Mobile Operators: Creating Artificial Demand For Capacity? 268
An anonymous reader writes with an excerpt from Broadband Convergent: "We all have been taught the basics of supply and demand since high school. If demand is high, prices rise. If demand is low, prices fall. Simple, but true; yet this concept can be manipulated artificially if, as seen with the latest projections of mobile operators, that higher demand means higher prices. Are the dire predictions being promoted by operator's a true demand, as we have been told, or capacity hoarding that will lead to artificially higher prices and more profits for the mobile industry?"
The gist seems to be: operators have no incentive to maintain good infrastructure because it costs money and the artificial scarcity of capacity allows them to charge more.
Regulation (Score:2, Interesting)
This is why competition must not be hindered by regulators. If it's allowed then other entries into the market will drive down the price, seeing the potential to take marketshare away from the higher margin telcos.
Canada is a great example of this. Prices were stupid for years, then entrants like Wind and Mobilicity got in, often despite the best efforts of the regulatory-captured cftc, and have cut prices so you can now get unlimited everything (really unlimited) for $25.
Re:The theory: (Score:4, Interesting)
In theory, companies that produce shitty service and charge too much for it go out of business.
In reality, the government metes out frequencies in a bidding process that generally shuts out competition.
The alternative would be to close down the FCC and let people broadcast whatever they want wherever they want at whatever power pleases them. There are probably people who think this is a good idea, and won't believe otherwise until Anonymous gets a hold of a transmitter.
A more realistic libertarian alternative would be to create an actual free market, not allow a handful of nationwide corporation to own the infrastructure.
1) Your corporation may only own towers and provide service to one metropolitan service area.
2) The government will only grant licenses to X-number providers per MSA. In return for this grant of public space and slightly limited competition, you are legally required by law to sign service contracts with anyone who asks for a contract.
3) The govt will regulate and F around with your tax rates to socially engineer it such that your service contracts will be standardized across the industry (different rates per location, of course, but identical format) and you'll get paid a fixed amount per month minus tower outright downtime, minus any time the backhaul network runs above 85% utilization, minus any time the RF side doesn't meet specs. The summary being you don't make any money unless you provide good service
This seems like a well regulated fair free market, genuine competition, etc. Needless to say it'll never happen because its not corrupt enough. It is vaguely based on pre-clearchannel broadcast radio regulation, which worked pretty well but was not corrupt enough, which led to our current previously-profitable wasteland.
An old, old story (Score:5, Interesting)
In ancient Rome, they would always say that food prices were too high, and there were ships full of Egyptian corn offshore, just waiting for the price in the marketplace to rise.
During the seventies the rumor was that Sixty Minutes had film of tank trucks of gasoline being dumped in the desert to keep prices high.
Now mobile providers are holding back on capacity in order to raise prices.
Sound familiar?
Re:Competition (Score:5, Interesting)
This is especially true with services that have such a high barrier to entry, like mobile.
How long is it going to be before everything has a high barrier to entry? That's what I'm wondering. I mean, we're already at the point now where companies like Apple are able to severely weaken, if not outright kill off, their competition just because they can basically use the insane amount of capital they have to corner the market on necessary raw materials and force out competitors at the manufacturing stage.
As these companies get larger and larger and larger [wikipedia.org], it seems like no matter what market we're talking about, eventually it's just going to be impossible for anyone to compete unless they're sitting on the enormous capital that the established players are, and how will they ever get that enormous amount of capital in the first place if they can't even enter the market?
Re:The theory: (Score:3, Interesting)
If libertarianism means "no government influence except where it's needed," then how the fuck is libertarianism a useful philosophy at all? How is it even different than any other philosophy, for that matter?
--Jeremy