Why Switzerland has 25 Gbit internet and America doesn't
sschueller.github.io564 points by sschueller 18 hours ago
564 points by sschueller 18 hours ago
The real reason for the “cartels” in the US is because of the cost of infrastructure versus the subscribers cost. Because the United States is so large there are only a few companies that can create the infrastructure required to service large area areas with fiber.
So companies that have the ability to lay down, fiber do so in necessary cooperation with other providers to create a large patchwork across the country. This means that network companies have to cooperate with each other to send traffic back-and-forth.
It’s not realistic or feasible to have the US government generate a fiber optic connectivity for the entirety of every household in the United States. In fact, the free market was the only realistic possible to deliver this.
In my small island community, I participated in a municipal committee whose mandate was to bring proper broadband to the island. Although two telecom duopolies already served the community, one of them had undersea fiber but zero fiber to the home (DSL remains the only option), whereas the other used a 670 Mbps wireless microwave link for backhaul and delivery via coaxial cable. And pricing? Insanely expensive for either terrible option.
Our little committee investigated all manner of options, including bringing municipal fiber across alongside a new undersea electricity cable that the power company was installing anyway. I spoke to the manager of that project and he said there was no real barrier to adding a few strands of fiber, since the undersea high voltage line already had space for it (for the power company’s own signaling).
Sadly, the municipality didn’t have any capital to invest a penny into that fiber, so one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island.
A few weeks later, the cable monopoly engaged a cable ship and began laying their own fiber. Competition works, folks. Even if you have to fake it.
this is a great example of where the government should step in and say “welp, you took too long, we’re now funding municiple fiber and we’ll give it to everyone cheap. sorry.”
i truly do believe competition can often drivr things forward but we have countless examples where executives get comfortable and decide their best course of action for profits is to do little to nothing.
if a community has been screaming for fiber internet for years and the service companies cry “oh it’s just too expensive” when we know that isn’t true, then the people who pay the taxes should say “ok, apparently you’re not up to the job, you and/or your business model is clearly a failure, we’ll do it and provide it cheaper than you would have anyway.”
maybe this would force the competition we know can often work. if they can’t figure out a way to do it without subsidies, then we’ll do it ourselves. you can call it “spooky government” all you want, but that’s just another term for “us”
something to the effect of: ok, this thing has become integral to society. ceos, you have 5 years to compete and prove that you’re up to the task by delivering A, B, and C for $N. can’t do it? not up to it? no worries, thanks for trying.
> where the government should step in and say “welp, you took too long, we’re now funding municiple fiber and we’ll give it to everyone cheap
Thereby accruing not only a capital expenditure but ongoing operational obligation? How is this better than scaring the cable company into fronting the cash to get the same outcome?
In which way this is a viable strategy that you can repeat more than once?
If the outcome is you need to pay the next time, but not the first time…. Doesn’t it at least save you from having to pay for it the first time?
> In which way this is a viable strategy that you can repeat more than once?
I’m not saying commit to bluffing. But after the other guy has folded, continuing with your threat just to be petty is kind of dumb.
Australia did that but also paid out the telecom companies a gazillion dollars for infrastructure that had only been privatised like a decade earlier.
That's nice in theory, but look at how much money has gone to Verizon in the name of rural broadband, and how much they (haven't) delivered. And the consequences.
What does giving money to Verizon have to do with municipal (i.e. operated by the municipality) broadband?
Municipalities don't know anything about the job and few have the resources and personnel to become sufficiently experienced. I know every other poster on HN has a story where they personally stepped in and saw their local government through the process for incredibly cheap, hey that's great, but how is some random municipality without an elder tech god living with them supposed to get "municipal" internet without contracting with an ISP who actually knows how to get that work done?
We're talking rural broadband. These municipality don't have great human capital for this kind of stuff. Hell, they struggle to just fill potholes.
i was only using fiber as just one example. but in the case of fiber, there are plenty of non rural areas that still can’t get it and are stuck with terrible options.
even so, even in rural areas, nothing at all stops them from hiring people the same way they hire a weatherman or a police man or a fireman or a city accountant. there are educated intelligent people in rural areas…
That is not how it works here. Municipality owned fiber is common here in Sweden (called stadsnät). Often several smaller municipalities join together and co-own the venture.
