This feels very much like the kind of thing Marc Andreessen would complain about. Whatever the original good intent government created a monopoly or duopoly in many markets for cable companies. So now we have a lack of competition. Now we need more government regulation on top of the regulation in place to fix the original problem. It seems to me that sites like NetFlix are artificially cheap because they're subsidized by all websites and end users paying into the internet access pool and that artifical cheapness results in? Higher usage which in turn drags down the overall performance of ISP's.
Net neutrality
141–150 of 270 posts
Re: Net neutrality
#142If you want competition, perhaps the simplest way of doing it might be for municipalities to provide universal service at layer -1: run an underground plastic pipe to each house from the street. That way it suddenly becomes cheap for multiple telcos to run fibre to each house, but the municipalities aren't doing anything with an ongoing technical burden which they might be bad at, or running an ongoing service which might be subject to some kind of capture.
Of course, this assumes that laying a pipe isn't drastically more expensive than fibre, which I don't know.
Re: Net neutrality
#143I agree, there's no real competition for the "last mile." (If there were real competition, ISPs would be trampling over each other to deliver the best Netflix experience and bragging about it in their advertising campaigns!) Requiring the incumbent mono/duopolistic last-mile ISPs to lease their lines may improve the situation, but I'm not as sure as Sam Altman that it would bring about real competition, because of th…
One option would be to prevent any company from operating a last mile AND selling it to retail customers. Honestly, what I find most striking is how bad cable boxes are simply because there is no completion.
> Honestly, what I find most striking is how bad cable boxes are simply because there is no completion.
Anecdotally, my Comcast X1 is worlds ahead of the old Comcast boxes. Not perfect, but no longer so bad that I look longingly at Tivos. So, slowly but surely, they're making some progress...
Re: Net neutrality
#144The author of this article -- like most others who write on the topic -- fails to understand that the lack of competition is not due to a "market failure". Rather, it is due to government intervention that allows only a few -- or a single -- provider in an area.
From the article: > Municipalities, often for good reason, gave these edge providers a monopoly (the bad kind of monopoly where consumers can’t choose to leave) and often used tax dollars to fund the development. Your guess about the author was mistaken.
The opening paragraph indicates otherwise. It's not very well-written.
Re: Net neutrality
#145I know this may end up seeming a pretty useless comment, but I cannot miss the opportunity of recommending a VERY good book about this subject, by the guy who coined the term net neutrality:
http://www.amazon.com/The-Master-Switch-Information-Empires/...
The book analyses monopolies in information businesses, since Western Union, going through Bell and proceding all along to the era of Google and Apple. The end of the book is filled with very good insight on the subject. If this is a topic that interests you as much as it interests me, you should get yourself a copy of this.
Re: Net neutrality
#146Earlier quoted context omitted.
But the prices you list aren't connected with reality. They're your wishful thinking of what Internet access should cost. Reality says that most telecom companies make about 10-15% net margins, so there really isn't room to drop prices more than 10% or so from where they are currently, even if the ISPs are willing to abandon all hope of profits. It's also a well-known psychological phenomenon that people will curtail…
Telecoms have huge marketing budgets. A large portion is just a zero-sum war with competitors (another portion is enticing people to upgrade existing service). Those are effectively a source of hidden profit margins--NFL, Major League Baseball, et. al. get them instead of the telecom operators, but when looking at how much prices could drop, you have to consider that.
Telecom service is by its very nature a high-churn business: you lose approximately 20% of your customers every year. Churn happens for a lot of reasons: people move, competitors offer better deals, or people simply get rid of the service (but the "people move" one is actually probably the biggest). But because it's a high-churn business, you have to do brand marketing so that when people say "I need TV service. Who offers that?" your name is the first one they think of. Since so many of your customers leave you (and your competitors) every year, you have to be constantly acquiring new customers through a variety of means. If you don't, you'll be out of business in 5 years flat.
The huge marketing budgets don't go away if you suddenly split the market between a dozen or so providers. In fact, overall marketing spend across the industry would probably go up substantially because there would be more competition for limited consumer mindshare.
Re: Net neutrality
#147Earlier quoted context omitted.
But don't telcos face the same issue: enormous capital costs with limited prospects for attractive returns? E.g. FiOS is profitable, but the margins have been quite disappointing to shareholders. Indeed, observers have been skeptical about the value proposition of FiOS since the beginning: http://bits.blogs.nytimes.com/2008/08/19/a-bear-speaks-why-v... . Note that this article was written in 2008. As of 2014, Verizon…
Nobody's asking them to build this stuff out for free. I'm cutting a check north of $100 to Verizon every month, last I checked. And that IS them capturing some of the money generated by services running on their infrastructure. If they're not getting enough money to continue building, first off, I find that hard to believe, second off, they should just charge more to consumers, either additional $/month or an additi…
Please see the NYT article I linked. The per-subscriber capital investment into FiOS is almost $4,000, assuming that 40% of potential subscribers actually sign-up (Verizon is almost there, but still below that benchmark). Now, you're cutting a $100 check to Verizon every month, but how much of that goes to: advertising,[1] maintenance, paying for video content, etc? FiOS is about 70% of Verizon's wireline business, and Verizon's operating margin in that segment is about 22%, so let's assume the margin in FiOS alone is 25%. What's the value of a $25 payment discounted by 5% over 15 years? About $3,200.
As the author of the article above concluded, Verizon might not even come out ahead on each customer with FiOS.
[1] You can ask "why spend so much on advertising?" and the reason is that you want to maximize uptake, otherwise you spend a lot of money running fiber past houses that don't actually subscribe.
Re: Net neutrality
#148I don't see how a normally libertarian-leaning group of people have embraced regulation rather than deregulation as to this issue. Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies? Two words: universal access. It's the same principle that led municipalities to grant taxicab monopolies, of the kind that stifle companies like Uber today. The idea…
I don't know about the Openreach comparison being completely invalid - Openreach was only created in 2006, 12 years after BT was fully privatised. Is there a reason why the FCC couldn't provide a similiar regulatory climate in the US? Even with subsidies if required?
[deleted]
Re: Net neutrality
#149Earlier quoted context omitted.
I don't see how internet is any less a natural monopoly than electricity. Picture a residential street with 100 completely separate fiber optic networks vs 10 vs 1, now which seems more efficient. It's not like everyone connects to a different Hacker News.
Because with electricity, everyone gets the same power. You're tied to the same grid; your provider just meters your usage, bills you, then pays wholesale prices for the power you used. But the system as a whole only measures inputs (from power generators) and outputs (consumers). It works for something like electric power where a volt is a volt and a kilowatt is a kilowatt. With Internet access, you're looking for S…
With internet access, everyone (should) get the same bandwidth (per-dollar).
Similarly, with electricity you're not looking for SPECIFIC electrons.
Re: Net neutrality
#150I don't see how a normally libertarian-leaning group of people have embraced regulation rather than deregulation as to this issue. Why do local ISP markets tend towards monopoly, even though it has been illegal since 1992 to grant local cable monopolies? Two words: universal access. It's the same principle that led municipalities to grant taxicab monopolies, of the kind that stifle companies like Uber today. The idea…
Then how do you explain the smaller ISPs like Monkeybrains, Sonic, and Astound? They don't provide Universal access. Neither does Comcast and AT&T. I've lived in several areas where they won't provide service.
Universal access is usually implemented as build-out requirements in an ISP or cable provider's franchise agreement. The exact terms vary by municipality, but build-out requirements are the general rule.