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Why Is Connectivity So Cheap In Stockholm?
lpress writes "Symmetric, 100 Mbps service in Stockholm, costs $11/month. Conditions in every city are different, but part of the explanation for the low cost is that the city owns a municipal fiber network reaching every block. They lease network access to anyone who would like to offer service. The ISPs, including incumbent telephone and cable companies, compete on an equal footing."
Socialism?
I'm not a big fan of a huge federal government, but at the local level, cities and towns should have been building out the last mile of service instead of granting local monopolies. If building that infrastructure IS so expensive that no business would do it without the monopoly status, then it probably is something best left to local governments to fund/build and then lease out to whomever wants to offer services to the residents.
My Dad has this problem. He has the choice between the sucky local phone monopoly for DSL or the sucky local cable monopoly for cable.
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
Lafayette, LA, Cox Cable $140 5 50
Capitalism working for the consumer as usual.
My first thought was that because the city owns the entire network, much of the reason for the low cost is self-explanatory. But then I imagined if a similar arrangement were formed in the US, I would be extremely surprised if the same prices were attained. Local governments would likely see this as a source of income and either charge a similar rate to competitors, or possibly undercut their neighbors by a narrow margin in order to appear generous and possibly gain a few extra votes for the incumbents. Does anybody know more particulars of this arrangement and local laws in the area? Is the portion of the Stockholm government that runs this program have any sort of "no-profit" legislation?
Dragging the fiber can't be that expensive. I mean, compared to water or sewer pipes (which they can even be bunded with).
What's wrong here in the US is a strong public distrust of having the government do anything, because the government may screw you over. So instead people prefer to give important tasks to businesses, who will screw you over.
I'm on the Stockholm network mentioned in the summary, and it's more like 80Mbps downlink and 20Mbps uplink in actual usable bandwidth. But I can live with it.
It's the lack of profiteering that keeps the price down.
If you see communications as a service to be provided to your community; rather than something to be exploited for profit then the dynamics change drastically.
The Pirate Bay, of course!
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... or it could just be that by preventing companies from having monopolies, the players can't just set an arbitrary take-it-or-leave-it price because the consumer can take his money to someone else.
This is a prime example of the mistake people of any nation state thinking that any company, particularly one that's granted a local monopoly will in any way, shape or form act in the consumer's best interest.
Exactly. By socializing the fiber pull, the gov't was able to give the people a true free-market when it comes to shopping for providers allowing the free market to actually work. This is what gov't is supposed to do when it meddles with business; level the playing field, let competition happen forcing companies to compete (yes, there will be losers), and allow consumers to actually win. It's monopolies that screw up the system, not having some socialist elements. When will people learn that the goal of government should be to improve the lot of the people, not to just to do the cheapest thing.
Because their taxes are so high, it had better be cheap!
When one factors in the cost of exorbitant privilege (i.e. the eventual realization of the cost of printing money as a reserve currency) to the United States citizens, the ultimate cost to taxpayers in the United States is probably significantly higher than any day-to-day taxes anywhere else in the world.
To put this latent tax in perspective, the United States federal government has well over $52 trillion in outstanding obligations (over $12 trillion to foreign countries). That's $189,000 in present-day value U.S. dollars (i.e. relative to the basket of world currencies) that the federal government has spent on behalf of each citizen in the United States above and beyond what the U.S. federal government was taking in as taxes (i.e. they printed the money). When it comes time to pay this off, the amount will be significantly higher relative to the present-day purchasing power of the dollar, given the near certainty of exceptional inflation of prices or alternatively (or equivalently) depreciation of the value of the dollar inherent to paying off such a volume of debt. The "real cost" of this debt when realized is probably four times the amount I've stated there (based on observable data and projections from the fifty or so other countries that have become insolvent since World War 2).
It's worth noting that AT&T and others were "gifted" $500 billion dollars in the late 1990's to upgrade telecommunications infrastructure, with virtually no results whatsoever, I understand. Why this half-a-trillion didn't result in the same or similar subsidized infrastructure when compared to Sweden boggles the mind.
So to say Sweden has oppressive taxes is folly. Sweden does have day-to-day higher taxes per capita, but they have leaps and bounds better services (cheap and fast internet access among them, but also better, cheaper policing, health care, high speed rail, and education), and they have not burdened future generations with oppressive or odious amounts of debt.
