Verizon is having routing trouble again. I can’t get to this site directly, although I can obviously get to a proxy and the proxy can get to here or else I wouldn’t be able to post this. The site’s fine, most of the net is fine, it’s just Verizon that’s a mess. Such routing failures, cutting me (and presumably other customers) off from 10-80% of the internet, are a common occurrence. As I’ve noted before, Verizon’s internal status pages are worse than useless. They always say “everything’s fine” even when everything is quite obviously not fine; this has been the case even on occasions where the failure was obviously very widespread and severe.

In an ideal universe I wouldn’t have to put up with this. After this many instances of poor service, I would have switched to an alternate provider long ago, as I have in fact done more than once with web hosting providers. Apparently both Comcast and RCN offer service in my area. The problem is that they’re not clearly any better – certainly not enough better to justify the high substitution cost. That’s not a matter of regulation nowadays. It’s a matter of how real capital-intensive markets work. There are some who base their economic philosophy on assumptions of zero substitution costs, zero externalities, perfect information flows, and perfectly honest businesspeople who never engage in any kind of collusion or other anti-competitive behavior. I’ve said it before and I’ve said it again: those people are either crooks or idiots and often they’re both. Here in the real world, in a market where barriers to entry are high (“naturally” or otherwise) and thus only a few providers serve a market, collusion is inevitable because it’s “stickier” than the alternative. There’s no incentive to rock the boat when you’re in it, especially when substitution costs are high and margins are low (because of supply/demand curves, not competitive pressure). Verizon wouldn’t increase their profits by improving service, and neither would Comcast or RCN. In their established markets the route to increased profitability is almost always through lowered costs which are not passed on to consumers and almost always lead to an actual decrease in service.

It’s a race to the bottom, not to the top. It’s why certain industries should be regulated, but the last time the government tried to regulate this particular one they didn’t have the backbone to do it properly. The phone companies found ways to make life difficult for the so-called “competitive local exchange carriers” (CLECs) who discovered it really wasn’t possible for them to be competitive at all. Because the CLECs are all dead now, and because of similar patterns occurring in the cable and satellite industries, there really is no meaningful consumer choice when it comes to high-speed internet access. Providers will continue to suck, and consumers will have no choice but to live with it. The “invisible hand” is invisible indeed in cases like these.