So, how can you spice up really bleak statistics like recent stock market performances of major companies and the death toll of soldiers in Iraq? Make them into music, using that new darling of blog posts, Microsoft Songsmith (obligatory holy crap moment as I realize I’m linking to a Microsoft product I’m not hating on). See and listen to the results at WFMU’s Beware of the Blog.
Year: 2009
Sermon — Will Progressives Be The Generation of the Desert or The Generation of Joshua?
I must interrupt my usual analysis for a sermon.
It is appaling to me that we stand on the verge of seeing the stimulus bill go from a reasonable piece of legislation designed to fundamentally alter the economy to enhance sustainability to a return to the usual failed policies and boondoggles. This is not happening because the Obama people are “stupid” or “failing” or because the “special interests” are too powerful. It does not happen because Rush Limbaugh is “too strong.” If it happensm, it will be because the people who listen to Rush Limbaugh are willing to get off their rear ends and pick up phones and make calls to their Senators and to their local newspapers and browbeat them into cowed compliance — and we Progressives will not.
Voting on election day is not nearly as important as being willing to spend five minutes when it counts. We have the tools, we have the moment, we have a good first step before us. But will we trouble ourselves to save it?
The time has come for Progressives to decide. Shall we be the helpless Generation of the Desert, the generation that time and again quailed before the challenge and demanded Moses return them to the land of Egypt and died in the desolate waste without coming to the Promised Land? Or will we be the Generation of Joshua — willing to make war to take the Land flowing with milk and honey the Lord has promised us? This fight for the stimulus bill marks our first test.
Blogroll amnesty day redux
As we did last year, we’ll join blogroll amnesty day again this year.
I will observe a modified limited hangout limit of 72 links in my blogroll, which number is arrived at arbitrarily, but intended to keep the thing manageable. My jubiliee policy is in effect from now until such time as the limit is reached.
If you would like to be added to my blogroll, add me to yours, and send me your listing in the form thus wise:
Wetmachine
http://wetmachine.com/
You can either leave your particulars in the comments, or send via email to
mail [at sign][the name of my blog] dot com
The Pains: A Book For Our Times
My teenage daughter knows a bit about life and art and intellectual pursuits. But only a bit. She rated John’s “Acts of the Apostles” as “not bad”, which is to say she liked it a lot. It’s a good read, and she can relate to its view of uncool dudes in the world. But having grown up living the technology instead of studying it, she takes too much for granted to appreciate the detailed references or the jokes.
I’m not yet recommending John’s latest book to her. She does not yet have the intellectual background for “The Pains.” Thank God.
Everyone over 20 should read it. It is an easy, funny and entertaining novella to read, with terrific pictures, and I thoroughly enjoyed it. But it has a challenging subject that forms a litmus test of whether you’ve been out in the world and paying attention and asking questions: What is the scope of science, religion, and politics?
“The Pains” is no wishy-washy thematic rambling — it has an opinion. (My favorite line is when the heroine meets the obviously dying hero for the first time in an ’80’s dance bar and declares, “I hate the fucking Eagles.”) I had first thought that opinion was centered on the general theme of “neo-con totalitarianism is bad, starting with Reagan.” As such, maybe the story was a bookend capturing a dead era?.
But the deeper theme of personal vs messianic science, religion, and politics are certainly not resolved this January, 2009. Indeed, a soul’s freedom requires perpetual awareness, and I think I hope that it always will.
Set a Fire Under Obama — and Abolish the Filibuster
The stimulus bill has been larded with tax cuts which will have virtually no impact on aggregate demand, and infrastructural spending which does have demonstrated immediate positive effect on aggregate demand has been trimmed back, to placate Republicans by a pusillanimous Obama administration. And despite the Obama administration’s determination to have a kumbaya moment with right-wing Republicans, not a single House Republican voted for the scaled-back stimulus package. This is a recipe for another Great Depression.
