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realibrad

Lifer
Oct 18, 2013
12,337
894
126
No, I'm not worried about any place getting or not getting service, really.

I'm saying that current market conditions prevent effective competition due to large barriers to entry and entrenched incumbents.
Well, I dont know how you can be worried about "Any" place, because we already know that google is willing to do big cities. Google is not looking to lose money either, so I would bet other large companies would be willing to invest in low hanging fruit aka large dense cities. But, we dont live in a world where ISPs dont exist so its not like deregulation would end service. I think your point is that the investment cost might be too high for a company who wants to open itself into a new market. I just dont understand that fear, because if there are profits, then companies will find a way to get to that profit.

I mean, we dont subsidize restaurants to feed people, because the market has figured out ways to see demand, and invest and not lose money. Some do, but most dont. The scale is different sure, but the analogy is there.
 

werepossum

Elite Member
Jul 10, 2006
29,876
460
126
Hopefully this will happen more often soon. The FCC is looking to issue new rules that will override state bans on internet access offered by local municipalities. These bans were basically the result of the cable companies buying off state legislatures to insulate them from competition.
I do think there are legitimate questions to be raised when we're asking private business to compete with public entities. In our case those were satisfied fairly easily by maintaining the fiber end separate from the power end. As our EPB gets no public money, that means its fiber data network is competing fairly with for-profit companies, not subsidized by either electricity sales or tax dollars.

We do, it's just that the cost of entry is so high that it makes little sense for new companies to come in when the current provider has a 50%+ market share. That's not even including lobbying out competition.
That, plus legitimate concerns about competing with government entities supported by tax dollars, plus Eskimospy's point about a few high density, high income areas being so potentially lucrative that you get a plethora of poorly utilized competitors. The other issue is access; new competitors coming into an area justifiably want to concentrate on high density, high income, high ROI areas and exclude poorer and less dense areas. If allowed, they will stretch out service to less lucrative areas as long as allowed. I have no problem with that as a business strategy, but government's job is to provide equitable access to all its citizens. So in most of America we need some way to balance the need to serve everyone at the lowest cost with the need of businesses to make a profit while preventing a de facto monopoly on poorer areas.

USA is such a huge country, it's hard to expect we should have broadband access like South Korea.

Maybe huge metro areas like NYC can, but out in Kansas it's just not feasible or logical. Nobody is going to spend millions of dollars on a customer base of a few hundred people or even less.
See my post about our EPB's fiber network. Power companies have to send meter readers out to those far-flung homes, so a fiber network serving smart meters in a natural to provide service. If a utility does not want to be a content provider, it could lease bandwidth to content providers, providing cheap entry into otherwise non-viable markets. Otherwise the utility could be required to lease bandwidth to provide competition. Only major problem is that many such utilities are already converting to cellular smart meters and would need incentives to switch to fiber, in which case there's not huge advantages over subsidizing someone else to provide a cable backbone.
 

fskimospy

Elite Member
Mar 10, 2006
70,068
18,808
136
Well, I dont know how you can be worried about "Any" place, because we already know that google is willing to do big cities. Google is not looking to lose money either, so I would bet other large companies would be willing to invest in low hanging fruit aka large dense cities. But, we dont live in a world where ISPs dont exist so its not like deregulation would end service. I think your point is that the investment cost might be too high for a company who wants to open itself into a new market. I just dont understand that fear, because if there are profits, then companies will find a way to get to that profit.

I mean, we dont subsidize restaurants to feed people, because the market has figured out ways to see demand, and invest and not lose money. Some do, but most dont. The scale is different sure, but the analogy is there.
I'm just saying that there is a lot of money floating around, looking for things to invest in. That money appears to flee in terror from creating new broadband service providers. This isn't an accident.

The U.S. regulates ISPs less than basically any developed country. In fact there has been a deliberate effort to exempt Internet access from regulations, hence the whole title 2 argument to begin with. This was done in the hope that it would foster greater competition than anywhere else and...well...look what happened.

Europe and Asia have found a solution that works quite well: force companies to lease their pipes to whoever wants to pay for them. That has fostered much greater competition, better speeds, and lower prices. The UK is a great example of the benefits of this model.
 

