We are truly in a wasteland of competition when Alphabet and Netflix are the underdogs.
Netflix and Alphabet will need to become ISPs, fast
181–190 of 284 posts
Re: Netflix and Alphabet will need to become ISPs, fast
#182Earlier quoted context omitted.
How exactly would the government do it without "forcing the places that do have it to subsidize the places that don't have it?" Taxes are how the government funds those sorts of things, and taxes are collected from everybody. So the subsidization still happens.
The way electricity works is by allowing the electrical company to charge everyone (across their whole network) such that they make a max of 10% (depends on state) above their current amortized expenditure. The idea being, if an electric company wants to make more money, it has to spend more money. And it's fixed how much money they can charge (it's based on total network cost). Think of it as a semi-non-profit, whic…
There's decades of precedent on how to do utility regulation, and that is one of the models. (It's called the rate-of-return model.) It was used for telecom for a long time, but has lots of problems. On one hand, it can encourage gold plating (spending money on infrastructure that isn't helpful because there is a guaranteed return on capital investment). On the other hand, political pressure can drive the return rate below the optimal level.
Your post actually highlights the problem. What makes 10% the proper profit margin? BT OpenReach, the U.K.'s regulated infrastructure monopoly, has a profit margin of double that. That number becomes a political football, and the political result probably isn't what most people on HN would want. People are happy with 25 mbps DSL; they're not going to vote to raise Internet rates to drive returns high enough to incentivize investment in replacing everything with fiber. That's exactly what you see in other rate-regulated utilities. People don't vote to replace lead pipes that poison kids, because they would rather have cheaper water rates; they don't vote to replace sewers that leak raw sewage into rivers when it rains, because they'd rather have cheaper sewage fees.
Re: Netflix and Alphabet will need to become ISPs, fast
#183Earlier quoted context omitted.
My understanding of Google Fiber is that they ran into to many headaches from existing telecom companies while trying to expand their fiber infrastructure. Instead of continuing to fight such an uphill battle they are trying to make a wireless approach work. I haven't heard much recently from their more standard wireless attempts (other than Loom being used in Puerto Rico) but they did invest (jointly with Fidelity)…
Every little town in America is a battleground of government blessed monopolies for physical access. Trying to do a large rollout for Google Fiber probably turned into a bigger hassle than they expected.
Would be nice if there was a nationwide building code for cities which stipulates fiber optic to the premises with absolute minimum connection speeds of 1Gbps synchronous and ideally 10Gbps. Completely unrealistic but I can dream.
Re: Netflix and Alphabet will need to become ISPs, fast
#184Earlier quoted context omitted.
None that could ever be an existential threat to the gatekeepers tough; that only happens on the open web. Which is about to be a lot less open.
Maybe. But it seems good enough. People aren’t clamoring for an alternative in the mobile space for example.
I think that’s because the web exists and is accessible on your phone. YC didn’t have to talk to Apple or Google for me to type this on my iPhone.
Re: Netflix and Alphabet will need to become ISPs, fast
#185Earlier quoted context omitted.
The plan appears to be, yes: https://www.pcmag.com/news/357374/verizon-no-4g-level-data-c... . Verizon execs are throwing around 5G caps in that ballpark.
That's a tiny ballpark: > During a roundtable, VP of network support Mike Haberman, some other Verizon folks, and the assembled journalists agreed that an average data cap in the vicinity of 180GB/month would satisfy the average consumer. > "That shouldn't be a problem with 5G. What does 4K video use? Think about how many 4K TVs you can put on a service that's a true 1 gigabit to your house," Haberman said. I don't s…
The average Netflix user watches 40-50 hours per month, and its going down: https://techcrunch.com/2017/12/11/netflix-users-collectively.... Netflix says 7GB/hour for 4K (~350 gigabytes), but HEVC will halve that number. That's under 180GB, and that's assuming all streaming is 4K, which is far from the case.
Re: Netflix and Alphabet will need to become ISPs, fast
#186Earlier quoted context omitted.
If there is more demand for cell service the cell companies will build more towers. Lower the power levels and use higher frequency bands to reduce interference. By your numbers, 200 clients x $50/mo $10k revenue per mo for a tower. A new cell tower costs $150k, so it pays for itself in 15 months.
