Starting an Internet Service Provider

"easily" "litigated"

Those two words do not go together.

I'm glad to no longer be in the ISP business (I did my years in the trenches, '95-02), but I sure enjoy trading "war stories" with other folks who started out their careers in a similar manner.

Makes me wonder just how many people are still using dialup these days, due to a lack of any other options (or lack of desire to change..)

They could just try not having jacked prices and offering good packages. Their customer-base would skyrocket and revenue would more than cover costs.

>A small new player can't compete in either of those markets.

We're Wifidabba.com and we're in the current batch of YC. We provide low-cost internet in India at tea-stalls and bakeries. Consumers buy tokens and get access to wifi. In effect, we take a broadband connection and slice it into tiny pieces and sell that as wifi.

I guess in some ways we're an ISP, the government certainly thinks so, we've had to apply for an ISP license.

We're only a few months old, but we're reasonably profitable and the future looks good.

I think there's room for new ISP's if you're willing to be creative about how to grow the number of customers you want to reach. For example, we're getting tons of inquiries about being an IOT platform amongst other things.

*edited for clarity

Gotta disagree here, especially with the statement that there's "no comparison". Your comment is making it sound like the author is both over-claiming the difficulty in the business he's setup and over-stating the capital required. I read it as almost the opposite -- I can't figure out how he could have possibly gotten to where he is from the point he started.

Yes, you're talking apples and oranges, but both industries have a few of the same problems. On the "similarities side", deploying fiber at the scope and reach of deployed silicon would be comparatively expensive. On the growth similarities side, a company wishing to enter the "chip production" business could start comparatively small on something like a ARM or FPGA board targeted at a niche market like Bitcoin mining or specialty network equipment using off the shelf chips, custom software and custom printed boards in low quantities ranging from relatively cheap to somewhat expensive, but some would land in the range of "small, regional, ISP", feeding that money back into R&D toward designing a chip to be fabricated by an existing manufacturer (akin to "the national roll out of fiber). There are parts of that business that exist between "soldering a board of off-the-shelf parts" and "Intel" (ARM fits somewhere in that spectrum).

On the oranges vs. apples side, silicon has little/no geographical component outside of regulatory export restrictions. Short of the non-"first chip" related examples I listed above, there are comparatively fewer ways to start small and grow from profits. But expanding from a small regional fiber business to a national fiber roll-out, at this point, hasn't really been done successfully[0]. It's also been tried by several big players and ended in outcomes ranging from disaster (ref. any number of businesses from 1998-2002) to fade-out/quiet abandonment/refocus (ref. Google Fiber). It will take an incredibly long time to do it by feeding profits back into the business.

Also on the "easier to do silicon side" of things is that there are still boutique and niche market opportunities where, yes, a large capital outlay will still be required, but a healthy profit margin can be found due to being the only provider of a market need where the players are willing to spend the money. No such market exists in broadband. Even in locations where service is limited to dial-up, there's a pretty low upper limit on what a business or consumer will pay for that service whereas an FPGA board designed in such a way as to allow it to eek out 25% or greater efficiency doing something comparatively unimportant like mining Bitcoin would have a small, but healthy market with a higher upper limit

Then there's the regulatory overhead which is substantially costlier on the fiber side. On the "chip" side, if you're the actual manufacturer, you have environmental concerns around sourcing materials and disposal, which is no small cost, but see what it takes to just run an underground wire between your home and your neighbors, legally without crossing a street and you'll discover how much harder it is to roll fiber out in a city. Couple that with municipalities/states where large players (for all intents and purposes) own state and local governments and make them very interested in causing grief for a smaller player that could rob them of campaign contributions from the local mono-duopoly.

The worst part, though, is that there's a hard, upper limit on what consumers will pay for broadband even when the only alternative is dial-up. Businesses who require fiber-quality service simply won't locate themselves in places where adequate services aren't offered and consumers won't pay more than about three times the national average (and most will set that limit a lot lower due to lower incomes). It's a commodity service that an entrenched incumbent has every motivation to step in and suffocate a promising start-up early rather than see them succeed enough to cause prices to erode further. Similar problems exist on the "chip" side, but there are opportunities to target boutique/niche markets (bitcoin mining, again?) where the purchasers have specific needs not being met by existing solutions and would be willing to pay substantial sums for something that fits their needs (i.e. anywhere you can substantially reduce compute time while reducing consumption will have a market with players willing to spend comparatively larger amounts of money).

[0] Maybe it has, but I can't find an example of a micro-regional ISP expanding nationally and all of the large players I'm aware of started as large players in another business that they still serve -- DSL providers mostly were once local telcos, Cable Internet -- cable TV, "enterprise" providers/carriers like Level 3 are really a combination of several local telcos, long distance providers and other telecom service providers that leveraged/extended their existing networks to carry data and merged with their competitors to expand nationally. He mentions the SONET network issues and that just reminded me of Global Crossing's old SONET network (now owned by Level 3).

EDIT: Formatting and removal of a sentence I rewrote but failed to delete.