HeXen

Diamond Member
Dec 13, 2009
7,808
28
91
Sadly most people don't have options. In smaller towns it's usually AT&T or some other small time provider.

Either way, I hope they continue upping the requirement.
Small time providers have some of the fastest internet. All the fiber drops to houses I do is in small towns by phone companies ran by no more than 2 guys usually.
 

realibrad

Lifer
Oct 18, 2013
12,337
894
126
I'm just saying that there is a lot of money floating around, looking for things to invest in. That money appears to flee in terror from creating new broadband service providers. This isn't an accident.

The U.S. regulates ISPs less than basically any developed country. In fact there has been a deliberate effort to exempt Internet access from regulations, hence the whole title 2 argument to begin with. This was done in the hope that it would foster greater competition than anywhere else and...well...look what happened.

Europe and Asia have found a solution that works quite well: force companies to lease their pipes to whoever wants to pay for them. That has fostered much greater competition, better speeds, and lower prices. The UK is a great example of the benefits of this model.
So we have a lot of money that could be invested. We have a market for service that can be very profitable. We have companies that dont want to invest in the market, because they fear they cannot make money even with sufficient demand?

http://bgr.com/2015/01/29/google-fiber-vs-comcast-att-net-neutrality/

Google seems to think that its biggest thing holding them back is access to infrastructure, which would at first seem to support your argument right? But, why would google not be willing to build its own infrastructure? Why would another company not be willing to build the infrastructure and lease it out to other companies? The very nature of an ISP is to build infrastructure to allow access to something they dont own, so its not all that different already right?

Perhaps, its because you are not allowed to build new infrastructure?

http://www.wired.com/2013/07/we-need-to-stop-focusing-on-just-cable-companies-and-blame-local-government-for-dismal-broadband-competition/

That article seems to think so.

So, the issue is not that investors are afraid to invest, its that its not worth investing because of local regulations and expenses it would seem. It would be true that making ISPs a utility would increase competition, but its less optimal than deregulation of ISPs as a whole.
 

fskimospy

Elite Member
Mar 10, 2006
70,068
18,808
136
So we have a lot of money that could be invested. We have a market for service that can be very profitable. We have companies that dont want to invest in the market, because they fear they cannot make money even with sufficient demand?

http://bgr.com/2015/01/29/google-fiber-vs-comcast-att-net-neutrality/

Google seems to think that its biggest thing holding them back is access to infrastructure, which would at first seem to support your argument right? But, why would google not be willing to build its own infrastructure? Why would another company not be willing to build the infrastructure and lease it out to other companies? The very nature of an ISP is to build infrastructure to allow access to something they dont own, so its not all that different already right?
I do not believe that investors think the potential for profit is worth the risk. You have enormous upfront capital costs that you're putting at risk. Investing isn't simply about if something could possibly be profitable, it's finding people who are willing to drop a few billion and wait several years before you even get started just to face a highly uncertain future against an entrenched incumbent.

Sounds like a bad investment decision to me, and the investing community seems to agree.

Perhaps, its because you are not allowed to build new infrastructure?

http://www.wired.com/2013/07/we-need-to-stop-focusing-on-just-cable-companies-and-blame-local-government-for-dismal-broadband-competition/

That article seems to think so.
The idea that basically the entire country has no effective competition for broadband due to individual choices to over-regulate by virtually every single local government nationwide is not a compelling argument.

The far easier explanation is simple economics. When faced with a new competitor trying to build a new network the incumbent simply lowers prices for a brief period of time to keep people from switching.

Competitors need at least about 30% of people in a given area to subscribe in order to be profitable. The incumbent network has no such huge investment costs to worry about and already has an entrenched customer base, so a modest decrease in profits is all that's needed to kill off their competition. Millions or billions flushed down the toilet. Who wants to sign up for that?

Not to mention that once again, overbuilding infrastructure is extremely economically inefficient. It's just bad policy when we have other, better alternatives available like open access.

So, the issue is not that investors are afraid to invest, its that its not worth investing because of local regulations and expenses it would seem. It would be true that making ISPs a utility would increase competition, but its less optimal than deregulation of ISPs as a whole.
I don't believe that argument can be supported by the articles cited.

