AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff • Hacker News Board

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#41

Post by yuhong » Tue, Apr 22, 2014, 1:12 AM UTC

drewcrawford wrote: post #30

rayiner wrote: post #25

Earlier quoted context omitted.

The $200 billion figure doesn't represent real money that changed hands. It's an estimate based on taking the actual profit margin of the telecom companies since deregulation in 1996, and calling everything over 9-10% to be "excess profits." The premise is that telcos "promised" to lay fiber in return for being deregulated, and that if their profit margins had been limited to rates typical of a regulated utility, the…

> According to this reasoning, every year Google is "ripping off" the public to the tune of $6 billion. This comparison is invalid because Google's business is fundamentally different than a telecom in every relevant dimension. Telecoms sell a commodity product with technology they source entirely from third parties, the only form of product differentiation they have is geographical monopoly, and it is a zero-sum gam…

I wonder what would happen for such businesses if the quarterly earning game was ended, with CEOs paid on a salary basis. I think Ivan Seidenberg was fired because of short term returns on FiOS being low.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#42

Post by AnthonyMouse » Tue, Apr 22, 2014, 1:32 AM UTC

rayiner wrote: post #31

drewcrawford wrote: post #30

Earlier quoted context omitted.

> According to this reasoning, every year Google is "ripping off" the public to the tune of $6 billion. This comparison is invalid because Google's business is fundamentally different than a telecom in every relevant dimension. Telecoms sell a commodity product with technology they source entirely from third parties, the only form of product differentiation they have is geographical monopoly, and it is a zero-sum gam…

This data point shows that AT&T spent about $1 billion on R&D in 2010: http://www.bizjournals.com/dallas/print-edition/2010/11/19/f... . Yes, it's a "drop in the bucket" compared to their $20 billion in capital expenditures, as noted in your article ([1]), but it's hardly "basically none." Also, a lot of sophisticated engineering goes into building out infrastructure, even if it's accounted to capital expenditures an…

> You can't have your cake and eat it too. If you want to develop telecom as a regulated monopoly, which worked just fine in the U.S. for the better part of a century, then you need to give companies monopoly protections.

This effectively became impossible when the internet turned out to work fine over both telephone and cable TV wires and then subsumed the respective franchises as over the top services. If AT&T had monopoly protections again then Comcast couldn't operate in the same geographic area anymore. I have to imagine the cable TV industry would object to its forced dissolution strenuously enough to scuttle any plans to do such a thing.

But why do you believe that monopoly protections are necessary for utility regulations? Suppose we regulate AT&T as a utility and then let Comcast carry on unregulated in competition with them. Individual customers can choose whether they want the regulated entity or the unregulated one. In the worst case one of them goes bankrupt so the reason why monopoly protections are impractical is eliminated, and the other one becomes a regulated monopoly.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#43

Post by Zigurd » Tue, Apr 22, 2014, 2:32 AM UTC

rayiner wrote: post #31

drewcrawford wrote: post #30

Earlier quoted context omitted.

> According to this reasoning, every year Google is "ripping off" the public to the tune of $6 billion. This comparison is invalid because Google's business is fundamentally different than a telecom in every relevant dimension. Telecoms sell a commodity product with technology they source entirely from third parties, the only form of product differentiation they have is geographical monopoly, and it is a zero-sum gam…

This data point shows that AT&T spent about $1 billion on R&D in 2010: http://www.bizjournals.com/dallas/print-edition/2010/11/19/f... . Yes, it's a "drop in the bucket" compared to their $20 billion in capital expenditures, as noted in your article ([1]), but it's hardly "basically none." Also, a lot of sophisticated engineering goes into building out infrastructure, even if it's accounted to capital expenditures an…

Lot's of non-R&D enterprises scrape up some dollar figure they can semi-plausibly call R&D in order to get tax incentives. Often that does not resemble what people here would call R&D any more than getting paid not to plant resembles farming.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#44

Post by jessaustin » Tue, Apr 22, 2014, 3:20 AM UTC

rayiner wrote: post #38

jessaustin wrote: post #32

Earlier quoted context omitted.

The RBOCs didn't "promise". They actually promised to lay fiber to a particular percentage of homes, then they actually received the benefits of deregulation and rate hikes premised on that promise, and then they actually did not lay that fiber. Prior to the deal, RBOCs were regulated like the utilities they were, so profit margins were absolutely appropriate for regulators to target. After the deal, they reconglomer…

Your premise is that telecom companies are utilities and should be regulated as such. I think that premise is deeply flawed. Utility models are appropriate for things where demand and technology changes slowly, like power and water. But telecoms is totally different in that regard. Public utilities are almost universally underfunded. Unless public money is invested, utilities have very little incentive to do more tha…

Haha, I guess I can see why you'd think that's "my premise". Actually I feel we'd be better off if the FCC and all its regulations were eliminated tomorrow. (We'd learn the real meaning of "wireless innovation", at least.) A regulated provider that gets the chance to rewrite all its regulations "mid-stream" benefits from an enormous windfall, and the public is not well-served when its representatives give away such a windfall for free. (Well of course there was expensive lobbying and other corruption, but the public didn't benefit much from that either.) This unearned windfall is the "ripoff" that we're complaining about.

