The ILECS Suck

Yes, those relics of the Bell Telephone System, the incumbent local exchange carrier are a bunch of pig felching scum, and US telecommunications and data costs and performance will continue to lag behind the rest of the world until they are treated as rent seeking parasites, rather than valued participants in the process.

In the case of Verizon, it now appears that they are deliberately sabotaging its own DSL service and forcing its customers with which it colludes, with the hope that these people will be forced to move to (almost completely unregulated) wireless.

It has the additional "benefit" of moving their business from their unionized land line market to their non-unionized wireless division.

We also have AT&T reporting improved profits by deliberately and aggressively making their product worse:

AT&T reported their second quarter results today. According to this analysis, AT&T achieved better profitability by (a) dramatically limiting their broadband service; (b) discouraging consumers from upgrading their devices; and (c) figuring out new charges for consumers to enhance overall profit per customer.

I get that firms are supposed to maximize profit. But when every single incentive to profit maximization relies on providing less service for more money and discouraging people from using your service, something is seriously messed up. This is doubly true when usual trend in information technology is to drive prices down. And, more tellingly, it creates a real concern if we are relying on market incentives to ensure that providers do things like build out networks and provide us with better service and lower prices.

………

I’d be happy to concede the issue on metred pricing, except that there doesn’t seem to be any actual relationship between the price metering and the cost of provisioning. The idea of metering is that I want to provide you with more capacity because that way I make more profit. If this were bananas, I would have a fairly direct incentive to grow more bananas so I can sell more bananas. But AT&T doesn’t want to charge me for more bandwidth, which would arguably give it incentive to build better systems and sell me ever more capacity. It wants to sell me limited capacity and then stop, presumably so it can capture some imaginary and unspecified revenue on the the other side of the platform. That creates a fairly unfriendly incentive to create scarcity and avoid investment in the network.

It's what economists call rent seeking behavior, where a company manipulates the social or political environment to extract money, as opposed to doing that icky, "out-competing the competition" thing.