<why would you want the distribution channels to be owned privately? There may be a case for competition in supply, but it's not feasible to have more than one company running pipes into homes. Any private company would have to be so regulated to ensure consumers were not gouged, it might as well be directly controlled.>
Ashley, To ensure consumers were charged what the market would bear. I'm a fan of charging what the market will bear. I agree that one set of pipes is all that would be economic, for most areas anyway. There might be a few special circumstances where two pipelines might make sense but I can't imagine many that would be significant, though potable water and low quality water might justify two pipelines. That would mean a small diameter, low-cost, low pressure water supply with high-quality potable water and a low cost water supply for swimming pools, car washing, toilets, showers, industrial applications and bulk usage.
As with most monopolies, there is leakage around the fringes. People can avoid buying piped water by collecting it from their roof, sucking it from the ground, washing their car at a car wash instead of on the driveway [they recycle water - some of them anyway], using another swimming pool instead of their own [neighbour's or public pool], buying truckloads of water, using dry toilets instead of Crapper's water closet design, showering instead of bathing, using laundromats or low water-demand machines, buying a Fisher & Paykel Dishdrawer machine. There are many ways to avoid buying piped water, which sets an upper bound on what the market will bear. Drinking water can be bought in bottles, or delivered in large lots by vehicle.
Anyway, the monopoly is not all that robust and at fairly low prices, demand would drop a lot, so any supplier would have to optimize their pricing at a reasonable level or lose a lot of customers. In Auckland, during the water supply crisis, many consumers made other arrangements and demand dropped permanently by 15% and that was with relatively little effort. Another 15% could easily go with little increase in price.
I'm in favour of gouging consumers. By charging what the market will bear, local authorities, who own the pipes, could cut rates and get their money from water sales. Theft would become a significant problem at some price, but that could be controlled with meters on the mains and the equivalent of an electrical earth leakage detector to compare consumer meters with the mains total. Discrepancies would mean leakage or theft.
With graviton.com and CDMA, meters could report real-time figures and households [and others] could pay as the use, to avoid bad debts, working capital demands, disputes and stuff. Leap Wireless could run the accounts for the water company and consumers could pay their water on their phone accounts.
When the "market will bear" price income is established, the local authority should sell the business to the highest bidder. The reason for selling it would be that governments ALWAYS run things stupidly. Private companies do so frequently, but it's the shareholders' money which is lost and they only hold the shares because they consider it a good bet. It's ethically wrong to force people to own a share in such a business, which is what local body democratic ownership entails.
The money could be used to pay for other local authority services or better still, paid to ratepayers who could use that large payment to pay for their water supplies for a decade or two, or permanently if they invest it wisely [they could buy shares in the water company for example, if they think it's such a good thing to own].
Because democracies favour communism, I doubt that electorates would favour such privatisation. They'd scream blue murder at the price and the concept. They'd be swindled because some political hacks would accept bribes and sell it at a low price to their mates. But I think it would be a good idea. Maybe if done the right way, with up front payments to ratepayers, people would see the financial benefits - they could get shares in the company or a cash payment [their choice] at the time of privatisation. Cash would tempt a lot of people.
We had a similar thing with electricity supplies, the privatisation of which was a complete shambles, inequitable and crazy! Some people made out like bandits while others missed out. The public sold their assets too cheaply! Silly people.
Leap is billing for some services and if cheap enough, disputes would be minimal. Management of disputes would need to be very effective. Prepayment of accounts would help because the company would have the money up front. Getting money out of debtors is hard work. The subscriber would have to take the dispute to the company rather than the company try to extract a disputed payment from the customer. That makes a BIG difference. Having spent years collecting money from reluctant debtors, I know there are a lot of principles which make payment relatively certain and painless, with low collection costs. The most important is immediacy [COD for example].
<You say some money would be made on selling phones. Not much otherwise people would bring phones from other systems> If people bring their own phone, we'd charge a connection fee. There's a cost in setting them up, albeit low. Most people would buy a phone if the prices were reasonable.
<And capacity would not be reached just once, rather users would find it increasingly frustrating at busy times. Your company would then, and only then, start charging and receiving revenues. Many would delay their calls until less busy times when service was still free. Still the average user would pay much less than a Leap customer, and your companies revenues would be much less. The greater the capacity of the system, the more money your company would need to sustain itself before it obtained meaningful revenues.>
All correct, other than the frustration part. There'd be no frustration because charges would start before the frustration. We'd have to chase sufficient customers away that the system didn't get overloaded. There would be a transition to higher-paying customers. Many early adopters would stay with the service, but reduce their calls dramatically to avoid incurring high charges, leaving space for those more happy to pay peak prices.
Poor people would get service, so would rich ones. Each would get what they want. At present, poor people are cut out of the cellphone services because the barriers are entry are too high. They have to pay either $30 a month to Leap or high minute charges to prepay competitors who don't manage their network peaks and subsidize rural users with urban customer payments. With the Cat's Eyes service, all urban users would get service they want at a price they can afford.
As you say in the last sentence, designing the capacity would be crucial. Too much and it's game over. Too little and prices would spike up too soon as hordes of people tried to join and that would be bad for the brand image. A few months of bargain phone calls would be ideal which would be the main marketing programme - word of mouth would soon spread the message.
Mqurice |