The point is not that every home in the nation should be connected by fiber: that would be unnecessary if the FCC ever got off its ass on unlicensed wireless but more to the point was never feasible even while the RBOC lobbyists were promising it. Promising what they could not deliver is really not different than failing to deliver what they promised.

It's funny, but a fiber in the ground is actually an example of a network component that wouldn't require much effort from a regulated provider to remain useful. If a regulator prevented vertical integration, other operators could compete to "light" the fiber, and that would be enough to accommodate innovation. In fact that's what happens in other nations.

There are two actually-independent wireless network operators in the USA. Sprint and T-Mobile both have to rely too much on the big two for backhaul to really threaten them commercially. While it is true that much spending is in response to demand, that demand would be quite different in a market where the FCC allowed actually-innovative services. Also the RBOCs and their two mutant descendants don't get to complain about the regulations they themselves wrote.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#45

Post by mathattack » Tue, Apr 22, 2014, 1:53 PM UTC

rayiner wrote: post #6

> In short, if your city plays nice and gives AT&T what they want legislatively (namely gut consumer protections requiring they keep serving DSL users they don't want so they can focus on more profitable wireless) I think the author is being hypocritical in holding this against AT&T while ignoring the fact that Google is only rolling out fiber in cities that agree to basically leave them alone from regulatory standpo…

Is it really a bluff (something they won't do) or just hype? If it's hype, who cares?

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#46

Post by thenewbtg » Wed, Apr 23, 2014, 5:13 PM UTC

jessaustin wrote: post #37

thenewbtg wrote: post #36

Earlier quoted context omitted.

I'm sometimes amazed how otherwise competent adults believe that one investor focused for profit corporation isn't capable of behaving just like another investor focused for profit corporation. When I look at Google services, I see a lot of monopolies forming. For example, Hangouts now takes over SMS messages, and is automatically installed on all Android devices as a system app that cannot be removed. Or, in order t…

You would benefit from a sense of proportion . Come back with this noise when there's a Google line running through my front yard that I'm not allowed to dig up. If you don't like the Android that Google built for you, then don't use it. Google haven't been purchasing laws and agencies since 1937. Ma Bell has.

Hey, step out of the 1980's!

I have used telecommunication services for over a decade now, and I have never once done business with AT&T or a Mabell company.

Perhaps it's YOU who needs a sense of proportion. It isn't 1984 anymore. Mabell isn't a massive monopoly: Google, however, is becoming one.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#47

Post by jessaustin » Fri, Apr 25, 2014, 2:59 PM UTC

thenewbtg wrote: post #46

jessaustin wrote: post #37

Earlier quoted context omitted.

You would benefit from a sense of proportion . Come back with this noise when there's a Google line running through my front yard that I'm not allowed to dig up. If you don't like the Android that Google built for you, then don't use it. Google haven't been purchasing laws and agencies since 1937. Ma Bell has.

Hey, step out of the 1980's! I have used telecommunication services for over a decade now, and I have never once done business with AT&T or a Mabell company. Perhaps it's YOU who needs a sense of proportion. It isn't 1984 anymore. Mabell isn't a massive monopoly: Google, however, is becoming one.

...never once done business with...

...Verizon, SBC, CenturyLink, Qwest, FairPoint, Frontier, etc.? Eh, seems unlikely. Or perhaps the extent of your telecom purchasing is cell service from an MVNO? Guess where the majority of your payments are going... Apparently it is difficult for some people outside telecom to separate what's going on from the marketing of what's going on. Don't feel bad: back in the late 1990s I believed the hype too.

Re: AT&T's 'Expansion' of 1 Gbps to 100 Cities is a Big, Fat Bluff

#48

Post by [deleted] » Fri, Apr 25, 2014, 2:59 PM UTC

thenewbtg wrote: post #46

jessaustin wrote: post #37

Earlier quoted context omitted.

You would benefit from a sense of proportion . Come back with this noise when there's a Google line running through my front yard that I'm not allowed to dig up. If you don't like the Android that Google built for you, then don't use it. Google haven't been purchasing laws and agencies since 1937. Ma Bell has.

Hey, step out of the 1980's! I have used telecommunication services for over a decade now, and I have never once done business with AT&T or a Mabell company. Perhaps it's YOU who needs a sense of proportion. It isn't 1984 anymore. Mabell isn't a massive monopoly: Google, however, is becoming one.

[deleted]