Rick Falkvinge, in some recents posts on his site, points to a very important issue that is practically unknown to many of us.
We can thank the telcos, the ones that power our phones, for the fact that internet connectivity generally sucks. They have every interest to prevent and retard improvements in connectivity of the internet. It would end an era of fantastic profit margins for them …
“A little-noticed report by the OECD sheds light on why the telco industry so forcefully prevents more and better internet connectivity to Europe’s entrepreneurs and households: the telcos are currently overcharging by five orders of magnitude by forcing people to use the telco network rather than the Internet.”
But the report also highlighted something else: the Internet provides a large superset of the services of the telco industry, at a cost five order of magnitudes less for the same service. In other words, the telco industry is currently overcharging for voice service by five orders of magnitude – that is, overcharging by a factor of 100,000 compared to market price for net connectivity. (This ties well in with our previous observations that the future sales value of voice and storage is exactly zero, but the OECD is arguably a much heavier voice than this site.) The telcos’ ability to do this – to prevent the net’s utility, the public interest, and economic growth – is entirely due to a gatekeeper position that comes from having strategically bought all the small ISPs in the infancy of the net’s commoditization. It is now completely against the telco industry’s interest to roll out internet connectivity at the pace of the public interest, so it doesn’t happen.
“The profit margin for the telecom industry on mobile data roaming is in excess of one million per cent. On healthy and functioning markets, the profit margins typically range between five and ten percent. This is an in-your-face example of free market failure.”
“The telco industry charges more, kilobyte by kilobyte, for sending a text message from your phone to next door than what it costs to send the same message from Mars to Earth. This is the apex in this series of the dysfunctional telecom market, giving a background to why the telecom industry wants control of the Internet so badly, and is using every conceivable resource to stall, prevent, and delay its resulting economic development.”