Tuesday, September 30, 2014

Who will pay for the zero marginal cost society?

From this article, "Who will pay for the zero marginal cost society?":

"The first concern that arose in my mind as I began reading the book was simple and likely one that most people will raise: What about the fixed costs? Who is going to supply the infrastructures necessary for the various near zero marginal cost systems to function? [...] Who will bear the fixed costs and supply these infrastructures? If the supplier is a private company that owns the infrastructure, how will the supplier manage it? (To lay bare my concerns: Rent extraction and control by private, for-profit infrastructure owners may very well undermine most of Rifkin's dreams.) If the government supplies the infrastructure, how will it raise the funds and how will it decide which infrastructures to build and when to build them? [...] To be fair, Rifkin does address some supply side issues."

"He seems to believe that infrastructure financing will come from 'hundreds of millions of consumers and taxpayers.' But his arguments don't fully explain how this will happen. He discusses the Internet and emphasizes that is 'owned by everyone and no one' because the Internet 'is a system organized by an agreed-upon set of protocols that allows computer networks to communicate with each other.' While this is true, the physical infrastructure networks are indeed owned by companies. He suggests that these 'companies are merely providers and facilitators.' But how can that possibly be correct? Ask Netflix whether Comcast is a mere provider or facilitator. The network neutrality debate highlights the fact that physical network owners are anything but passive providers. To the contrary, in their relentless pursuit of profits for their shareholders (a perfectly reasonable objective for for-profit companies, mind you), private companies that own physical infrastructure networks have and will continue to extract rents and exercise control over user activities (by which I mean all higher layer activities by private companies like Google and Netflix and users like you and me) when it is feasible to do so."

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