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Why There Are So Few ISP Start-Ups In the U.S.
An anonymous reader writes "Despite whispers of growing dissatisfaction among consumers, there are still very few ISP start-ups popping up in communities all over the U.S. There are two main reasons for this: up-front costs and legal obstacles. The first reason discourages anyone who doesn't have Google's investors or the local government financially supporting them from even getting a toe in the business. 'Financial analysts last year estimated that Google had to spend $84 million to build a fiber network that passed 149,000 homes in Kansas City, with the cost per home at $500 to $674.' The second reason will keep any new start-up defending itself in court against frivolous lawsuits incumbent ISP providers have been known to file to bleed the newcomers dry in legal fees. There are also ISP lobbyists working to pass laws that prevent local governments from either entering the ISP market themselves or partnering with private companies to provide ISP alternatives. Given these set-backs and growing dissatisfaction with the status quo, one has to wonder how long before the U.S. recognizes the internet as a utility and passes laws and regulations accordingly."
Where government creates regulations and laws to favor "connected" businesses and interests. That's how the established ISPs have come to have so much power.
."..one has to wonder how long before the U.S. recognizes the internet as a utility and passes laws and regulations accordingly."
Now the author of TFS thinks *more* laws & regulations from the *same* crooks that have intentionally worked long and hard to *create* this situation are suddenly going to help!?
If there's enough crap stirred up to occupy the news cycle for more than a day or two, they'll do what they always do. Put together some Bill with a great-sounding name and at a quick glance looks good, but there will be sub-clauses and sub-paragraphs buried deep in the weeds of the Bill that actually make things *worse*.
Hmm, on second thought, where did I put that property title to that bridge? I may have found a prospect!
Strat
Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
Address exhaustion means all new entrants are locked out anyway. To become a major US ISP you would need to control several /8s worth of IPv4 address space. There is no longer enough unallocated space to grant that to a new company. So the only way, regardless of other considerations, to become a big ISP is to buy an existing big ISP.
The same is true in Europe. You cannot build a new European ISP, because you would need a sizeable network allocation and they're all gone. As a new entrant you would receive roughly the address space needed to run your data centre, leaving nothing for customers. And that's it, forever. Could you buy what you need on the "open" market? Sure, buy from your competitors at a price they specify, that sounds like it would definitely work...
You could have said the same thing about telephone 100 years ago, too, and the same thing about electricity at around the same time.
It is increasingly the case where you are excluded from participating in some parts of modern society if you don't have a decent internet connection. For instance, you're not going to be doing any MOOC courses if you don't have an internet connection that's good enough for video. You're not going to be able to find things out as easier as other people if you don't have a decent internet connection, and you can find yourself denied of many opportunities. It's not all about looking at cat photos. The internet has become embedded enough in modern society that you are now often at a disadvantage if you live in the US and don't have it, so just like the telephone became a utility, internet should also become available on a similar basis.
Oolite: Elite-like game. For Mac, Linux and Windows
All these idiot posts about how its the market that is constraining ISP development.
Never mind that it is a heavily regulated industry that is very hard to launch on a small scale despite logistically being very easy.
What drives the costs up are the pole fees. They're way too high.
Sell the poles to a co-op. And then let that co-op spread the cost of maintaining the poles around its members.
This should not be under the control of the cities. They just see it as a revenue making opportunity. And that attitude keeps the cost of using the poles high.
Sell it to a co-op. Then we can all use the poles/pipeline for anything.
You could have tiny mom and pop ISPs. That would be in everyone's interest except for the big telecoms.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Oh stuff a sock in it.
The cost for the infrastructural build out of basic telephone service, which is what the incumbent telcos are required to provide, was paid for decades ago and with significant taxpayer subsidies. None of the incumbents are required to provide universal internet service at all, let alone reasonably useful universal internet service, so your complaint is bull crap. Also, Comcast/Time Warner/Charter etc are not required to provide any level of universal service.
"Remember, there never were pineapple-almond cookies here."
Except for banking. And filing some legal papers. Education. Weather reporting. Checking commodity reports, which is very important to farmers. Rapid shipping of design documents to job sites. Those are just a few I can think of.
putting the 'B' in LGBTQ+
Free Market != unregulated market. In fact an unregulated market often becomes a captured market, e.g. monopolies. Too bad most people confuse that.
putting the 'B' in LGBTQ+
The simplest case is that they aren't required to upgrade. The slightly less simple case is that, like with phone service prior to 1984, regulators set upgrade targets based on information provided by the companies. In the first step, the second case is exactly like the first: a rational actor will blow smoke at regulators trying very hard to avoid significant upgrades (because further investment in upgrades by definition reduces their ROI in a defined-profit model).
When it becomes clear that some upgrade will be needed, the same calculations apply to the marginal cost of different upgrade options. The difference between a $10 million upgrade to the copper vs. a $80 million switch to fiber is $70 million, and far more risk. As above, the extra $70 million and extra risk is a bad thing for the company, so they should fight to only do the $10 million upgrade. In other words, choosing between a $10 million upgrade and a $80 million upgrade is exactly the same as choosing between no upgrade and a $70 million upgrade: a non-stupid company will spend as little as possible, and risk as little as possible, because either way the get the government-mandated profit. Look at the history of (minimal) AT&T service upgrades during the decades they were fully regulated.
Contrast this with removing the government mandated monopoly, in which case a $80 million upgrade will allow the ISP to offer service with 10 times the speed of their competition, resulting profits increasing by $180 million.
Further, consider these two sets of choices:
Compete.net has $80 million to spend on upgrades. They can either spend $80 million on fiber, or $65 million on fresh copper.
If they buy fresh copper, outages will be reduced, increasing profit by 2%. If they buy fiber, service will be WAY better, increasing profit by 50%. Acme should of course spend the money on fiber.
Regulated.net must spend $80 million on upgrades. They can either spend that $80 million buying fresh copper or spend it on fiber.If they buy fresh copper, profits are unaffected. If they buy fiber, profits are unaffected. If they buy $65M worth of copper from the CEO's bother-in-law for $80M, there's an extra $15M profit to the company run by the brother-in-law, to be shared with the family.
Regulated.net doesn't CARE that they've wasted millions of dollars by essentially giving it away to friends and relatives - their profit is the same either way. In Compete.net tried the same thing, shareholders would be in an uproar and their CEO would soon be sharing a jail cell with Bernie.
Being regulated doesn't mean being efficient or not being corrupt.
Look at the mexican telephone company.
Its a state monopoly... ever seen a mexican telephone bill?
Sorry, sport... its a zero cost operation. Its a tax/revenue scheme for local governments to get a little extra tax money through a service fee.
You see it in phone bills as well.
Ever tried to take your phone bill as low as you could go? Ever seen what portion of the bill that is left is taxes?
I set up a phone not long ago that was I shit you not 80 percent taxes. The phone company operated on 20 percent of what I was paying. 80 percent went to the government.
The government just needs to be taken out of these things. They want money? Remove the crap service taxes and have the stones to raise the actual taxes.
The point of all these little nickle and dime taxes is to hide the real tax rate. You have one big tax that is about as big as you can get away with... and then you have a thousand little taxes that eat away at the edges. And then you have taxes at different levels of the supply chain so that by the time someone goes to buy something they don't realize that half the price of whatever they're buying is just people up the supply chain passing the taxes down.
That's the game.
Its all predicated on the assumption that the people are stupid, unaware, incurious, gullible, and moronically trusting. Is that redundant? Only in the way that three exclamation marks are redundant and yet emphasize the point just that much more.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.