It can take years in the UK to add a new cell tower. Apply to the local govt for planning, then more applications to dig the road up for fibre. And then you need a power connection which often aren't trivial or quick to get. $150k sounds unbelievably low.
Re: Netflix and Alphabet will need to become ISPs, fast
#187I am more than happy on two events, seeing if the FTC truly does resume their role as watch dog and prosecutor and seeing what Congress may end up doing. With regards to all the panic and irrational reactions, we got to 2015 before the FCC decided to rewrite some rules and not others and we did fine. The FTC with FCC cooperation did work. there are more than two sides to this argument and why we favor content provide…
Your comment misses one of the two key points of the original post: the level of consolidation between ISPs and content providers is unprecedented and the merger between AT&T and Time Warner makes that even worse. Competitors which are solely ISPs or solely content providers will not be able to compete due to the advantage this newly vertically integrated company has in both arenas. The article is saying the only way to avert the catastrophe of a complete monopoly over both content and Internet access is for companies like Google and Netflix to "fight fire with fire" by becoming vertically integrated ISP/Content companies themselves.
This is not a case of market dominance through technological innovation, which is generally hard to predict, but rather a completely predictable result of old-school vertical monopoly. It's Econ 101 stuff and is not specific to the Internet at all.
Re: Netflix and Alphabet will need to become ISPs, fast
#188Earlier quoted context omitted.
If the FCC really wanted to promote competition instead of profits, they could mandate nationwide access to utility poles & shared conduit. As well as making exclusive franchise agreements illegal.
Exclusive franchise agreements are illegal for eg cable. They have been illegal for a quarter of a century. You'll find that nearly all examples commonly presented of the lack of competition, are not due to market lock-out, it's due to the high cost and time required to gain approval to build in a given town or city. The combined cost, with pre-existing competition entrenched, is a very large disincentive. Google Fib…
Normally when infrastructure is expensive to deploy and wasteful to duplicate like this we turn it into a utility (Water, Electric, Sewer, Roads, Telephone, etc...).
We don't do that for Internet because...
Re: Netflix and Alphabet will need to become ISPs, fast
#189Earlier quoted context omitted.
> Personally, I think that private buildouts are a better way to go than a government-funded network infrastructure. If it is government-funded, then the people own it not some bloated corporation.
Yeah. I think markets are amazing when you have the right conditions such that you get plenty of sellers, plenty of buyers, and switching vendors is easy. But the US market mostly doesn't have plenty of sellers. You really want at least 3 to get good competition, and that's very rare: https://arstechnica.com/information-technology/2017/06/50-mi... My first choice is strong competition, and I live in one of the few US…
The question is not what is best, but how much competition do you need to beat a government-run service? Here in D.C., with Uber/Lyft versus Metro, that number is just two. Indeed, even a giant national monopoly is probably better than your typical government service. Even Windows 95 was better than most of the public services in D.C.
Re: Netflix and Alphabet will need to become ISPs, fast
#190I have some friends who work at Netflix and it's crazy how far the executive team foresaw how Netflix would grow. I know they put a lot of resources early on into Open Connect which was to handle working with ISPs. https://media.netflix.com/en/company-blog/how-netflix-works-... Apparently a lot of people (internally too) called them out it was unnecessary but it's paying dividends back now.
I worked at Netflix when OpenConnect was introduced and I don't remember anyone internally thinking it was unnecessary (though, even at the time, the company was large enough that you didn't know everyone). Quite contrary, this was the era of the 250GB / month cap from Comcast and we could observe clearly that they were throttling Netflix traffic. OpenConnect, the ability to deploy the CDN directly into the internal network of these ISPs served multiple purposes--not the least of which was to expose the fact that they were holding Netflix for ransom. So, to say that was the executive foreseeing things is a bit of revisionist history. It doesn't lessen the impact or importance of OpenConnect; but, it grew out of a very real impasse with a very large ISP.
Ultimately, Netflix did end up paying Comcast in 2014 and, surprise surprise, the throttling stopped.