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By that logic, wouldn't a large ISP want to maximize its profit by splitting itself into smaller regional divisions with smaller, less expensive networks?
by wolfgang42 8y ago
By that logic, wouldn't a large ISP want to maximize its profit by splitting itself into smaller regional divisions with smaller, less expensive networks?
- ksk 8y agoI think what GP is also saying is the money maker divisions subsidize the 'loser' regional divisions. It would be interesting to see that data...
- peterwwillis 8y agoAbsolutely. Modern ISPs are part of corporations which have other business interests that are very, very expensive. All corporations use all of their money-making ventures to help subsidize other parts of the business. Just look at the old Bell system. They charged exorbitant rates for the long distance service and used this to subsidize local service. When Bell got broken up, local phone service got more expensive, but long distance got cheaper. Later on, a lot of the baby bells got absorbed by others because they were not efficient enough to generate profits as individual units without the "mothership" subsidizing them. The way a giant corporate monolith works is completely different from a tiny local company.
- creeble 8y agoThen they should kill the business units that are expensive to run, not jack up prices on the profitable services.
- peterwwillis 8y agoNo, that would be a logistical nightmare, and the amount of waste and complexity added would just bog down the whole thing and profits would fall. If you have 100 acres of land to farm, it does not get cheaper or easier to manage by buying 10 sets of tractors, 10 sets of farm hands, 10 grain silos, 10 of everything... you don't need all those things, and they all have implied costs which will all eat away at your profit by the time the grain gets to market.
- wolfgang42 8y agoRight, which is why I'm confused at the parent's claim that "Of course a tiny regional co-op ISP doesn't cost much. It's simpler!" They seem to be confusing absolute costs with the cost per customer, which is the number that's actually relevant for ISPs' users. Since I wrote my comment, the above comment has been expanded and now seems to be arguing that the reason ISPs are so expensive is because they're paying costs associated with being a media conglomerate (which sounds plausible), and that this is somehow perfectly normal and consumers shouldn't be upset that the cost of their network access is higher (which makes no sense to me at all).
- peterwwillis 8y agoSorry, I wrote both comments and expanded on them. It's multiple things. It's costs associated with other business interests, it's logistical and operational costs, it's a whole lot of things. My main point is that it is naive to compare a tiny isp to a gigantic one, because the tiny one doesn't have remotely as many extra considerations or costs. Of course consumers should be concerned about costs. I personally think they should lobby for municipal ISPs! But I'm also saying you can't say "oh my internet is too expensive compared to the tiny isp". Your internet is probably accurately priced considering who you're getting it from.
- zAy0LfpBZLC8mAC 8y agoIn other words: Everything is always accurately priced because there always is a reason for why the price is what it is. Not exactly a helpful way to think about things if you want to understand them, is it?