Obama supporters point out that he needs 60 votes in the Senate to avoid a Republican filibuster, and will only have 59 once Franken is seated (God alone knoweth when that will happen, and perhaps only 58 if Lieberman channels Vikdun Quisling again). Since Obama is essentially conservative, as reflected in all his economic appointments, and unlikely to challenge the status quo without substantial progressive pressure, it is incumbent on progressives to apply that pressure and to lean on Senate Democrats to smack the Republicans down hard by abolishing the anti-democratic filibuster rule.
Contrary to popular misconception, filibuster was neither a constitutional provision nor part of the original Senate rules. A simple majority could close debate from the adoption of the constitution until a rules change during the recodification of Senate rules under Vice President Aaron Burr’s supervision in 1806. There is debate among historians whether the rule allowing unlimited debate in the Senate was an unintentional error or was introduced by Burr in anticipation of conflict with President Jefferson’s administration. In any case, it overturned the original procedure used by the Senate.
The filibuster was not used until debates over the National Bank in the 1830s and its repeated use in that period culminated in an attempt by Henry Clay to restore the Senate’s ability to close debate by simple majority vote, which failed only narrowly. Republican Senate obstructionism to President Wilson’s war policies led to a threat by the Democratic majority to restore simple majority vote to close debate and this action was averted only by adoption of Rule 22, which permitted the Senate to vote cloture by a three-fifths majority. This is the rule under which the Senate currently operates.
The history of the filibuster has not been particularly distinguished, being primarily the refuge of southern racists to thwart civil rights legislation and right-wing Republicans to attack the New Deal, the Great Society, and progressive judicial appointments under Democratic Presidents.
Obama’s “bipartisanship” is nothing more than Clinton’s “triangulation” dressed up as “change we can believe in.” Progressives know very well that “bipartisanship” only ends up with Republican-crafted policies being implemented by Democrats, because it is always the Democrats who have to yield to intransigent Republicans. If FDR had tried to win a Republican majority for Social Security, there would be no Social Security today. The same goes for the Voting Rights Act and Medicare under LBJ. If LBJ had tried Obama’s nonsensical approach to dealing with right-wing Republicans, there would be no President Obama today.
Progressives need to set a fire under Obama to cease caving in to failed Republican policies. It’s time to remind him that the Republicans are the party of Hoover, Reagan and Bush — the authors of the failed policies that have twice brought us to economic collapse in a century — and that the Democrats are the party of FDR and LBJ.
And a major step forward would be to prevent further Republican obstructionism by abolishing the filibuster rule in the Senate and restoring the cloture by simple majority rule that the founders adopted.
Unless, of course, we want 20% unemployment by this time next year.
House Republicans Continue to Stand Up For Principle Despite Self Interest or Common Sense. Go GOP!
I am not entirely sure that a delay of the DTV transition is a good thing, but I know a political reality when I see it. With too many viewers likely to experience serious television viewing disruption, the smart politician takes some prudent steps to avoid blame. Hence the unanimous Senate vote to delay the transition until June. But the House Leadership, eager to give Obama and the Ds their first “defeat,” felt otherwise. They managed to muster a cadre of the faithful to vote against the passage of the Senate bill in the House “on suspension,” meaning without debate and requiring a 2/3rds majority.
It’s largely a symbolic gesture, since the Ds can always bring the bill up through the usual processes. And, for the majority of the country who are not hardcore GOP “we hate Obama and want him to fail no matter what this does to the country or even us personally,” it reenforces the perception that the Rs would much rather play games than get stuff done. Still, Republicans and various news outlets are all about how this marks Obama’s first “defeat.”
I look forward, therefore, to future news stories such as this:
Washington — House Minority Leader John Boehner (R-OH) and senior Republican members of the House of Representatives suffered serious head injuries today after slamming their heads repeatedly into a wall until they fell unconscious. The strange behavior began when Obama suggested he would introduce legislation that would have made it illegal to slam your head into a wall until you fall unconscious.
Conservative pundits praised Boehner and his colleagues for “sticking to their principles” and “refusing to cave.” “If Obama and his socialist comrades in Congress outlaw giving yourself a concussion, they’ll take our guns away next!” Warned Rush Limbaugh. Other media analysts questioned whether this “head banger rebellion” marked a turn around in the Republican’s fading fortunes. “If Obama can’t get bipartisan support for not injuring yourself, you have to ask what sort of influence he really has,” said Brit Hume.