A common variation is that they just provide the physical infrastructure and you can then select which ISP to use on top of the fiber, from a list of about 15 or so usually. This seems to work fine in rural Sweden, so I don't see why it wouldn't work elsewhere.
As to potholes, that is not a big problem? It is usually a larger problem in the cities than out in the countryside.
I guess we have different versions of HN cause the one I read has headlines on the front page pretty regularly about people (collectives, not individuals) doing their own broadband successfully. There's a reason right-wingers and lobbyists are against this and try to pass laws preventing it. It's because it works and undermines their position as rent-seekers who don't invest in their infrastructure.
That's the opposite of what was proposed above. Stop paying them altogether and replace them in the places where they aren't competing. I think that was the message.
Counterpoint: rural fibre is unbelievably expensive and starlink is solving it in a better way.
i’m sorry, but no, starlink is not comparable to fiber.
better than dsl? i mean, sure? but absolutely not even close to better than fiber. there’s a reason data centers in rural areas run fiber for miles and miles to their centers and aren’t on … starlink.
If it was easy to do with a lot of margin it would have been done by someone else in the private sector. In fact, they tricked these companies into making investments that weren't worthwhile for them. Sounds like the kind of people the deserve the shitty internet they have.
That’s not necessarily true. A lot of companies are very risk averse and will sit there creaming off profit and not making any investment.
If someone came to you and said - you have two choices:
Work incredibly hard, raise a lot of money, build a bunch of infrastructure. And at some point in the future you will make some more money.
Or - keep taking your very nice high guaranteed salary for the foreseeable future.
What would you pick?
I hear vending machine ppl often have 1-3 very profitable locations and 10-40 locations that only barely make sense often only because they already are in the business.
I imagine hiring someone to fix or restock them makes a lot more sense if you have 100 machine rather than just one.
It really depends what the goal is. Profit with fiber or fiber with profit?
Here public transport is required to cover all routes. Postal service is the same. Fiber doesn't seem that different?
The problem is all the regulatory stuff that means the bigger you are and the longer you've operated for the better you understand and have relationships with the often pretty inept regulatory bodies that can stop you.
This is a fundamental problem of value creation and value extraction. Just because the ISP's can't extract the value of adding the additional fiber capacity doesn't mean it doesn't confer that value to the customers. We live in an age of value extraction, what's colloquially known as "enshittification", that can't go on forever. Somebody has to create the value that is being extracted.
It's the old Marx quote: "From each according to his ability, to each according to his need". Except you know, the opposite.
If people truly want something and it can be done profitably, just start a company and do it yourselves.
If you need subsidies, that means the people who don't want that think are paying for it, just so people who do want it can have it cheaper.
With subsidies, the cost is still there, it's just hidden in some tax or other.
> If people truly want something and it can be done profitably, just start a company and do it yourselves.
There is a specific problem with last mile services: It costs approximately the same amount to install fiber down every street whether you have 5% of the customers or 95%.
So you have an incumbent with no competitors and therefore no incentive to invest in infrastructure instead of just charging the monopoly price for the existing bad service forever. If no one new enters the market, that never changes.
However, if there is a new entrant that installs fiber, the incumbent has to do the same thing or they're going to lose all their customers. So then they do it.
Recall that it costs the same to do that regardless of what percent of the customers you have, but they currently have 100% of the customers. Now no matter what price you charge, if it's enough to recover your costs then it's enough to recover their costs, so they just match your price. Then you're offering the same service or the same price, so there is no benefit to anyone to switch to your service now that they're offering the same thing, and inertia then allows them to keep the majority of the customers. Which means you're now in a price war where you'll be the one to go out of business first because customers will stay with them by default when you both charge the same price. And since this result is predictable, it's hard to get anyone to invest in a company destined to be bankrupted by the incumbent.
