Comcast rejected by small town, residents vote for municipal fiber instead • Hacker News Board

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#251

Post by greggyb » Thu, Dec 13, 2018, 4:33 PM UTC

sethrin wrote: post #241

greggyb wrote: post #238

Earlier quoted context omitted.

When an ISP leases bandwidth to a customer, they must reserve some amount out of their total available. They may reserve the full amount they have leased, or they may reserve some portion of it. Either way, the reserve is finite and proportional to the actual total bandwidth (the proportion may be 1:1, which is the simplest, but the proportion does not matter for this discussion). The marginal cost of provisioning me…

For residential service, there is no reason to expect a 1:1 reservation. This would be extremely wasteful. The exact number is not relevant, but residential bandwidth is oversold as a matter of course. Talking about capex and aggregate costs also seems to be drifting from the main theme here: whatever it costs to double the network's capacity is going to be pretty circumstantial, and not directly relevant to the topi…

You're right. The reservation ratio doesn't matter - we agree on this and have both stated it's irrelevant.

We're talking about average internet performance in a nation. This entire thread was kicked off by a comment about Akamai indicating the US as a whole has faster broadband than e.g. Germany.

The cost to wire up the US with an average speed of 2x that of Germany is absolutely an influencing factor in the cost of bandwidth to a consumer. We are talking about performance, not widgets. To double the performance of a nation's network from p to 2p, it is not unreasonable to expect that the cost is greater than double or greater than 3x the cost of performance p.

But, if you want to proceed from an analysis of marginal cost, we can do that as well. ISPs do not fit the model you are using.

Marginal cost for something like an ISP is not a single number. There may be 10,000 consumers with a marginal cost near 0. Then customer 10,001 may have a marginal cost that is "install a new backhaul to the network backbone and extra 10G or 100G routing equipment to serve your neighborhood". Obviously customer 10,001 doesn't get stuck with a bill of $100Ks to be added to the network.

You are attempting to pigeonhole an ISP into a model that assumes a single, flat fixed cost and (effectively) unlimited production of a good at a low marginal cost. That is not the industry we are in.

The fixed costs of an ISP are a stepwise function, not a constant. You cannot model an ISP effectively with an assumption of constant fixed costs.

All other things being equal, the marginal cost of a given customer is / N, where N is the number of customers that can be served before the ISP has to install new routing hardware, or in the unhappy path lay new wire.

Now, it is obvious that I have simplified things above. ISPs do not build infra for N customers, then wait for customer N+1 to build out the infra for the next N customers. ISPs invest in their infra in long planning cycles. They cannot effectively build out in this manner in response to a single customer.

Thus, for years at a time, the supply of bandwidth is effectively fixed. With a fixed supply of bandwidth, they can only lease so much. We have agreed that the reservation amount per bandwidth leased is not relevant. The model you want to look at has a vertical supply curve.

Finally, the theory that says consumer price should be the producer's marginal cost is predicated on the assumption that barriers to entry are low. This is not at all the case in ISPs. There is lots of expensive hardware, and there is a significant amount of technical expertise required. Thus, we cannot apply the standard econ 101 model, because we have violated its assumptions.

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#252

Post by nonce413 » Thu, Dec 13, 2018, 6:32 PM UTC

philipps wrote: post #245

nonce413 wrote: post #232

Earlier quoted context omitted.

Marked based outcomes are efficient. 90 miles east of here, metro Boston generally has a choice between three modern providers - Comcast, RCN, and Verizon. The western part of the state seemingly does not have the population density to attract this kind of investment. Comcast here is the monopoly provider of what we consider modern service, and AFAIK engages in their standard monopolistic playbook of throttling, caps…

Markets can work. But often they don’t. I live in the center of Boston and have access to Verizon (not FIOS!) or Comcast. I’ve spent more time on the RCN website than I’d like to admit and they do not cover my building. If you need more evidence that in this case the market does not lead to desirable outcomes, Verizon charges a monthly 5$ fee to NOT list your phone number (this is for the phone number you are require…

I'm just drawing a distinction because there's this toxic political meme of labeling an area with no competition as "the free market", and smearing collective action attempting to serve themselves as "government meddling", when in reality the latter is just the market mechanism itself! Customer demand gets so pent up that they start demanding a new competitor, and seek investment from the main source available to them. The new municipal entity still has to compete in the market for customers, and so any complaint from the incumbent about the government pushing them out of business is horse shit.