House Speaker Nancy Pelosi (D-CA) expressed sympathy for her Republican colleagues and wished them a speedy recovery. However, a source close to the Speaker reported that — when conferring with President Obama and Senate Majority Leader Harry Reid (D-NV) — Pelosi giggled and said: “Next week, let’s get them to eat dung beetles.”
Stay tuned . . . .
R/C Bugs!
Let’s say you want a radio-controlled flying insect (and really, who doesn’t?) Sure, you could go out and get a Wowee Dragonfly. But that’s made of plastic, and is really just a radio-controlled plane with flapping wings. Booooring! Instead, you could get yourself a rhinoceros beetle, stick electrodes in its brain and presto! Radio controlled flying insects real enough to frighten any annoying little sister.
Class warfare (a brief update)
I am shocked, shocked, that the robber-barons who extorted $850 billion from the people last autumn would turn around and use that money to fund a shock-and-awe campaign on the American working class. Golly gumdrops, I am dismayed. All the while I thought the High Capitalists and Party Functionaries were such nice people!
Why Do Competitive Markets Keep Misbehaving? The Curious Case Of Cellular Txt Msging.
Been meaning to get to this for awhile now, which is why the links are so old.
It has long been an article of faith among the worshipers of the Gods of the Marketplace that once you achieve “competition” (generally described as at least one more possible new entrant, but certainly where multiple providers exist) you eliminate regulation, because a competitive marketplace gives consumers what they want — like high fuel efficiency standards and a secure financial system. Thus, for the 30 or so years, we have more and more framed the debate in telecom and media policy around whether or not we have “enough” competition rather than about the benefits or drawbacks of any actual policy. Unsurprisingly, you can always argue that we have “enough” competition (or that competition is about to emerge) and thus side step the whole question of the actual state of reality and what reality we might prefer.
Enter the curious case of cellular telephony. I’ll take the case of text messaging, although the same argument applies in varying degrees to other aspects of the wireless market like network attachments and ring tones. As Randall Stross wrote in the NY Times at the end of December, the cost charged to consumers for txt messaging has absolutely nothing whatsoever to do with the actual cost of the service. Yet — as we are constantly reminded — the cell phone market has four national players and numerous regional players. This makes it squindoodles more competitive than, say, the broadband market in most places in the country where you can generally get two somewhat comparable services (cable and DSL) and a whole bunch of also rans that folks like to claim are competition.
Text messaging is so overpriced compared to cost that last year Senator Herb Kohl, Chair of the Senate Antitrust Subcommittee, has sent a letter to AT&T, VZ, T-Mobile, and Sprint (more details here)asking ‘Ello, ‘ello, ‘ello and what’s all this ‘ere, then? — you’re nicked!’ (no, I have no idea why Kohl sounds like a British Bobby from 50 years ago — ask him). As Kohl noted in his letter, the consistent ridiculously high prices for SMS txt messaging “is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”
Short answer: it is utterly consistent with the nature of the wireless market. But — and here’s the shocker — real world markets are often much, much more complicated than the followers of the Gods of the Marketplace like to believe. Cell phone companies charge outrageous prices for text messaging (and other services like ring tones) not because they conspire with one another, or even because they engage in conscious parallelism. Nor do they do so because they must as a result of actual costs. They do so because — to use that classic phrase — it is what the market will bear, and the structure of the market ensures there is no benefit to any cellular carrier to offer text msging plans at anything approaching cost plus reasonable profit.
In economic terms, this is an oligopoly. Washington regulators treat oligopolies as if they were the same as competitive markets, unless one can show evidence of actual collusion — in which case it becomes a question of price fixing. But in reality, it doesn’t always work out that way. Even absent collusion, the ability of players to engage in strategic planing can negate the anticipated benefits of competition. Applying this framework to the CMRS market, and the question of the price of text messaging goes from suspicious riddle to entirely predictable. Whether you regard this as a reasonable outcome or not has nothing to do with “competition” or “market failure” and everything to do with whether we make a policy choice to care about it or not.
