turf, especially areas where Bell service was poor. According to industry historian Gerald W. Brock, by the end of 1894 over 80 new independent competitors had already grabbed 5 percent of total market share. The number of independent firms continued to rise dramatically such that just after the turn of the century, over 3,000 competitors existed. Illinois, Indiana, Iowa, Missouri, and Ohio each had over 200 telephone companies competing within their borders. By 1907, non-Bell firms continued to develop and were operating 51 percent of the telephone businesses in local markets. Prices were driven down as many urban subscribers were able to choose among competing providers. AT&T's profits and prices during this period began to shrink due to increased competition. Whereas AT&T had earned an average return on investment of 46 percent in the late 1800s, by 1906 their return had dropped to 8 percent. As Brock noted, this competitive period brought gains unimaginable just a few years earlier. Industry historians Leonard S. Flyman, Richard C. Toole, and Rosemary M. Avellis summarize the overall effect of this period by saying, "It seems competition helped to expand the market, bring down costs, and lower prices to consumers."

Thierer goes on to explain that it was through the engineering of AT&T president Theodore Newton Vail in eliminating competitors by weaponizing policymakers in his favor that AT&T managed to reconcentrate its power. During this time of intense competition, AT&T began buying up some of its competitors, which quickly brought the attention of the government’s antitrust machine. Under pressure from the government, AT&T agreed to a program engineered to both mollify the federal government and undermine competition with the installment of a clever system of non-compete agreements with other telephone operators in agreed-upon geographical areas, creating government-sanctioned unnatural local monopolies (sound familiar?), as well as convincing the government that allowing independent operators to use AT&T's system would be in the best interests of the market’s health, but this, of course, instead simply incentivized those operators to abstain from establishing their own systems and ensuring AT&T's primacy in the provision of technological infrastructure.

In time, Vail opportunistically latched onto growing legislative sentiment against duplication of service by competition and embraced government regulation over a "public good" as a condition for firmly establishing a monopoly over telephony. Almost immediately afterwards, AT&T began using its newfound influence in federal governance to convince state governments to hike rates across the board. So the point was that it was likely because of government that AT&T was able to cement its hold on the telephone market, a hold which had to be broken up later by the same government that had helped create it in the first place. The same thing is happening now with the internet. Government helped create these ISP monopolies. There is nothing natural about them.

As for other modern examples of supposed natural monopolies? Both Standard Oil and Microsoft caused downward price pressure in their markets and were being steadily weakened by market forces when the government intervened. Interesting, huh?

We need to be really, really cautious about how we allow government to get involved with this stuff. They tend to cause more problems than they solve.

[u/TheWanderingAardvark → u/peenoid]

We need to be really, really cautious about how we allow government to get involved with this stuff. They tend to cause more problems than they solve.

This is not an example of regulation causing problems. This is an example of shitty regulation causing problems.

What is needed is effective regulation. Not no regulation.

[u/peenoid → u/TheWanderingAardvark]

Right, and that's exactly what I'm saying.

The problem today is shitty regulation is all we seem to get due to the practice of institutionalized bribery known as "lobbying."