Which means that if the customers want someone to compete with the incumbent, they have to invest in it themselves. At which point going bankrupt by forcing the incumbent to install fiber is actually a decent ROI, because you pay the money and then you get fiber. Furthermore, you can even choose to not go bankrupt, by making the basic fiber service "free" (i.e. paid for through local taxes), which then bankrupts the incumbent and prevents the local residents from having to pay the cost of building two fiber networks instead of just one.
There is an elegant way to solve this. Mandate that whoever install the fiber lets other companies run their ISP on top of it (with a small but reasonable cut of the profit presumably). I believe this happens (mandated or not) already for mobile phone networks in the form of MVNOs.
And here in Sweden we have the same for fiber. I don't think it is mandated here, since not every place has multiple options like that, but many do. If you have municipality owned fiber (stadsnät) it always work like that I believe, often you have a choice between 15 or so different ISPs.
why would we do that? not everything has to skim profits to a certain group of people just because they exist. they can use magical competition and build it if they want a piece.
if an area has been waiting for… (what would it be now? around 30 years since the internet took off?) so these companies had 3 decades to build out and have refused, if we the tax payers step in and we pay for it, why should we let them in? they have refused to do anything for literal decades… even worse, many of these companies took billions in subsidies and still did nothing. they’ve refused to be good boot strappin capitalists, for decades.
(i want to reiterate what i said above, i believe competition can often work really really well. but if we dont understand by now that it fails sometimes too, we're not seeing clearly.)
think about how long that is, like some people become grandparents at around 35. someone born in the windows 95 days might have a grandkid and the poor sap still wont be able to get fiber. even in tons of urban and suburban areas.
some of these same ceos have gone on about how perfect the marketplace is, how awful taxes are, how magical the marketplace is… decades later if we have to build it, why should they get a piece?
Having the municipality run the whole thing would be even better sure. I'm not sure why we do that mix here in Sweden, but it worked out OK for us I think.
Also, wouldn't those subsidies come with a legaly enforceable requirement to actually build out infrastructure? If not, I think that is where you went wrong.
im saying we shouldnt give them subsidies at all. if they cant make it work in the marketplace, if they arent up to the task, then the competitive marketplace is a failure in that instance. and thats ok.
no subsidies. if they cant do it, fine, we'll do it and we'll provide cheaper than they ever would have. and in the case of fiber, we know this is the case. there are plenty of municipally owned fiber areas that are solid and cheap af.
its ok to admit that the market doesnt always work. often, absofuckinlutely. always? not at all.
a lack of subsidies would make it obvious where those failures exist so we can just do it ourselves (the spooky government) for cheaper. tell them "you had your chance" and move on with our day.
This line of thinking comes up so often, but ignores second order effects. I don't need schools because I have no children, but I will certainly depend on well educated children entering the workforce.
Or, more facetiously, I don't need a subsidised fire service because no building I visit is currently on fire.
Yes but you cannot make up more than about 10-15 examples everyone will agree with, seeing as those are subsidized in practically every country on earth, and then apply the thinking the guy above you gives for everything else.
In my opinion internet access is as fundamental a right now as water access so I think it should be subsidized to a fair degree.
But not for example if it is to supply only a small island of rich people just because they happen to want to live there and force the rest of the state to supply them. There's nuance to these things and we can't just outright subsidized everything and we can't market economy everything either
I agree with you. The internet is now important enough that it's required for almost everything past basic sustenance. Governments worldwide are moving services to the internet, so it's not even optional any more.
As precedent, the framers of the US Constitution specifically authorized the government to run a national service provider of last resort...
In that technological era of horses and handwriting, it became the US Postal Service, but I think if it occurred today it would be the US Networking Service.
I wish there was a way to achieve that same outcome in my internet backwater of San Francisco.
Nearby blocks have symmetrical GB fibre from Sonic but we only have shity 30MB up from Comcast.
Sounds like you do know a way: Buy a spool of fiber and lay one from your house to the nearby block. Make it public knowledge that you're doing this and sharing internet with your neighbours (even if you're not). The incumbent will quickly upgrade your area.