(Much) longer answer below . . . .
Why The Stimulus Speed Upgrades Are Right, Or Public Utility Meets Zeno's Paradox.
Many folks talk about broadband build out as if it were rural electrification. I do agree with this in one sense — it is a critical part of our infrastructure and links to our tradition of ensuring that we remain one country with access to vital services for all. In this respect, broadband is similar to telephone/voice, electric power, sewage, roads, and other other public utility/natural monopoly type investments. But it is fundamentally different from all of these in a fundamental way. Other public utilities have high initial construction cost, but then have very predictable maintenance and upgrade costs. This makes it possible to solve some problems with a huge one-time grant or, for the private sector to make a serious cap ex investment, but then budget for regular upgrades based on projected need and maintenance based on standard depreciation.
Not so broadband. As our technological capacity increases, we increase both the potential capacity for the network and our capacity to use the network in unpredictable ways. But we have neither public policy nor private sector models that acknowledge this — with the possible exception of Verizon, which solved the problem from their perspective by aggressively pulling fiber/overbuilding capacity as to current demand where profitable and aggressively selling off high cost rural regions. And, while that works for Verizon and its shareholders, it rather sucks from a public policy perspective.
I call this the Zeno’s Broadband Buildout Problem. No matter how much Achilles invests in build out, he will never catch up to the limit of possible upgrades. As I explain below, my tentative conclusion is that the right public policy result is a recognition that we don’t get to do a one time investment and go away, but need to continue to experiment to find sustainable models that factor in growth rather than simply look at build out followed by steady state. I’m not sure beyond that, other than my conviction that anyone who shrugs and says “that’s why the government shouldn’t do this at all” is definitely wrong.
OTOH, it also means I find the speed upgrade in the stimulus package — 45/15 for wireline and 3/1 for wireless — pretty good despite the fact that many of us want to reach the 100 mbps or even 1 gigabit/second capacity for future network needs. Broadband Achillies may not be able to catch up to Bandwidth Demand Tortois, but that doesn’t mean he gets to slack off either. A good swift stimulus in the patootie is actually a pretty good idea, given the open ended nature of the problem.
More below . . . .
-
Sermon — Will Progressives Be The Generation of the Desert or The Generation of Joshua?
I must interrupt my usual analysis for a sermon.
It is appaling to me that we stand on the verge of seeing the stimulus bill go from a reasonable piece of legislation designed to fundamentally alter the economy to enhance sustainability to a return to the usual failed policies and boondoggles. This is not happening because the Obama people are “stupid” or “failing” or because the “special interests” are too powerful. It does not happen because Rush Limbaugh is “too strong.” If it happensm, it will be because the people who listen to Rush Limbaugh are willing to get off their rear ends and pick up phones and make calls to their Senators and to their local newspapers and browbeat them into cowed compliance — and we Progressives will not.
Voting on election day is not nearly as important as being willing to spend five minutes when it counts. We have the tools, we have the moment, we have a good first step before us. But will we trouble ourselves to save it?
The time has come for Progressives to decide. Shall we be the helpless Generation of the Desert, the generation that time and again quailed before the challenge and demanded Moses return them to the land of Egypt and died in the desolate waste without coming to the Promised Land? Or will we be the Generation of Joshua — willing to make war to take the Land flowing with milk and honey the Lord has promised us? This fight for the stimulus bill marks our first test.
Blogroll amnesty day redux
As we did last year, we’ll join blogroll amnesty day again this year.
I will observe a modified limited hangout limit of 72 links in my blogroll, which number is arrived at arbitrarily, but intended to keep the thing manageable. My jubiliee policy is in effect from now until such time as the limit is reached.
If you would like to be added to my blogroll, add me to yours, and send me your listing in the form thus wise:
Wetmachine
http://wetmachine.com/
You can either leave your particulars in the comments, or send via email to
mail [at sign][the name of my blog] dot com
The Pains: A Book For Our Times
My teenage daughter knows a bit about life and art and intellectual pursuits. But only a bit. She rated John’s “Acts of the Apostles” as “not bad”, which is to say she liked it a lot. It’s a good read, and she can relate to its view of uncool dudes in the world. But having grown up living the technology instead of studying it, she takes too much for granted to appreciate the detailed references or the jokes.