Sorry about your Internet choices - I was speaking based on friends in Arlington and Newton. It sounds like the market has failed you too, and it was not correct to chalk it all up to population density. RCN's upload speed sucks compared to my fiber here, so maybe that's some consolation?

Have you investigated whether any CLECs offer better DSL connections over that Verizon (Nynex, really) copper? IIRC, if you go to Megapath's website and check their business options (which I think involves a follow up phone call), they will send you a spreadsheet of all services available at your premises, which can be informative.

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#253

Post by sokoloff » Thu, Dec 13, 2018, 6:46 PM UTC

nonce413 wrote: post #252

philipps wrote: post #245

Earlier quoted context omitted.

Markets can work. But often they don’t. I live in the center of Boston and have access to Verizon (not FIOS!) or Comcast. I’ve spent more time on the RCN website than I’d like to admit and they do not cover my building. If you need more evidence that in this case the market does not lead to desirable outcomes, Verizon charges a monthly 5$ fee to NOT list your phone number (this is for the phone number you are require…

I'm just drawing a distinction because there's this toxic political meme of labeling an area with no competition as "the free market", and smearing collective action attempting to serve themselves as "government meddling", when in reality the latter is just the market mechanism itself! Customer demand gets so pent up that they start demanding a new competitor, and seek investment from the main source available to the…

> The new municipal entity still has to compete in the market for customers, and so any complaint from the incumbent about the government pushing them out of business is horse shit.

Do you not see any difference between vigorous competition among profit-seeking companies, where mis-steps can cause loss of profits, loss of jobs, and ultimately bankruptcy and competition between a company with risk on the line versus a municipality that doesn't have to take on any of those same risks?

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#254

Post by nonce413 » Thu, Dec 13, 2018, 7:17 PM UTC

sokoloff wrote: post #253

nonce413 wrote: post #252

Earlier quoted context omitted.

I'm just drawing a distinction because there's this toxic political meme of labeling an area with no competition as "the free market", and smearing collective action attempting to serve themselves as "government meddling", when in reality the latter is just the market mechanism itself! Customer demand gets so pent up that they start demanding a new competitor, and seek investment from the main source available to the…

> The new municipal entity still has to compete in the market for customers, and so any complaint from the incumbent about the government pushing them out of business is horse shit. Do you not see any difference between vigorous competition among profit-seeking companies, where mis-steps can cause loss of profits, loss of jobs, and ultimately bankruptcy and competition between a company with risk on the line versus a…

Yes, I do see a difference between apples and oranges - in areas with "vigorous competition", municipal fiber does not get support!

We're talking about areas where there has been no competition, and the incumbent has already succumbed to the same exact lethargic rent-seeking that people ascribe to municipal services.

Also it appears you seem to be thinking that "municipal fiber" means there are employees at City Hall with a blank check from the general fund. WG&E is a separate corporate body, overseen by the City of Westfield. I would guess they will be doing operations for Charlemont et al, but Charlemont will be free to choose a different operating contractor in the future.

So what we're really talking about is the ownership of the built-out infrastructure, which government has traditionally been paying for anyway - this story is about Charlemont not giving $500k to Comcast! The idea that the government should pay to build out infrastructure to be owned by a private company isn't the "free market" - it's textbook corruption!