High taxes do not give rise to cheap internet. The United States has exposed its citizens impossibly high obligations, way beyond what Sweden or virtually any other country does, but internet in the U.S. can be described as backwards in price and quality compared to other countries. Following David Lande's hypothesis, I'd say the reason Sweden has cheap, fast internet and the United States does not is culture: Sweden has educated people who elect a progressive government that spends money with accountability and forward-thinking reason; the United States has something different.
Yes, the fear of government and of Government regulation can be quite misplaced.
It is well known that in some markets regulation is the only thing that keeps the market even remotely resembling a free market, rather than an oligarchy.
Now regulation can have its issues too. N o doubt that some government regulation is actively harmful. Some of it is well intention regulation that goes sour, which is pretty common considering that macro-scale economics is not a science by any means. Other harmful regulation is that which is supported by the major players in the regulated industry. In general that indicates that the regulation dictates what they would be doing anyway, yet makes it more difficult for competitors to enter the market, or compete with the big players.
In a similar way, having the government perform some function may be very helpful, or may be quite harmful.
Look at the United States Postal Service. People complain about them, but they function pretty well all things considered. The pricing on first class mail is definitely very competitive despite the complete lack of competitors. If the market were opened do you really think UPS, FedEx, or DHL could offer first class mail services at a significantly lower price? Probably not. Perhaps a few cents lower, but not much. The USPS does tend to be slightly more expensive than the alternatives when shipping packages, but that does not really matter, because they have competition there.
Overall the USPS works well. Why does it work well? Perhaps the most important thing to notice is that it is well insulated from the elected politicians. They can't continually mess with it, making changes all the time. It is not profit driven. The apparent goal is to net exactly zero profit, with income covering all the expenses, and employee salaries, upkeep etc, thus requiring no treasury funding. It does reasonably well at that, although they almost never actually reach that goal.
That goes to show that a government institution can work effectively. One that owns last mile infrastructure could also work well, if set up well, such that the politicians have little influence over it, it is set up such that it must price fairly (be this some sort of per endpoint, or bandwidth based pricing scheme, the important thing is that Ma Bell gets no better deal than Joe's DSL Shack), and be set up so that the net profit is zero (the all income covers infrastructure, maintenance, and upgrades).
But alas, the average American is to scared of the government to allow such a thing, and don't see the absurd television, phone, and internet pricing as a real issue.
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The company is owned by the city of Stockholm and is not a private business. Stokab was founded in 1994 and is owned by the company group Stockholms Stadshus AB, which is in turn owned by the City of Stockholm.
Falcon
Should there be a Law?
Because they compare themselves to the reactionary superstitions-based society we have here in the US?
Even when excluding the inventions that occurred before the US existed, like the wheel, steel, and printing press, this is still patently (no pun intended) false:
As for people moving to the US, that has nothing to do with this country's greatness, but the amount of money this country is willing to pay smart people precisely because they are such a scarce resource here. While Wehrner Von Braun, Tim Berners-Lee and Linus Torvalds all moved here, that doesn't mean that the US can claim credit for their inventions.
Stockab has fibers connected to municipal housing. That's about 20% of all fiber, and they cost more as both ISP and stockab get paid. The reason why it's so cheap is because of fierce competition between the different broadband providers. There was zero regulation and great tax benefits during the IT-boom era which led to a large number of broadband providers. That made a huge difference.
I pay (in Stockholm) about $7/month for a 100 Mbit connection and that's through privately owned fiber, not the municipal one. It also varies from city to city. In the case of Västerås (another Swedish city) they did actually build a full municipal fiber network and through laws and regulations made it a monopoly (the fibers, not the service). Prices there are about $30-40/month for a 20 Mbit connection.
I live in Stockholm, please tell me where I can sign up for a 100Mb/s connection for $11/month. The blog post is pure nonsense. The uplink speed is not really that interesting. Sure you can get a connection with that kind of uplink but how does that differ from a 1Gb/s service? Hell I can sell you a 10Gb/s service for 12$/month. It won't connect anywhere but it will give you a really cool uplink and you will a nice 10Gb/s to all my other customers in your appartment.