I’m not yet recommending John’s latest book to her. She does not yet have the intellectual background for “The Pains.” Thank God.
Everyone over 20 should read it. It is an easy, funny and entertaining novella to read, with terrific pictures, and I thoroughly enjoyed it. But it has a challenging subject that forms a litmus test of whether you’ve been out in the world and paying attention and asking questions: What is the scope of science, religion, and politics?
“The Pains” is no wishy-washy thematic rambling — it has an opinion. (My favorite line is when the heroine meets the obviously dying hero for the first time in an ’80’s dance bar and declares, “I hate the fucking Eagles.”) I had first thought that opinion was centered on the general theme of “neo-con totalitarianism is bad, starting with Reagan.” As such, maybe the story was a bookend capturing a dead era?.
But the deeper theme of personal vs messianic science, religion, and politics are certainly not resolved this January, 2009. Indeed, a soul’s freedom requires perpetual awareness, and I think I hope that it always will.
Set a Fire Under Obama — and Abolish the Filibuster
The stimulus bill has been larded with tax cuts which will have virtually no impact on aggregate demand, and infrastructural spending which does have demonstrated immediate positive effect on aggregate demand has been trimmed back, to placate Republicans by a pusillanimous Obama administration. And despite the Obama administration’s determination to have a kumbaya moment with right-wing Republicans, not a single House Republican voted for the scaled-back stimulus package. This is a recipe for another Great Depression.
Obama supporters point out that he needs 60 votes in the Senate to avoid a Republican filibuster, and will only have 59 once Franken is seated (God alone knoweth when that will happen, and perhaps only 58 if Lieberman channels Vikdun Quisling again). Since Obama is essentially conservative, as reflected in all his economic appointments, and unlikely to challenge the status quo without substantial progressive pressure, it is incumbent on progressives to apply that pressure and to lean on Senate Democrats to smack the Republicans down hard by abolishing the anti-democratic filibuster rule.
Contrary to popular misconception, filibuster was neither a constitutional provision nor part of the original Senate rules. A simple majority could close debate from the adoption of the constitution until a rules change during the recodification of Senate rules under Vice President Aaron Burr’s supervision in 1806. There is debate among historians whether the rule allowing unlimited debate in the Senate was an unintentional error or was introduced by Burr in anticipation of conflict with President Jefferson’s administration. In any case, it overturned the original procedure used by the Senate.
The filibuster was not used until debates over the National Bank in the 1830s and its repeated use in that period culminated in an attempt by Henry Clay to restore the Senate’s ability to close debate by simple majority vote, which failed only narrowly. Republican Senate obstructionism to President Wilson’s war policies led to a threat by the Democratic majority to restore simple majority vote to close debate and this action was averted only by adoption of Rule 22, which permitted the Senate to vote cloture by a three-fifths majority. This is the rule under which the Senate currently operates.
The history of the filibuster has not been particularly distinguished, being primarily the refuge of southern racists to thwart civil rights legislation and right-wing Republicans to attack the New Deal, the Great Society, and progressive judicial appointments under Democratic Presidents.
Obama’s “bipartisanship” is nothing more than Clinton’s “triangulation” dressed up as “change we can believe in.” Progressives know very well that “bipartisanship” only ends up with Republican-crafted policies being implemented by Democrats, because it is always the Democrats who have to yield to intransigent Republicans. If FDR had tried to win a Republican majority for Social Security, there would be no Social Security today. The same goes for the Voting Rights Act and Medicare under LBJ. If LBJ had tried Obama’s nonsensical approach to dealing with right-wing Republicans, there would be no President Obama today.
Progressives need to set a fire under Obama to cease caving in to failed Republican policies. It’s time to remind him that the Republicans are the party of Hoover, Reagan and Bush — the authors of the failed policies that have twice brought us to economic collapse in a century — and that the Democrats are the party of FDR and LBJ.