There's no need to make ISPs a utility, just open the last mile up to leasing. Simple, easy, effective, and efficient.
 

realibrad

Lifer
Oct 18, 2013
12,337
894
126
I do not believe that investors think the potential for profit is worth the risk. You have enormous upfront capital costs that you're putting at risk. Investing isn't simply about if something could possibly be profitable, it's finding people who are willing to drop a few billion and wait several years before you even get started just to face a highly uncertain future against an entrenched incumbent.

Sounds like a bad investment decision to me, and the investing community seems to agree.
Then how are credit unions able to form locally, with relatively small amounts of money, and offer loans that do not pay off for a long time? How are tree farmers able to make money, when their crop takes upwards of 1 lifetime to sell? If the worry is that the investment wont come because the return is risky and may take a while to become profitable, the market has already figured that out. We see investment in many more areas that is far more risky than an ISP. At least with an ISP, you are very likely to start getting a return, but in many other markets, you literally cannot get a return until the product is ready, yet those markets still exist.



The idea that basically the entire country has no effective competition for broadband due to individual choices to over-regulate by virtually every single local government nationwide is not a compelling argument.

The far easier explanation is simple economics. When faced with a new competitor trying to build a new network the incumbent simply lowers prices for a brief period of time to keep people from switching.

Competitors need at least about 30% of people in a given area to subscribe in order to be profitable. The incumbent network has no such huge investment costs to worry about and already has an entrenched customer base, so a modest decrease in profits is all that's needed to kill off their competition. Millions or billions flushed down the toilet. Who wants to sign up for that?
The system we have now, is that regulation protects profits. If you opened up the possibility of competition, they would have to sustain the lower rates at all time, and not just when local govs start talking about negotiations.

Not to mention that once again, overbuilding infrastructure is extremely economically inefficient. It's just bad policy when we have other, better alternatives available like open access.
I would argue that under-building infrastructure is even more costly. The amounts of money being spent in the economy on higher prices is likely a very large number.




There's no need to make ISPs a utility, just open the last mile up to leasing. Simple, easy, effective, and efficient.
Why would you just limit to the last mile. If you think that over building is a problem, why would you go for the last mile, when you need far more lines at that point?
 

fskimospy

Elite Member
Mar 10, 2006
70,068
18,808
136
Then how are credit unions able to form locally, with relatively small amounts of money, and offer loans that do not pay off for a long time? How are tree farmers able to make money, when their crop takes upwards of 1 lifetime to sell? If the worry is that the investment wont come because the return is risky and may take a while to become profitable, the market has already figured that out. We see investment in many more areas that is far more risky than an ISP. At least with an ISP, you are very likely to start getting a return, but in many other markets, you literally cannot get a return until the product is ready, yet those markets still exist.
The long return on investment is only part of the problem. You're right that the market has figured out the ISP economics though. That's why it doesn't happen, because the risk/return ratio is bad.

While regulation and other things play a role, this is mostly a case of simple economics. It doesn't make sense to invest in additional ISP infrastructure, so people don't.

The system we have now, is that regulation protects profits. If you opened up the possibility of competition, they would have to sustain the lower rates at all time, and not just when local govs start talking about negotiations.
That's what I'm saying we do, we open up the possibility of competition. What you want is already largely there and as I keep saying, the market has spoken. The returns on investment are simply not worth the risks, hence no investment.

What is more likely, that literally almost every municipality in the country has conspired to prevent telecom competition, or that the economics of building new networks is bad? It is simply far too easy for incumbents to crush startups, at great cost to investors. It's common knowledge that this is the tactic ISPs use.

I would argue that under-building infrastructure is even more costly. The amounts of money being spent in the economy on higher prices is likely a very large number.
Those higher prices do not come from a lack of duplicative infrastructure, as we could achieve those same lower prices using the current infrastructure that we have. Duplication of infrastructure is costly both in terms of disruption and in pure dollars. It's inefficient, and we shouldn't do inefficient things.

Why would you just limit to the last mile. If you think that over building is a problem, why would you go for the last mile, when you need far more lines at that point?
Because the 'last mile' is the connection that goes to various hubs. Traffic once it gets to those hubs is far easier to re-route to different ISPs, so you the last mile is where it makes sense to keep things common.

This is a good example of smart regulations that spur competition instead of limit it.
 

dmcowen674

No Lifer
Oct 13, 1999
54,908
44
91
www.alienbabeltech.com
Didn't realize the FCC made it 25 meg down 3 meg up.