For context - I am libertarian, and I recognize that there is no difference between government and a de facto monopoly that one is forced to patronize. In fact, the latter is a great way of describing the former. If you want to make a philosophical argument that government has no business subsidizing communications infrastructure at all, I won't argue. But that is generally not the point of contention around "municipal broadband".

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#255

Post by takeda » Thu, Dec 13, 2018, 7:27 PM UTC

zzzcpan wrote: post #204

takeda wrote: post #198

Earlier quoted context omitted.

By last mile I'm talking about the physical wire between your house and POP. Layer 1-2 none of the protocols you mentioned work on that level, those would be provided by the ISP. The issue is city, users, ISPs can't afford to have a separate wire per ISP per house. It's extremely expensive and wasteful, because most of the time most houses will use at most a single ISP. What I'm saying is that city should be responsi…

Don't think of it like roads. Building roads is very expensive, laying down fibers is cheap. It's so cheap, that ISPs can afford to compete with like a dozen other ISPs in densely populated areas and with at least three in sparse areas. They won't get super rich like this, but it's still profitable and sustainable.

The actual work is cheap, but laying down the fiber is the most expensive because the incumbents purposefully make the process long and requires jumping through a lot of hoops.

Even if laying fiber would cost $0, it is still not a good idea to do it. The way things are currently if there are 10 competitors one would have 10 have then fiber cables go to their house, or every time one would change an ISP you will have to wait for new wire to be laid, potentially coordinating with neighbors, if it would have to go through their property.

Most people will only need a single fiber.

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#256

Post by eeeeeeeeeeeee » Thu, Dec 13, 2018, 8:12 PM UTC

bronco21016 wrote: post #86

I hate Comcast with a passion and have always fantasized about living in a progressive municipality that provides fiber to the home. However, a few years ago I bought a home and it’s only been over the last 6 months or so I’ve realized how horribly corrupt and mismanaged small city governments can be. We’re being sucked dry by our mayor who hired her cousin as city manager for an exorbitant compensation package. They…

It’s a hard sell to say that your experience with your small government is indicative of all small governments and somehow warrants going with the leeches at Comcast instead.

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#257

Post by Jarwain » Fri, Dec 14, 2018, 1:29 AM UTC

rayiner wrote: post #169

theptip wrote: post #143

Earlier quoted context omitted.

> I have never seen "panacea" used by anyone except those opposed to any public infrastructure This is a good point; seems like an isolated demand for rigor. The bar we should be aiming to be above is "better than Comcast", which is a quite low standard. > Corruption is simply something that has to be fought, period, but we do have the tools to do so more easily at the local government level then for more widely dist…

> This is a good point; seems like an isolated demand for rigor. The bar we should be aiming to be above is "better than Comcast", which is a quite low standard. Is it really? Compared to what? If the government-run train I use to get to work were as reliable as the Comcast service I've had in the past, I'd be so so happy. I'd cry with happiness. Where do people live that they think Comcast is as bad as it gets in te…

I'd like to contrast with the rail system in most of Asia (or at least Seoul and Hong Kong). Government run, and always on time. The worst thing is how it can be packed full, but that's just uncomfortable

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#258

Post by gok » Fri, Dec 14, 2018, 2:38 AM UTC

Jarwain wrote: post #257

rayiner wrote: post #169

Earlier quoted context omitted.

> This is a good point; seems like an isolated demand for rigor. The bar we should be aiming to be above is "better than Comcast", which is a quite low standard. Is it really? Compared to what? If the government-run train I use to get to work were as reliable as the Comcast service I've had in the past, I'd be so so happy. I'd cry with happiness. Where do people live that they think Comcast is as bad as it gets in te…

I'd like to contrast with the rail system in most of Asia (or at least Seoul and Hong Kong). Government run, and always on time. The worst thing is how it can be packed full, but that's just uncomfortable

Huh? The Hong Kong system is run by MTR Corporation. The Seoul subway is run by Korail and Seoul Metro corporations.

