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I don't think many people realize just how difficult it is to start an ISP and compete. I started an ISP late last year (Shameless plug: https://nepafiber.com

I don't think many people realize just how difficult it is to start an ISP and compete. I started an ISP late last year (Shameless plug: https://nepafiber.com https://nepafiber.com ), and I have a new found respect for ISP's. Don't get me wrong, I think most of them do an extremely shitty job at what they do. But starting one requires enormous sums of money. Furthermore, even though we hit profitability after our 4th month in business, raising money has extremely difficult because no one thinks we can weather the storm given how large and powerful other telecoms are.

forrestthewoods 10y ago
It requires enormous sums of money to start. But it is also enormously profitable. Time Warner has a profit margin of 97% on their ISP business. Which sounds about right. When profit margins are that high capital finds a way. What capital can't do is chop through red tape, burdensome regulation, and noncompetitive system. Your investors aren't crazy. You challenge titans! But your difficulty isn't going to be technical. It's going to be those titans doing everything in their (significant) power to stop competition. They want to protect their 97% margin after all!
- chrishacken 10y ago
  Yes, it's extremely profitable after X years (after the infrastructure is all paid off), but lowering those profit margins would only make it more difficult for new players to enter the market. If profit margins weren't high, it would essentially be impossible to recoup that initial capital expenditure. Aside from that, if you're anything like us, you will be reinvesting those profits into expanding and growing your network.
- st3v3r 10y ago
  Time Warner has those levels of profit margin because they largely have no competition, so they can charge as much as they can squeeze from people. Cover their territory with 3 other, competitive ISPs, and watch that margin number drop.
  - forrestthewoods 10y ago
    That's literally the point I've been making in this sub-thread...
JustSomeNobody 10y ago
It's difficult now. It wasn't before cable companies bought them all.
- chrishacken 10y ago
  If you're referring to DSL/Dial Up companies, the infrastructure was already in place for that. Phone lines have been around for decades. Anyone can start a DSL/dial up company, but what good is that? The technology is outdated. To be competitive in today's market you need to be running fiber. Depending on where you're located, fiber is scarce and running it isn't cheap.
- st3v3r 10y ago
  No. It always took lots of money. Maybe not for dial-up, but otherwise it's always taken a lot of equipment, not to mention the tearing up of the roads to lay down lines.
  - chrishacken 10y ago
    DSL uses, in most cases, the same copper phone lines as dial-up. So unless you're deploying a cable network (which has multiple revenue streams if you're selling TV, thus a higher market penetration rate) or a fiber network, there's no need to dig up roads or lay your own lines. Yeah, the equipment was probably expensive, but compared to what? Laying your own infrastructure? Not even close.
    - Kadin 10y ago
      I suspect that you're already aware of this, given that you run an ISP, but for those who are not familiar ... the reason that there was a proliferation of DSL-based ISPs in the late 90s and early 2000s, such that for a brief moment there was actual competition in the broadband market (in some areas), was due to utility-style regulation by the FCC. Specifically it was called "local loop unbundling" and it required that the incumbent phone system operators lease "local loops" (the copper that runs to your house) out to independent operators at reasonable-and-non-discriminatory rates. This regulation was undone under the Bush administration and most of the independent DSL operators died shortly thereafter, leaving consumers with a choice between the incumbent telephone company and the incumbent cable company, in most cases, for broadband. In short, when the market was regulated, there was competition and consumer choice. When the regulation was removed in response to industry lobbying efforts, consumer choice disappeared.

forrestthewoods 10y ago

It requires enormous sums of money to start. But it is also enormously profitable. Time Warner has a profit margin of 97% on their ISP business. Which sounds about right. When profit margins are that high capital finds a way. What capital can't do is chop through red tape, burdensome regulation, and noncompetitive system. Your investors aren't crazy. You challenge titans! But your difficulty isn't going to be technical. It's going to be those titans doing everything in their (significant) power to stop competition. They want to protect their 97% margin after all!

chrishacken 10y ago
Yes, it's extremely profitable after X years (after the infrastructure is all paid off), but lowering those profit margins would only make it more difficult for new players to enter the market. If profit margins weren't high, it would essentially be impossible to recoup that initial capital expenditure. Aside from that, if you're anything like us, you will be reinvesting those profits into expanding and growing your network.
st3v3r 10y ago
Time Warner has those levels of profit margin because they largely have no competition, so they can charge as much as they can squeeze from people. Cover their territory with 3 other, competitive ISPs, and watch that margin number drop.
- forrestthewoods 10y ago
  That's literally the point I've been making in this sub-thread...

JustSomeNobody 10y ago

It's difficult now. It wasn't before cable companies bought them all.

chrishacken 10y ago
If you're referring to DSL/Dial Up companies, the infrastructure was already in place for that. Phone lines have been around for decades. Anyone can start a DSL/dial up company, but what good is that? The technology is outdated. To be competitive in today's market you need to be running fiber. Depending on where you're located, fiber is scarce and running it isn't cheap.
st3v3r 10y ago
No. It always took lots of money. Maybe not for dial-up, but otherwise it's always taken a lot of equipment, not to mention the tearing up of the roads to lay down lines.
- chrishacken 10y ago
  DSL uses, in most cases, the same copper phone lines as dial-up. So unless you're deploying a cable network (which has multiple revenue streams if you're selling TV, thus a higher market penetration rate) or a fiber network, there's no need to dig up roads or lay your own lines. Yeah, the equipment was probably expensive, but compared to what? Laying your own infrastructure? Not even close.
  - Kadin 10y ago
    I suspect that you're already aware of this, given that you run an ISP, but for those who are not familiar ... the reason that there was a proliferation of DSL-based ISPs in the late 90s and early 2000s, such that for a brief moment there was actual competition in the broadband market (in some areas), was due to utility-style regulation by the FCC. Specifically it was called "local loop unbundling" and it required that the incumbent phone system operators lease "local loops" (the copper that runs to your house) out to independent operators at reasonable-and-non-discriminatory rates. This regulation was undone under the Bush administration and most of the independent DSL operators died shortly thereafter, leaving consumers with a choice between the incumbent telephone company and the incumbent cable company, in most cases, for broadband. In short, when the market was regulated, there was competition and consumer choice. When the regulation was removed in response to industry lobbying efforts, consumer choice disappeared.