Thought they were going to go with 10 meg down 3 meg up.

Well I no longer have broadband then.

Most I ever see is 15-18 meg down and around 2 meg up although Crapcast charges me for 25 meg down 5 meg up.
 

realibrad

Lifer
Oct 18, 2013
12,337
894
126
Didn't realize the FCC made it 25 meg down 3 meg up.

Thought they were going to go with 10 meg down 3 meg up.

Well I no longer have broadband then.

Most I ever see is 15-18 meg down and around 2 meg up although Crapcast charges me for 25 meg down 5 meg up.
Dont you still owe someone $100?
 

dmcowen674

No Lifer
Oct 13, 1999
54,908
44
91
www.alienbabeltech.com
Originally Posted by dmcowen674
Didn't realize the FCC made it 25 meg down 3 meg up.

Thought they were going to go with 10 meg down 3 meg up.

Well I no longer have broadband then.

Most I ever see is 15-18 meg down and around 2 meg up although Crapcast charges me for 25 meg down 5 meg up.



Dont you still owe someone $100?
No, but you're a too bit far to blow me being there in Florida.
 

werepossum

Elite Member
Jul 10, 2006
29,876
460
126
The long return on investment is only part of the problem. You're right that the market has figured out the ISP economics though. That's why it doesn't happen, because the risk/return ratio is bad.

While regulation and other things play a role, this is mostly a case of simple economics. It doesn't make sense to invest in additional ISP infrastructure, so people don't.



That's what I'm saying we do, we open up the possibility of competition. What you want is already largely there and as I keep saying, the market has spoken. The returns on investment are simply not worth the risks, hence no investment.

What is more likely, that literally almost every municipality in the country has conspired to prevent telecom competition, or that the economics of building new networks is bad? It is simply far too easy for incumbents to crush startups, at great cost to investors. It's common knowledge that this is the tactic ISPs use.



Those higher prices do not come from a lack of duplicative infrastructure, as we could achieve those same lower prices using the current infrastructure that we have. Duplication of infrastructure is costly both in terms of disruption and in pure dollars. It's inefficient, and we shouldn't do inefficient things.



Because the 'last mile' is the connection that goes to various hubs. Traffic once it gets to those hubs is far easier to re-route to different ISPs, so you the last mile is where it makes sense to keep things common.

This is a good example of smart regulations that spur competition instead of limit it.
Another point is that where government regulation is preventing new competitors, it's usually where the market is already well served. It makes little sense to have a sixth ISP fiber network in Manhattan if one can mandate equitable sharing of existing infrastructure, so that tends to be blocked. Where there exists only one or two competitors, such as telephone can cable TV utilities, infrastructure typically isn't blocked by regulation, it's welcomed. It's just that there aren't that many such places where adding another ISP infrastructure is a sound investment based on the potential market. Competing with existing providers who have partially if not completely already amortized their infrastructure is just extremely difficult, especially in a major for-profit venture. So even though there are many cities who would welcome Google's fiber network, even Google can't jump into many cities at once.

As always, one size does not fit all.
 

marvdmartian

Diamond Member
Apr 12, 2002
5,513
1
81
They'll just come up with some fancy and pleasing name to make it sound good.
Or, more likely, they'll up everyone's internet, then charge twice as much for it. And when people complain, they'll point the finger at the FCC, and say, "Blame THEM!!" :\
 

Engineer

Elite Member
Oct 9, 1999
39,255
698
126
Or, more likely, they'll up everyone's internet, then charge twice as much for it. And when people complain, they'll point the finger at the FCC, and say, "Blame THEM!!" :\
They were going to do that anyway. Now, they have a place to point the finger.
 

werepossum

Elite Member
Jul 10, 2006
29,876
460
126
Or, more likely, they'll up everyone's internet, then charge twice as much for it. And when people complain, they'll point the finger at the FCC, and say, "Blame THEM!!" :\
Probably speed it up, then throttle heavy data use so people don't actually use more trunk bandwidth.
 

Sonikku

Lifer
Jun 23, 2005
15,480
3,800
136
Obama's regulating of the internet has struck it's first casualty, taking away broadband from millions of Americans!
 

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