AT&T to cap broadband usage. Streamers beware

Sam,

Not remotely.

I have no particular philosophy regarding public ownership/regulated business versus unregulated capitalism. There are benefits to each. Stability vs. efficiency. People want the upside without the downside. Sadly, that's not how the world works. Free markets bring upside, but volatility. Regulated markets are more stable, but kill the upside.

My guess is that most people are happiest somewhere in the middle. Fine by me, either way.

However, I have personally financed (to the best of my knowledge) more fiber than any other individual on the planet. I know the history of these assets better than I want to.

My comments reflect the history of ths business as I understand it - but they certainly shouldn't be taken as an endorsement of free markets at all costs. Rather, I'm just pointing out that the development of low cost digital distribution is a direct result of privatization. Having lived thru the transition from public to private, I don't think that this fact - FACT -should be subject to debate.

Marty

Marty is absolutely right about privatization lowering the cost of bandwidth for everyone. I'm old enough to remember when a 56K frame relay circuit was $500/month and a T1 (1.5Mb) was $2,500/month! And the reliability stunk on both. I now get 10Mb into my house, over copper, for $40/month. People with FIOS can get 10 times that, and Google is rolling out 1Gb service in KC, KS. Some bandwidth providers are governmental, most are private, all charge similar prices. Competition almost always drives prices down.

He's also right that most people prefer something between public and private, and all you have to do is look at how water, sewer, electric and gas utilities are run. Some are government run, some private. All are regulated, because the government decided everyone needed access to those basic services at a reasonable price.

At some point, Internet access and cell phone service will cease to be luxuries and cross over into necessities, just like water, sewer, electric and gas. Some would argue they already have, although there's still a large portion of the population who survive quite nicely without either. When the crossover happens, the government will step in and regulate.

As Marty points out, this will bring stability, kill the upside, and probably result in consolidation of the market. Better? Depends on which side you're standing.

The guy who owns the fiber (or wires or pipes) gets paid no matter what. Delivery to your door is what you actually pay for.

David

Sam,

I see that I sort of skipped answering your question re: TARP directly and went straight to the logical follow-up, re: government intervention.

As to the former. I'm not an economist, but I do have the gut feeling that letting the big banks fail might have been truly disastrous. Therefore, I think TARP probably saved Main Street as much as Wall Street and, therfore, constituted good policy. (Only, however, on the basis of TARP's effect on Main Street.) Just an opinion, and not a terrible informed one, at that.

As a side note, you might be interested to know that, of the many dozens (maybe hundreds) of Wall Street bankers and lawyers that I know, NOT ONE fully embraced TARP. From that, I hope you deduce that I don't hobnob with the Lloyd Blankenships of the world.

Bankers tend to be free market guys who want to see badly run businesses fail - even if they work for those businesses. Most (at least the good ones) are sufficiently confident (arrogant, if you prefer) as to believe that they could find another job and make the same (or more) money. These guys were as angry as anyone at their own executive management - except maybe for the asset backed origination guys who were the bulk of the root cause and, honestly, I just don't know anyone at that end of the business.

The only fact tempering their resistance to TARP was the their own position in their employer's stock (a portion of those huge bonuses you hear about is always in stock/options that vest over time). Bottom line: most bankers grudgingly approved of TARP because it protected their wealth, even tho they hated the idea.

OTOH, those guys who saw it coming and shorted the bank sector (I know several who did so) were just furious. One neighbor even trotted out the Boone Pickens line that, after TARP, political risk to investment was greater in the US than it is in China. For what that's worth....

Hope that is more responsive to your question.

Marty

Hi Marty,

Fascinating perspective...our intimate and casual associations notwithstanding, I regard the conviction with which you speak.

Thank you,

Sam

Sam,

Sorry, I don't follow the "intimate and casual associations" reference. I'm particularly curious about the "intimate" part.

Marty