Broadband Market and Prisoner’s Dilemma
Technology is consistently improving upon itself at a faster rate as time passes. Many facets of technology have improved over time, such as faster computer processing, more storage in smaller devices efficient, and efficient, self-driving cars. Then why is it that our internet speeds continue to get better at such a slow pace compared to everything else? The article talks about an interesting version of the prisoner’s dilemma. Surprisingly, the prisoners in this example aren’t us, the consumers of the broadband industry, but internet companies themselves. In a typical market, two companies or more compete within themselves to get a competitive advantage, which would lead to obtaining a better share of the market. Prisoner’s dilemma has three outcomes. Either one confesses, both confess, or neither confess. The first one is the most beneficial individually, the second one hurts the most, while the last option hurts both in the short term, but is the best overall. For the last decade, broadband companies had generally decided to go with option three. Aggressive competition in developing better speeds is a no for everyone. Instead of investing money into making their service better while competing, why not keep it the same if it continues to make more profit?
I found this interpretation really interesting. After Google created its now well known Google Fiber, suddenly all these other network companies started to come out with faster speeds and better packages. Some believe that this was an intention move from Google to force network companies to improve their service, since Google has historically relied on these companies to reach most of their consumer base. Google forced the stakes of the prisoner’s dilemma to change, and network companies adapted and improved accordingly. It comes to mind how many sectors of our world is artificially inhibited like this, where growth of technology is stifled due to major companies playing a game of mutually beneficial prisoner’s dilemma, where the stakes are how much profit these companies don’t make.
https://hbr.org/2018/09/why-google-fiber-is-high-speed-internets-most-successful-failure
I was intrigued when I first read this post because in the stimulation of the Prisoner’s Dilemma, it is the Internet providers who are the prisoners rather than the consumers. This approach is used to explain why companies have not been working on improving Internet speeds, and turns out, it is because one of the choices in Prisoner’s Dilemma is leaving everything the same while still profiting. This choice allows all companies to mitigate competition, keep providing the service they already provide, and still make a profit. This is convenient and easy, so companies have not been innovating with regard to their Internet speeds. However, now that Google has provided a faster Internet speed, all the other companies are worse off. This forced the companies to improve their speeds. I agree that is interesting to see how one company trying to improve its service leads other companies to innovate as well. It is also interesting to look at what other sectors of the economy are constrained because of the Prisoner’s Dilemma.