[1915] in Commercialization & Privatization of the Internet
The NREN and Regulation
daemon@ATHENA.MIT.EDU (drw@BOURBAKI.MIT.EDU)
Tue Jan 7 21:58:55 1992
Date: Tue, 7 Jan 92 21:56:55 EST
From: drw@BOURBAKI.MIT.EDU
To: com-priv@psi.com
In-Reply-To: <9201071626.AA06464@lokkur> "scs@lokkur.dexter.mi.us"
From: scs@lokkur.dexter.mi.us (Steve Simmons)
To put my point more
succinctly: a well-regulated monopoly is much more likely to provide
a universal service to "unprofitable" areas than a pure capitalist
market.
That's true by definition -- a pure capitalist system will never
service something that's unprofitable. However, "unprofitability" is
often relative -- it depends on what price the customer is paying.
Consider airline deregulation -- small airports were still served,
although at a higher price than previously. Large airports were
served at dramatically lower price. On the whole, deregulation has
helped the public, although certain segments have been hurt.
The danger of a regulated monopoly (IMHO) is that it might stifle the
technological improvements that can suddenly make an unprofitable
service area profitable. Not that this is a really an argument
against regulated utilities, just a caveat about how they should be
regulated.
Also, it is quite feasable to provide service to unprofitable
customers by the simple mechanism of a government subsidy. Of course,
that would require tax revenues. But, the cross-subsidization of
customers by utilities is simply a hidden tax, whereby profitable
users subsidize unprofitable users. However, politicians prefer that,
because they don't have to take the heat for it! Although, if memory
serves me right, the Rural Electrification system was a set of direct
subsidies to cover the capital costs of electrifying farms.
[...] but note that the extension of infra-
structure seems to always yield benefits -- be that infrastructure
telephony, electricity, highways, or networks.
In general, the installation of infrastructure usually provides
benefits far larger than what can be captured by any commercial
provider. This suggests that direct government subsidy (even of
commercial providers) can be socially useful.
Dale Worley Dept. of Math., MIT drw@math.mit.edu
--
Boston: The place where one has to *fight* for a double-parked space.
Unbelievable. -- Kathryn Scholl
