I'd like to focus on ISPs but since utility providers are basically the same, observations on those are also welcome.
Is there some kind of law(s) prohibiting other startup ISPs from moving in and competing with (for example) cable companies? Or is government creating these monopolies through regulatory barriers? Or other causes?
Also does this problem originate from local or state government, or does it originate mostly from the federal level (speaking of the US here obviously)? I'm mainly curious about everyone's personal observations and how these monopolies have formed in practice, rather than theory about how government can cause this to happen.
I'm not sure about the United States, but in Spain (at least in Madrid) the ability to connect a house to a phone line is monopolized by a single company, Telefónica. As a result, before you can contract internet or anything of the sort through another competing company, you have to call Telefónica and set up some sort of deal to get your house connected.
Ansury:Is there some kind of law(s) prohibiting other startup ISPs from moving in and competing with (for example) cable companies? Or is government creating these monopolies through regulatory barriers? Or other causes?
(I worked for three years as a land title examiner in Michigan, so I'm speaking from experience but not authority.)
The monopolies are established through grant of easement.
When land is improved, subdivided or otherwise developed and platted, the developer a right of access is established over/under/through the lots (generally along the lot lines, but this is not a rule) to otherwise "private" property for the purpose of laying cable (or pipes, etc) and subsequently maintaining and servicing them. The easement is granted to a particular corporation. An easement right can be sold, assigned, transferred, etc. An easement "runs with the land" and as such, when you buy the land, you agree to the existing rights of easement.
Ansury:Also does this problem originate from local or state government, or does it originate mostly from the federal level (speaking of the US here obviously)?
Utility easements are local in origin.
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David Z
"The issue is always the same, the government or the market. There is no third solution."
@ post #2 - Sounds like in the US it would have just been called "The Telephone Company" ("The", as in the one and only-- talk about a blatant monopoly!) But this doesn't surprise me too much in Europe.
David Z: The easement is granted to a particular corporation. An easement right can be sold, assigned, transferred, etc. An easement "runs with the land" and as such, when you buy the land, you agree to the existing rights of easement.
The easement is granted to a particular corporation. An easement right can be sold, assigned, transferred, etc. An easement "runs with the land" and as such, when you buy the land, you agree to the existing rights of easement.
So what is the (I'm sure it's stupid) reason for only granting these easements certain corporations vs letting anyone come in who wants to make the investment? (Assuming the physical space is available.) Local government corruption via special interest payoffs?
Side note: I suspect (no proof yet) that I have my local government administrators to blame for not having FIOS available in my neighborhood as a competitor to broadband cable with their outrageous prices, even though seemingly it's all over the place a few miles down the road across a nearby political boundary...
Ansury:So what is the (I'm sure it's stupid) reason for only granting these easements certain corporations vs letting anyone come in who wants to make the investment? (Assuming the physical space is available.) Local government corruption via special interest payoffs?
I could only speculate on the historic context... Many of them were obviously granted 50 years ago or more, so the then prevailing competitive enironment (was it monopolized/cartelized? probably) would've been a big factor.
Nevertheless, for whatever reason, the easements are granted to specific parties, unlike public easements like the sidewalks that traverse your property which all the public may use for access, etc.
I'm going to have to research this a little (if I can figure out how), it's just too stupid to be the whole story, even for government.
Ansury:I'm going to have to research this a little (if I can figure out how), it's just too stupid to be the whole story, even for government.
The fact is that there is no law preventing you from starting an ISP or a telcom company or a sewer line. But you would have a very, very difficult time overcoming the barriers to entry presented by the existence of the use easements granted to the existing players.
Ansury: So what is the (I'm sure it's stupid) reason for only granting these easements certain corporations vs letting anyone come in who wants to make the investment? (Assuming the physical space is available.) Local government corruption via special interest payoffs?
Anyone who wants to, and has the money, can obtain an easement. One way of doing this is to purchase an existing easement. Many old railroad easements have been purchased and put to other uses. It is also possible to lease the unused portion of an easement that is used for other purposes.
The second way of obtaining an easement is by assembling one. This involves negotiations with every property owner through which the easement will pass. As a practical matter, most companies taking this approach incorporate eminent domain in the process, which of course requires participation by the local government.
DougM:The second way of obtaining an easement is by assembling one. This involves negotiations with every property owner through which the easement will pass. As a practical matter, most companies taking this approach incorporate eminent domain in the process, which of course requires participation by the local government.
And this is somewhat like the manner in which easements for utilities were established.
So basically the easement was "assembled" before the properties were really settled, or at the very least, before the properties were subdivided and sold as individual parcels.
Utilities tended to be territorial at the time (and many still are) because the "grid" required to serve them was found beneficial to be geographically continuous, the most obvious example of which is "trash removal" which was often a municipal task, like policing or fire-fighting. Until relatively recently, many traditional subdivisions had alleys in which trash was disposed, and the alley was established as an easement for, among other things, trash removal, access/pass-through, etc.
Because of the nature of the public easement and the convenience which same afforded (since they were already there for the trash removal, e.g.) the city could lease or assign a portion of this easement (and often did) to the utility companies, in the same manner that you might sub-let an apartment. (I'm sure there were never any "kickbacks" involved!)
When alley trash removal went out of style in favor of curb-side pickup 30 years ago, the vacated alley/easements reverted to the lot owners, however any intervening easements, grants, leases or assignments thereof would still be in force.