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Canadian Regulator Orders Telecoms To Tell Us What It Costs To Run Their Service
bshell writes "Canada's CRTC (like the FCC) has finally asked telecoms to provide information about how much their services actually cost. Quoting a Montreal Gazette story: 'In a report I wrote last year, I estimated the markup for Internet services was 6,452 per cent for Bell's Essential Plus plan, which provides a two-megabits-per-second speed for $28.95 (prices may have changed since last year).' The markup is likely similar in the U.S. It's about time that we consumers found out what it really costs to provide Internet service, and for that matter telephone and wireless services, so we can get a fair shake."
I don't get this issue here. Most of these companies are publicly traded, so you have access to their financials. Go look for yourself if you want to know what their operational profit margin is.
actuallly, most of the fixed costs that you would imagine telcos pay to secure rights of way, lay wire, etc. etc. is heavily subsidized by taxpayers, so effectively we're paying for that part, too, even if we don't subscribe to their ridiculously overpriced internet service
The markup is large but I suspect it is no where near that by the time you add in advertising (print, TV, cold/warm calls), collections activities, billing legal etc. The ISP business might very well be like Coke: 1% cost what is in the bottle and all the rest is branding and service around that. If investors really got to make 6000+% on there money the market would flood with people wanting those returns and the prices would drop.
Rogers didn't have competition in the cable space in east Canada and then Bell got into the business. For phones you have Fido, Virgin etc entering the market. ISPs: the little guys have always been around. They get screwed over since they have to lease bandwidth from one of the big players (usually Bell since it is DSL) but still it is there. They have nothing like the advertising (I think they are so local the revenue can't get them TV time) but you can get a fastish (5Mbps) connection for ~$30 with no limits in most places, some of them even explicitly state they don't traffic shape, the connection is symmetric etc.