And a major step forward would be to prevent further Republican obstructionism by abolishing the filibuster rule in the Senate and restoring the cloture by simple majority rule that the founders adopted.
Unless, of course, we want 20% unemployment by this time next year.
House Republicans Continue to Stand Up For Principle Despite Self Interest or Common Sense. Go GOP!
I am not entirely sure that a delay of the DTV transition is a good thing, but I know a political reality when I see it. With too many viewers likely to experience serious television viewing disruption, the smart politician takes some prudent steps to avoid blame. Hence the unanimous Senate vote to delay the transition until June. But the House Leadership, eager to give Obama and the Ds their first “defeat,” felt otherwise. They managed to muster a cadre of the faithful to vote against the passage of the Senate bill in the House “on suspension,” meaning without debate and requiring a 2/3rds majority.
It’s largely a symbolic gesture, since the Ds can always bring the bill up through the usual processes. And, for the majority of the country who are not hardcore GOP “we hate Obama and want him to fail no matter what this does to the country or even us personally,” it reenforces the perception that the Rs would much rather play games than get stuff done. Still, Republicans and various news outlets are all about how this marks Obama’s first “defeat.”
I look forward, therefore, to future news stories such as this:
Washington — House Minority Leader John Boehner (R-OH) and senior Republican members of the House of Representatives suffered serious head injuries today after slamming their heads repeatedly into a wall until they fell unconscious. The strange behavior began when Obama suggested he would introduce legislation that would have made it illegal to slam your head into a wall until you fall unconscious.
Conservative pundits praised Boehner and his colleagues for “sticking to their principles” and “refusing to cave.” “If Obama and his socialist comrades in Congress outlaw giving yourself a concussion, they’ll take our guns away next!” Warned Rush Limbaugh. Other media analysts questioned whether this “head banger rebellion” marked a turn around in the Republican’s fading fortunes. “If Obama can’t get bipartisan support for not injuring yourself, you have to ask what sort of influence he really has,” said Brit Hume.
House Speaker Nancy Pelosi (D-CA) expressed sympathy for her Republican colleagues and wished them a speedy recovery. However, a source close to the Speaker reported that — when conferring with President Obama and Senate Majority Leader Harry Reid (D-NV) — Pelosi giggled and said: “Next week, let’s get them to eat dung beetles.”
Stay tuned . . . .
R/C Bugs!
Let’s say you want a radio-controlled flying insect (and really, who doesn’t?) Sure, you could go out and get a Wowee Dragonfly. But that’s made of plastic, and is really just a radio-controlled plane with flapping wings. Booooring! Instead, you could get yourself a rhinoceros beetle, stick electrodes in its brain and presto! Radio controlled flying insects real enough to frighten any annoying little sister.
Class warfare (a brief update)
I am shocked, shocked, that the robber-barons who extorted $850 billion from the people last autumn would turn around and use that money to fund a shock-and-awe campaign on the American working class. Golly gumdrops, I am dismayed. All the while I thought the High Capitalists and Party Functionaries were such nice people!
Why Do Competitive Markets Keep Misbehaving? The Curious Case Of Cellular Txt Msging.
Been meaning to get to this for awhile now, which is why the links are so old.
It has long been an article of faith among the worshipers of the Gods of the Marketplace that once you achieve “competition” (generally described as at least one more possible new entrant, but certainly where multiple providers exist) you eliminate regulation, because a competitive marketplace gives consumers what they want — like high fuel efficiency standards and a secure financial system. Thus, for the 30 or so years, we have more and more framed the debate in telecom and media policy around whether or not we have “enough” competition rather than about the benefits or drawbacks of any actual policy. Unsurprisingly, you can always argue that we have “enough” competition (or that competition is about to emerge) and thus side step the whole question of the actual state of reality and what reality we might prefer.