A few years ago I learned that the only thing keeping me on 20/2 ADLS was a few 100 meters of already built but empty cable channel. I easily could buy that much fibre, borrow a fibre splicer and cable puller, patch it up to a relative in one of the already wired buildings and share their gigabit link with my entire apartment building. Half of my building was on the ISP that owned the empty channel, so moving to a competitor would've directly hurt their bottom line.
Except that opening the manholes is a crime, using the ISP's channels would be at least a civil cause of action, laying such infra requires a municipal permit... The ISP was not worried about such "competition".
Now try doing this in the US, the land of endless red tape, NIMBYs and HOAs. And without having an already dug cable channel. Sure, that's going to scare the probably multi-billion-$ incumbent ISP...
People are too afraid of breaking the law. Look at every multi billion dollar company - all of them got where they are by breaking the law. How's it going to look in front of a jury when the government says "this man illegally brought cheap and fast internet to a neighbourhood?" The companies don't even have narratives that nice.
Even YC startups are encouraged to break the laws. The key is knowing which laws you can break, how much you can break them, and what's likely to happen if you're caught. When an illegal good thing is caught, the response is usually to slap on the wrist and legalise it.
A lot of current ISPs did start out illegally too.
Don't splice into other people's fibers though. That's a much worse crime of property damage.
You can break the law if you have money. That's it.
You won't be in front of a jury for "setting up fast internet". You'll get caught climbing into a manhole with electrician tools and charged with terrorism. The jury will be fed a story of how you had expensive specialized equipment on you, so this was a well-funded professional attempt at sabotaging critical infrastructure. You'll have a shitty public defender who will only realise that fiber in this case is about internet not clothing because he first read the file in the taxi to the courthouse. You'll take a plea deal because you can't afford a trial.
The system doesn't work how you think it does, at least not for the people on the ground.
You'll have money because you'll be selling fast internet to people. If YCombinator startups can make it work, so can you. Wear a hi-vis vest.
ROW?
It's easier to ask forgiveness than permission, especially if nobody notices.
Local municipality power companies put fiber in the ground whenever they put power. The result is fiber almost everywhere at very low cost. Even along rail and major roads.
It seems incorrect to call this competition.
I'm glad you got your broadband but what happened sounds much more like American politics than ordinary market processes. And in this political environment, corporations can engage in a variety of other tactics than placating a squeaky wheel - they can outlaw competition, buy off officials, pay for shrill media hit pieces and so-forth.
It's clearly competition. The incumbent company saw a potential competitor and acted upon it. That's literally what happens when there's competition. It doesn't matter that the competitor didn't actually exist if the incumbent behaved as if it did exist.
I'm never sure what the point of comments like this is. "It seems incorrect". But it isn't. You just don't want to admit that competition is good and necessary.
If they ever find out they've been duped, they'll certainly go out of their way to make something worse down the line at the expense of the people.
These are the kind of short-sighted tactics that competition and capitalism breeds that belongs in luxury markets, not utilities or essentials.
OK, I should have said "economic competition" though I imagined that it was implied.
If you just say "competition", you can point at the efforts of ten people to gain a seat on the politbureau as a clear case of this.
No, it's called market manipulation. OP's action caused spending at the expense of the companies. Not going to "won't someone think of the shareholders", but calling competition is misleading
Either side of the spectre lies enshittification:
- more competition comes with margin squeezing and cheapest source for service or goods
- less competition brings the monopoly, the dream of any capitalist (owner, not user).
Either way comes enshittification, and there's no middle balance, it drifts towards one of the sides always.
This German supermarket system has strong compettion , low margins but it is cheap and reliably good quality what most German wish.
So I disagree.
During the Soviet Union years, tourists to it knew that the thing to do was pack blue jeans in their luggage, which were highly desirable under communism. Wearing blue jeans in the USSR was a mark of status.
we still had luxury goods without monopolies, so I think I'll take more competition please.
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> What exactly did they prove?