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#259

Post by rayiner » Fri, Dec 14, 2018, 3:06 AM UTC

Jarwain wrote: post #257

rayiner wrote: post #169

Earlier quoted context omitted.

> This is a good point; seems like an isolated demand for rigor. The bar we should be aiming to be above is "better than Comcast", which is a quite low standard. Is it really? Compared to what? If the government-run train I use to get to work were as reliable as the Comcast service I've had in the past, I'd be so so happy. I'd cry with happiness. Where do people live that they think Comcast is as bad as it gets in te…

I'd like to contrast with the rail system in most of Asia (or at least Seoul and Hong Kong). Government run, and always on time. The worst thing is how it can be packed full, but that's just uncomfortable

Hong Kong's MTR is a private, publicly-traded corporation. So are Japan's major rail operators. Korea's long-distance rail operator is government-owned, but not government-run (it's structured as a government-owned for-profit corporation). Singapore's rail system is operated by two for-profit corporations (on tracks built by a government board).

Re: Comcast rejected by small town, residents vote for municipal fiber instead

#260

Post by rayiner » Fri, Dec 14, 2018, 7:36 PM UTC

philipps wrote: post #246

rayiner wrote: post #242

Earlier quoted context omitted.

That’s not really true either. Tax rates are higher outside the U.S. (but also flatter—VAT taxes which are pervasive in Europe would be considered a right-wing attempt to shift the tax burden to the middle class here.) But infrastructure isn’t more “left” in Europe, and it’s often more “right.” The Danish telecom operator owns all the copper and almost all the cable and is a fully private company. And Denmark got rid…

The key point is that you need tax revenue to manage (build, own, operate, or regulate) public infrastructure well. Expecting great rail, road, or internet service without paying high taxes and strong government involvement hasn’t worked out. Nothing in your post contradicts that. In many cases, public funding was even required to put in place the core infrastructure and conditions for privately operated companies to…

> Expecting great rail, road, or internet service without paying high taxes and strong government involvement hasn’t worked out. Nothing in your post contradicts that.

All of the examples in my post are ones where "high taxes" aren't used to pay for infrastructure, or where "government involvement" is limited because infrastructure is managed by for-profit corporations. Stockholm doesn't have pervasive fiber because of "high taxes" (tax dollars were not used to build the network) or "strong government involvement" (while Stokab is owned by the city, it is a for-profit corporation and the city does not control its rate and expansion plans). Denmark's telecom system, likewise, is owned by a private company, was not built with public money, and is loosely regulated (Denmark got rid of its telecom regulator recently). Japan's railways (owned by private companies which mostly run at a profit), and London's subway (which breaks even through fare revenue) are examples of great infrastructure that are not the result of "high taxes" and "strong government involvement."

It's fair to point out that European systems aren't completely privatized and often receive subsidies. There is a spectrum. But the U.S. is generally on the left-side of that spectrum. U.S. passenger rail is almost entirely government-owned, government-run, and heavily subsidized. New York receives half its budget from taxpayer funding, for example.

Europe tends to be further right on the spectrum. For example, in the U.K. a government agency owns most of the track, but private Train Operating Companies own the trains and provide service. And London's subway system receives all its funding from fares. You see high levels of privatization in the U.K., Germany, Netherlands, Denmark, etc. You also see multi-national competition--half of train operating companies in the U.K. are foreign firms; Deutsche Bahn subsidiaries operate passenger rail service in the Netherlands, etc. Can you imagine NY MTA opening up its network to competing operators from Europe? Now, European systems receive subsidies, for sure. But Deutsche Bahn at least runs an operating profit. U.S. rail operators universally rely on tax dollars just to meet their operating expenses (and rely on the government for all of their capital expenses).

At the other end of the spectrum, many Asian rail systems receive few subsidies, and are mostly responsible for their own capital expenses. Japan, Hong Kong, and Singapore systems are operated (and often owned) by private companies, and run a significant profit.