Enter the curious case of cellular telephony. I’ll take the case of text messaging, although the same argument applies in varying degrees to other aspects of the wireless market like network attachments and ring tones. As Randall Stross wrote in the NY Times at the end of December, the cost charged to consumers for txt messaging has absolutely nothing whatsoever to do with the actual cost of the service. Yet — as we are constantly reminded — the cell phone market has four national players and numerous regional players. This makes it squindoodles more competitive than, say, the broadband market in most places in the country where you can generally get two somewhat comparable services (cable and DSL) and a whole bunch of also rans that folks like to claim are competition.
Text messaging is so overpriced compared to cost that last year Senator Herb Kohl, Chair of the Senate Antitrust Subcommittee, has sent a letter to AT&T, VZ, T-Mobile, and Sprint (more details here)asking ‘Ello, ‘ello, ‘ello and what’s all this ‘ere, then? — you’re nicked!’ (no, I have no idea why Kohl sounds like a British Bobby from 50 years ago — ask him). As Kohl noted in his letter, the consistent ridiculously high prices for SMS txt messaging “is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”
Short answer: it is utterly consistent with the nature of the wireless market. But — and here’s the shocker — real world markets are often much, much more complicated than the followers of the Gods of the Marketplace like to believe. Cell phone companies charge outrageous prices for text messaging (and other services like ring tones) not because they conspire with one another, or even because they engage in conscious parallelism. Nor do they do so because they must as a result of actual costs. They do so because — to use that classic phrase — it is what the market will bear, and the structure of the market ensures there is no benefit to any cellular carrier to offer text msging plans at anything approaching cost plus reasonable profit.
In economic terms, this is an oligopoly. Washington regulators treat oligopolies as if they were the same as competitive markets, unless one can show evidence of actual collusion — in which case it becomes a question of price fixing. But in reality, it doesn’t always work out that way. Even absent collusion, the ability of players to engage in strategic planing can negate the anticipated benefits of competition. Applying this framework to the CMRS market, and the question of the price of text messaging goes from suspicious riddle to entirely predictable. Whether you regard this as a reasonable outcome or not has nothing to do with “competition” or “market failure” and everything to do with whether we make a policy choice to care about it or not.
(Much) longer answer below . . . .
Why The Stimulus Speed Upgrades Are Right, Or Public Utility Meets Zeno's Paradox.
Many folks talk about broadband build out as if it were rural electrification. I do agree with this in one sense — it is a critical part of our infrastructure and links to our tradition of ensuring that we remain one country with access to vital services for all. In this respect, broadband is similar to telephone/voice, electric power, sewage, roads, and other other public utility/natural monopoly type investments. But it is fundamentally different from all of these in a fundamental way. Other public utilities have high initial construction cost, but then have very predictable maintenance and upgrade costs. This makes it possible to solve some problems with a huge one-time grant or, for the private sector to make a serious cap ex investment, but then budget for regular upgrades based on projected need and maintenance based on standard depreciation.
Not so broadband. As our technological capacity increases, we increase both the potential capacity for the network and our capacity to use the network in unpredictable ways. But we have neither public policy nor private sector models that acknowledge this — with the possible exception of Verizon, which solved the problem from their perspective by aggressively pulling fiber/overbuilding capacity as to current demand where profitable and aggressively selling off high cost rural regions. And, while that works for Verizon and its shareholders, it rather sucks from a public policy perspective.
I call this the Zeno’s Broadband Buildout Problem. No matter how much Achilles invests in build out, he will never catch up to the limit of possible upgrades. As I explain below, my tentative conclusion is that the right public policy result is a recognition that we don’t get to do a one time investment and go away, but need to continue to experiment to find sustainable models that factor in growth rather than simply look at build out followed by steady state. I’m not sure beyond that, other than my conviction that anyone who shrugs and says “that’s why the government shouldn’t do this at all” is definitely wrong.
OTOH, it also means I find the speed upgrade in the stimulus package — 45/15 for wireline and 3/1 for wireless — pretty good despite the fact that many of us want to reach the 100 mbps or even 1 gigabit/second capacity for future network needs. Broadband Achillies may not be able to catch up to Bandwidth Demand Tortois, but that doesn’t mean he gets to slack off either. A good swift stimulus in the patootie is actually a pretty good idea, given the open ended nature of the problem.
More below . . . .