They proved that the Free Market doesn't automatically provide functional competition, if you think about it, the Western-style free market is very keen on creating and maintaining monopolies, even cheating isn't going to help you here.
> The company laid down fibre because of what they saw as a potential competitor (municipal fibre).
The OP is about free market failures, not about competition. As another example, many people have pointed out that there is much more competition in China than in the US. Hope, this is enough for you to understand the difference.
Free markets don't automatically do anything. There's nothing automatic. It's about giving individual people the opportunity to take action.
Free markets tend toward monopoly which restricts individual people’s opportunities for action. In this example, there was a cable monopoly mentioned. The only way to coerce it (not even to defeat it in some way) was through baseless deception, not free market competitive action. The monopoly remained.
> Free markets tend toward monopoly
Not true and oversimplification. Some markets tend toward monopolies, but you rarely will get one unless enforced/protected by a state. If you navigate through history, you will find almost exclusively monopolies on salt extraction, coal mining oligopolies (with the help of worker unions), silk... Curiously, the Standard Oil was accused of being a monopoly, and the proof was they were offering lower prices than anyone thanks to their scale, destroying the competence. The reward for offering low prices was disolving the company (notice that they never reached the hypothetical price hike stage).
It is also common practice for the state to declare something "public utility" or "natural monopoly", on things like snail mail distribution, telephone or TV, that were clearly not a natural monopoly and could be offered by free market. Here fall a lot of ISPs, that get a "public utility" status and only then can abuse that monopolistic position with the help of the state.
A lot of free market sectors tend to atomization: think hair or nail saloons, masonry, plumbers, carpenters... if you know someone in the sector, it seems that as soon as they get a size over 5 or 6 people, two of them always decide to split and go by themselves.
You're right on most of these, but wrong on telephony. That actually was a natural monopoly.
It's exactly how OP describes it. It's unproductive for multiple companies to maintain disconnected, parallel telephone infrastructures. The most productive use of resources is to lay more wires to more houses, not to lay more wires to places which have already been wired up for telephone service by somebody else. That creates a monopoly, and the government should step in.
With modern tech, you can mandate local-loop unbundling and fix some of this, but that wasn't possible with 1970s (and earlier) phone infrastructure.
We use "natural monopoly" too freely and too quickly, almost as a free card to actually implement monopolies that last for decades. Anecdo-time: in my small city there is a small "natural" monopoly in public bus service: the municipality offers a monopoly on which buses can operate in the city, that lasts for 25 years or so. I lived through a renewal that was a bit rocky, the bus company went on a strike, and as a result there was a vacuum of monopoly for six months. That resulted in a flood of other companies, big and tiny (as in 1 bus only, serving 1 very demanded route), doing the routes. They were as cheap as it gets, offering month cards outrageously cheaper than previous public-natural-monopoly. It was so cheap, and the offer was so high that cars seemed to vanish from the city center, that was so full of buses that you didn't even check the timetable: you just waited for the next for 5 minutes.
Eventually the municipality renewed the previous contract with the same previous company, a contract that forbids other companies from entering the city center, and we went back to the worse service we were used to. Of course they were a lot of narratives: they were trying to capture the market, drive competence away and then hike the prices; they were bounded to bankrupcy at such prices; that many buses were damaging the roads, and others. But the reality was that for a brief time we had the best bus service in the modern world.
As for telephone wires, we went through some years, between copper-IDSN and fiber (the DSL bridge) that a lot of companies found a way to make it profitable to put new copper cable parallel to what it already existed. The only thing the municipality did was to make it mandatory that the first to install it must use a wider-than-needed conduct (a solution much less disruptive than giving a natural monopoly, latest shown by new small companies born everywhere), so if a company wanted to add more cable later could use the same tubing. Predictions about company A blocking their tubing showed false, as other companies could retaliate in other places. No second tubing was allowed until the first tube was full, this was the only state intervention in the issue. The same tubes have now the optic fiber.
I am not fully anti-state, but there are undeniable overreaching everywhere, and a lot of zealots of intervention that are itching to issue mandates and interfere with everything, and then fix what fails with more interventions.
