[arin-ppml] Spectrum and IP address reservations / More from NERA

[Milton L Mueller]

Hey, Tom,
I'm glad after some years of purporting to be an economics researcher you've finally discovered the standard textbook definition of perfect competition. Looks like my reading recommendations are indeed helpful.

If you want to bone up a bit more (the quote you cited was patronizing WB baby-talk for developing country regulators) here's a start: 
http://en.wikipedia.org/wiki/Perfect_competition 

> -----Original Message-----
> From: Tom Vest [mailto:tvest at eyeconomics.com]
> Sent: Monday, July 20, 2009 8:24 AM
> To: Milton L Mueller
> Cc: ARIN PPML
> Subject: Re: [arin-ppml] Spectrum and IP address reservations / More from
> NERA
> 
> Apropos my request for you to clarify, NERA also authored most of the
> content for World Bank InfoDev's (ICT Division) Telecom and ICT
> "regulation handbooks" and "toolkits". The former includes a section
> (Appendix B) on "THE ECONOMICS OF TELECOMMUNICATIONS PRICES AND
> COSTS," where I found the following, unabridged quote:
> 
> "This*, then, is the situation in the ideal competitive marketplace.
> For this efficient ideal to be realized, the market must meet a number
> of conditions. For instance, the market must have several sellers
> (suppliers) and buyers (consumers), with none so large that it can
> affect prices: no one can be dominant in the marketplace. In addition,
> there must be no significant externalities, loosely defined as
> spillover benefits or negative effects to/from other markets. There
> should also be free entry to and exit from the market. Finally, as
> mentioned above, this market should not be characterised by economies
> of scale.
> 
> Where *all* [[emphasis mine]] the conditions mentioned above are not
> present, the market will not generally produce socially-optimal
> results."
> 
> *This = theoretical overview of what basic neoclassical economics says
> about how supply and demand interact in a rule-free context.
> Full file online at: http://www.infodev.org/en/Publication.22.html
> 
> TV
> 
> Begin forwarded message:
> 
> > From: tvest at eyeconomics.com
> > Date: July 20, 2009 7:28:19 AM EDT
> > To: Milton Mueller <mueller at syr.edu>
> > Cc: address-policy-wg at ripe.net
> > Subject: Re: [address-policy-wg] Spectrum and IP address reservations
> >
> >
> > On Jul 20, 2009, at 4:38 AM, Milton L Mueller wrote:
> >
> >> I forward information about a study conducted by NERA on spectrum
> >> auctions.
> >> Not directly applicable to IP addresses, but has some relevance to
> >> current discussions about attempts to reserve resources for new
> >> entrants vs. incumbents. Bear in mind, of course, that the study
> >> was produced by Telus, an incumbent operator, and discount for
> >> that; the point is that we need to pay attention to the economic
> >> reasoning underlying the finding; which is that policies designed
> >> to "help" competitors can have unintended consequences that may
> >> encourage conslidation and higher prices.
> >
> > Hi Milton,
> >
> > Clarifying question: what are you referring to exactly by "policies
> > designed to 'help' competitors," and why are you choosing to reduce
> > the question of routing and addressing system openness to this one
> > narrow dimension? I (among others) have written a lot about the
> > importances of keeping the door open for "new entrants," but not all
> > new entrants are "competitors" -- nor is competition the only reason
> > for incumbent service providers (and everybody else) to regard such
> > openness as a critical institutional priority.
> >
> > To illustrate, I've never heard anyone claim that the *only* reason
> > why it was a good idea to move from NCP addressing to classful IP
> > was to enable competition. Ditto, the move from classful IP to CIDR;
> > then as before, the prospect of continuous competition (including
> > competition by emerging new entrants) was just one of many reasons
> > to support the preservation of addressing and routing system
> > openness. I'm assuming that whatever you find persuasive in this
> > NERA document would not also implicate those past policy choices,
> > because I don't think you'd find much sympathy for the idea that the
> > "unintended consequences" of those decisions were/are so bad that
> > they outweigh they *intended* consequences (i.e., a future with max.
> > 256 independent addressing and routing system participants).
> >
> > Since most of the subscribers to these lists are not economists, it
> > would be helpful if you could briefly summarize the "underlying
> > economic reasoning" that you find particularly compelling in this
> > study. If it was less onerous, I'd also request that you clarify
> > what you regard to be the right way to balance intended vs.
> > unintended policy choices, and "historically/experientially
> > informed" vs. "idealized, theoretically informed" expectations about
> > the future -- but perhaps a sentence or two of clarification on the
> > NERA "reasoning" would suffice.
> >
> > Thanks,
> >
> > TV