The Invisible Hand of the Market Faces The Kobayashi Maru Scenario

The Invisible Hand of the Market Strikes Again!

American-style capitalism  is facing a Kobayashi Maru test, and this Axios item proves it:

President Joe Biden has a $100 billion plan to ensure all Americans have high-speed internet, but some of the key companies that provide those connections are already balking.

Why it matters: Democrats on the Hill will have to overcome industry lobbying and Republican opposition to make this part of Biden’s multi-trillion-dollar infrastructure program a reality.

Bringing cable (and Fox News propaganda, I might add) to Possum Hollar is now a commie thing? —

What they’re saying: “I thought that it was really out of character the degree to which they embraced this sort of unfounded faith in government-owned networks to own, build and run this program,” Michael Powell, CEO of cable trade group NCTA and a former Republican chairman of the Federal Communications Commission, told Axios.

  • “The idea that the private sector and profit incentives are intrinsically unsuited to do the job” is “surprisingly Soviet,” Powell added.
  • The focus on deploying fiber networks will leave rural households behind because companies will first upgrade networks in suburbs and areas that already have some service, he argues.

I would note that the Invisible Hand of the Marketplace has had 40+years to get cable (and the internet) to Possum Hollar and has failed, so maybe those profit incentives are not enough, Comrade Powell.

The other side: A Biden administration official told Axios that “future proofing” ensures rural areas aren’t left with stop-gap solutions, and that the proposal focuses on underserved areas.

  • “If we are going to put billions of public dollars behind this effort, we want to do it in a way that sets us up for decades to come,” the official said.
  • Involving community networks is a key piece of Biden’s goal of reaching 100 percent access, but the private sector will play a role as well, the official said.
  • “Having communities in the driver’s seat with this funding means that those communities have a stake, not only in articulating what the digital divide looks like on the ground, but what type of network will work best to meet their needs,” Kathryn de Wit, manager of the broadband access initiative at The Pew Charitable Trusts, told Axios.

I think it’s fair to say that broadband is a utility in our modern world, and it seems reasonable that this is a place where standards should exist, which means regulations.

What’s next: The FCC is about to roll out a new subsidy program, the Emergency Broadband Benefit, to give low-income consumers $50 off their monthly internet service bill during the pandemic. More than 300 providers have been accepted into the program so far.

  • But the White House says subsidies are not a long-term solution, and cheaper service is the answer. A study from New America’s Open Technology Institute finds that Americans pay more than Europeans for internet service at comparable speeds.
  • “We’re going to drive down the price for families who have service now, and make it easier for families who don’t have affordable service to be able to get it now,” Biden said in announcing the American Jobs Plan on Wednesday.

The intrigue: The potential paths forward for reducing internet prices are not particularly appealing to providers.

  • One way would be increased competition — through government funding of competing networks. Another is government regulation of internet prices.

And there’s Comrade Powell’s Invisible hand: competition.

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1 Response to The Invisible Hand of the Market Faces The Kobayashi Maru Scenario

  1. R White says:

    Whatever happened to the promise of companies like google fiber who were supposed to provide universal high speed internet here stateside in select cities and eventually in rural areas at lower prices just a few years ago? It seemed to be all the rage until companies like Comcast found out that google was going to piggy-back on existing infrastructure, wiring that all companies including Comcast regularly use.

    Like

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