Markets are just a tool. This tool functions on information. OP explained how information (in this case, the rumor of a competitor laying fiber) caused action within the market.
Hmm. Seems the tool is working as expected.
The OP is about telecom. I took a look and learned [1]:
> The telecommunications industry in China is dominated by three state-run businesses: China Telecom, China Unicom and China Mobile.
A little slippery to bring China into the telecom free market discussion and contrast it with “Western-style” while failing to mention the structure of its telecom industry.
[1]: https://en.wikipedia.org/wiki/Telecommunications_industry_in...
> The OP is about telecom. I took a look and learned [1]:
Untrue - in the context of the OP, telecom is just an example. Look at the title.
> The telecommunications industry in China is dominated by three state-run businesses: China Telecom, China Unicom and China Mobile.
"More competition" doesn't mean "no monopolization". Communications are political everywhere, I'd be surprised if they were a subject of less control in China than in the US. However, even on Amazon and even with tariffs, there's more competition between Chinese sellers than between sellers of other origins.
Western free market doesn’t create monopolies. Where did you get that idea?
The only place monopolies tend to emerge is heavily regulated areas that allow for regulatory capture (laying fiber is a great example of this).
> The only place monopolies tend to emerge is heavily regulated areas that allow for regulatory capture (laying fiber is a great example of this).
No, actually laying fiber is a great example of the problem with a free market.
It's not regulations that make it hard to put down fiber, it's property rights. Without some sort of regulation or government action (such as eminent domain) it's impossible to build out modern infrastructure. There will always be some person with property right in the way of a cable line. You can beg and plead with them to let you bury a line (including pointing out that it's very temporary disruption of soil) and they can still just say no.
It isn't unusual for a phone company that's looking at a difficult land owner to say "ok, screw it, we'll just have to take a 90 mile detour because the guy that owns that 500 yard strip won't let us bury here". Imagine how much harder that is if the land owner is related to or owns stock in a competitor company.
We have been able to lay as much fiber as we have in the US because there's a bunch of regulations around right of way that ultimately grants burying rights near public roads to utilities companies like ISPs. Without those, it'd be almost impossible.
Property rights are regulation. You’re just vehemently agreeing with me. Markets filled with laws that make entry difficult are subject to monopolies.
Ok, let's imagine property rights are gone. Now it's impossible to build a fiber line without also employing an armed guard of that line. Sure, the open market allows for anyone to build out their lines where ever they like, but since we've eliminated all property rights and laws it means the most natural thing to do to your competition is sabotage.
That means if you are a new comer, you have to employ significant military strength to guard and defend your line going in. Otherwise, existing powers will simply stomp it out as soon as they get a whiff that someone is trying to compete with them. That, or they'll simply take your line by force.
That is probably the most difficult form of entry because it requires someone to be independently very wealthy before they could dream of putting in new infrastructure and it requires them to enforce their own property rights since there's no government doing that.
Are you an anarco-communist by chance? That's about the only group I'm aware of that would advocate for the complete elimination of property rights, but they also usually don't advocate for a "free market".
If property rights are regulation, then so is anything that allows you to ignore them.
Once you get down to the level of property rights, the only alternative left is total might-makes-right anarchy.
Property rights are some of the earliest and most basic things protected by governments—indeed, to a large extent they precede governments, being protected with force by the people who wish to assert them.
Wipe out all regulations, all laws, all property rights, and try to run fiber across someone's property without their permission, and they're likely to come out with a shotgun and start shooting everyone digging. Follow the steps logically from that point, and you'll fairly quickly start reinventing governments and regulations.
The "only" place monopolies tend to emerge in is any market with a significant barrier to entry. Regulatory regime can be one such barrier, but e.g. up-front capital costs and network effects are other barriers to entry that can and will lead to monopolies.
> Western free market doesn’t create monopolies.
To quote myself: "the Western-style free market is very keen on creating and maintaining monopolies"
Guess who's the highly influential investor, with strong connection to the WH who said the following:
"Competition is for losers".
