Los Angeles City gives away yet another monopoly

Los Angeles City officials have figured out yet another way to give an Internet access monopoly away to the incumbent haves, while pretending they’re doing it all for the poor have-nots. They are calling it the City of Los Angeles Community Broadband Network (LACBN), even though their stated approach is nothing like the community fiber networks already deployed in much smaller cities in the US — including the Chattanooga fiber network which was cited in the LACBN FAQ. That FAQ also contains the key flaw in the whole LACBN unicorn-hunting farce — both the question and answer in #4:

4) Why wouldn’t the City have LADWP build out the fiber network and offer internet services?

The City of Los Angeles does not want to compete with private business, and the City prefers to have a separate network handling its essential services (water, electric and public safety).

Both parts of this answer are in direct contrast to the extremely successful Chattanooga fiber deployment, which was completed by their public municipal electrical utility (same as LA’s DWP): EPB.
Here is the most problematic part of that answer: what “private business” would LA City be competing with? Don’t they know that monopolies, by definition, do not compete? Perhaps this is just a confusion over the meaning of the opposing words ‘monopoly‘ and ‘competition‘, so let’s explain the difference to them.


Part of the definition of ‘monopoly‘ states that it exists when a market lacks sufficient replacements or ‘substitute goods‘. Different Internet access methods like fiber, cable, DSL, and satellite broadband may look a lot like substitute goods (they all connect to the Internet, eventually); but they are actually complementary goods. There are complex technical reasons for this, related to mathematical concepts like Metcalfe’s Law, so it might be easier to explain some aspects of this fact with an analogy to easier understood markets.

When I needed to explain why mesh network routers could be considered like a home appliance, I explained the ways they are similar to water heaters. That seemed to communicate my thoughts pretty well, so I’ll go back to that analogy here with a slight twist: let’s imagine home water heaters don’t exist. Instead, each temperature of water gets to our homes through separate pipes, and each pipe is owned and maintained by a separate monopoly. To keep it simple, let’s say there’s just 3 pipes, each providing 1 consistent temperature of water: refreshingly cold, warm bath, and scalding hot. If you want to get one of these temperatures of water out of your home faucets and appliances, you have to connect the right pipe, and pay the rate dictated by that temperature’s monopoly provider.

You probably want to use the sanitation settings of your dish or clothes washers when hygiene is important, which requires a connection to the scalding hot water pipe — no cooler temperature will suffice. If you want to take a warm bath or shower, you probably want to connect the warm pipe instead. If you want a glass of water, you probably only want water from the cold pipe. All these uses technically involve water, but you would never consider them equivalent. The same goes for broadband, except different criteria than pipe flow rate and temperature come into play: bandwidth and latency.

Let’s say fiber is like a big scalding hot water pipe: when you want it, you want lots of it immediately. Like fiber, we can assume the scalding hot pipe is the newest hot water deployment technology, so it’s expensive to install but cheap to maintain once it’s already there. You want to use it for new things, like video chats while the sanitary clothes washer is running. Accordingly, let’s say satellite or DSL is like a big cold water pipe — it’s already there and thus cheap to deploy, but it comes out with a lot of delay (and maybe a little rust), which is fine for things like downloading full movies to watch later with a glass of filtered iced tea. Usage caps on both services are problematic, like when you want to watch a miniseries video in 4K HDTV next to a large jug of iced tea.

You might now ask, do cellphone networks compete in a way that wired and fixed wireless networks do not? The short answer is: no. The long answer goes into details about how the FCC has allocated radio spectrum bands, which have different reflection and diffraction properties based on their wavelengths.

A more accurate analogy for wireless Internet is a world where the FCC (Federal Color Commission) regulates or auctions off colors of light. Verizon gets red, Sprint gets yellow, AT&T gets blue, and T-Mobile gets hot pink. If you ever want to see white light without the sun, then you have to buy all the colors of lights together from all of these color monopolists simultaneously, and put them together yourself on your own equipment (like an ultra-wideband cognitive radio or Li-Fi device). We could also go into how the FCC assumes everyone is using big light-bulbs and exposed single-rod light sensors all the time, instead of flashlights or lasers and digital cameras, but that’s another long story. It suffices to say that the wireless monopolies control specific and complementary spectrum, not the idea of wireless communications itself. The only wireless communications spectrum with any real competition is “unlicensed” WiFi. The FCC still mandates that WiFi lights use much less energy (are dimmer) than the monopolist lights.

So now that we’ve established that LA City is at no risk of competing with any “private business” (all of which are publicly traded, not really privately held) because no actual competition exists, now we can have LA DWP offer fiber to everyone in the City of Angels! Right? Right?!

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