This sums up pretty well what the free market is keen on.
It is well known that individual businessmen often want to reduce competition, because it's best for them. That is why the government's important role in the free market is to promote competition. But just because the market is imperfect and can be captured without the government making sure that people play fair, does not mean that the free market is "a lie" as TFA claims. It means that it's imperfect, as are all human endeavors.
So this shows competition works, but I thought the original post was about the free market. When the two companies were asked to fill a need for the people, they refused, and the people were not otherwise about to independently provide the service based on their own funds. I feel as though if the only way of getting companies to do something without organic competition is to use underhanded methods (such as lying about another competitor), then the free market has some places for improvement, no?
Competition works up to a certain point its best for short term returns and not for long term as the time and capital investment increases the chances of monopolies forming increases. This is the reason why I think most public infrastructure should be invested in and owned by the government. Let companies compete on building, running and maintaining it.
> ...one day, one of the municipal counselors just called up a friend who worked for a fiber laying company and asked them for a favor: put out a press release saying that they were “investigating” laying an undersea fiber to power a municipal fiber network on the little island.
They called in a favor that put pressure on the company from public expectations.
Yes. What do you think happens in a competitive marketplace? Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console. That's literally competition.
The details of how the "public pressure" came to be don't matter, because the monopoly didn't know about that. All they knew was there was a potential competitor, so they behaved according to that information. That's how it works.
Frankly, I think you're trying to poke holes in a straightforward concept. And now you've dug your heels in and you're trying to justify it. But... let's ignore opinions and interpretations...
> Sony heard about Nintendo partnering up with Philips for the SNES CD expansion, so Sony made their own console
This is completely inaccurate in every way possible. You even have the order of events backwards (Nintendo and Sony partnered first). There is in no way in which even the most charitable interpretation of this statement could bear out. Just about the only correct part is that you have some (but not all!) of the relevant parties involved.
If you're wrong about such a well documented, cut and dry matter of historical record, then what else are you wrong about? :)
That isn’t actually refuting his original argument. Just proving his example false.
Then you beg the question with a bit of a straw man fallacy thrown in.
I don't understand this line of thinking. The spreading of a false rumor is an example of a competitive marketplace? If this took place in a different domain wouldn't it be fraud? That it was in the public benefit seems orthogonal.
Yes, if a simple unsubstantiated rumor is enough to get your competitors to spend potentially millions of dollars to fight you, that's a competition. Literally what else could it be?
It can be two things, anyways. You can utilize fraud to manage your competitors expectations. CEOs lie constantly about the state their products are in, in order to drum up more sales.
It has absolutely zero requirement to be beneficial to the public in order to be a competitive marketplace. They're also competing to make as much profit as possible, which has effectively zero benefit for the public.
> They're also competing to make as much profit as possible, which has effectively zero benefit for the public.
The end result is plenty of cheap stuff for people to buy. It's why free markets have full supermarkets and socialist markets have long lines.
Take the free market in software, for example. My entire software stack on my linux box cost me $0.
Plenty of cheap stuff is a consequence of companies interested in people's money and, yes, presence of at least nominal competition between providers (i.e. they can be essentially a cartel, mirrioring each other exactly, but each still wants to step into other's money supply and retain its own). Choice for customer is present but also equally nominal.
In deficit economy, economic agents aren't really interested in people's money, and competition is between consumers - who'll bid higher and offer something of real interest to provider. So providers hoard stuff and there are long lines.
Benefit for public is not a boolean, it's a spectrum. Lots of cheap poor stuff readily availible is better than having to compete for stuff, but less good than having choice between cheap poor stuff and more expensive better stuff, for example. For the latter, you need non-nominal competition and providers having to compete whithin the market, not outside of it, and also each individual provider having infinitesimal effect on whole market.
"Companies optimize to make as much money as possible, which is why there is cheap stuff" does not logically follow. I get what you're saying, but it's not related to the concept of companies trying to make as much profit as possible. Some will simply chase higher profit margins.