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I wish that the EFF had actually taught people the math of running an ISP, rather than just writing a puff piece. Here's Comcast's Form 10-K for 2017: https://

by cbhl 8y ago

I wish that the EFF had actually taught people the math of running an ISP, rather than just writing a puff piece. Here's Comcast's Form 10-K for 2017: https://www.cmcsa.com/static-files/111ba611-eb85-4edc-9000-3907c84697d8 https://www.cmcsa.com/static-files/111ba611-eb85-4edc-9000-3... Yes, the majority of the expense for Internet is definitely the upfront cost of equipment (physically putting in the cables). Cable companies borrow lots of money in order to do this -- Comcast's Form 10-K shows that they have 64 billion dollars of debt. In order to get bank loans that big, you need to show that you can pay it back. But they only have 3.4 billion in cash; the way they keep their balance sheet from falling apart is knowing you pay your monthly cable bill ("Receivables, net" of 8.4 billion). Comcast had 41 billion dollars of "Residential" revenue last year, but only 14.7 billion dollars of that was for Internet. The big expense line item is 13 billion on "Programming" (aka, TV stations from the other conglomerates, for people who haven't cut the cord yet). There's also 6.4 billion on tech support, and 2.5 billion on customer service. If you keep looking further, you see they spent 3.4 billion on "customer premise equipment" (which is probably cable modems and set-top boxes), and another 2.4 billion on "scalable infrastructure", which is the actual "paying money to make your internet better". The balance sheet shows ~38 billion on property and equipment, so maybe Comcast is upgrading, say, 5-10% of their network in a given year? In my opinion, Comcast's real long-term business risk is the shifting revenue mix from Cable to Home Internet means that Comcast gets smaller cash flows, so there's less money to upgrade the equipment every year. That can't possibly look great for shareholders.

matthewmcg 8y ago
Makes sense. Comcast does everything they can to get you to add legacy cable to your Internet only service.
electricEmu 8y ago
The 10-K for 2017 is great. You pointed out some great reasons the infrastructure and programming sides could be split. > Cable companies borrow lots of money in order to do this -- Comcast's Form 10-K shows that they have 64 billion dollars of debt. In order to get bank loans that big, you need to show that you can pay it back. But they only have 3.4 billion in cash; the way they keep their balance sheet from falling apart is knowing you pay your monthly cable bill ("Receivables, net" of 8.4 billion). I wonder would these look like split out into "internet infrastructure", and "media infrastructure". I bet it would be a stable business with low, but expected, returns, and another with lots of volatility. As a United States Citizen, I wouldn't mind providing subsidies and incentives for an internet company to expand internet connectivity. I do take offense to a media company taking subsidies to _also_ expand a media empire with those funds. > Comcast had 41 billion dollars of "Residential" revenue last year, but only 14.7 billion dollars of that was for Internet. Yes, a split out company would have a smaller market cap. That's actually larger than I expected! > The big expense line item is 13 billion on "Programming" Exactly. Get that shit out of my internet provider. In my opinion, the American Public's real long-term business risk is the over consolidation of businesses. That means that Comcast gets to continue posting record breaking profits while offering shitter services, meanwhile expanding their media empire.
- Casseres 8y ago
  > As a United States Citizen, I wouldn't mind providing subsidies and incentives for an internet company to expand internet connectivity. We already did, to the tune of somewhere between 100 to 400 billion dollars in tax breaks in the 1990s for fiber that they never delivered. Search terms: broadband scandal
  - __jal 8y ago
    Not to mention the seemingly endless series of subsidies at the city level, in return for bupkis. Some examples having to do with one connectivity slumlord: https://www.techdirt.com/articles/20131012/02124724852/decades-failed-promises-verizon-it-promises-fiber-to-get-tax-breaks-then-never-delivers.shtml https://www.techdirt.com/articles/20131012/02124724852/decad...
  - rayiner 8y ago
    Read the actual source of those claims. It’s not “100 to 400 billion in tax breaks.” See: https://news.ycombinator.com/item?id=7709556 https://news.ycombinator.com/item?id=7709556.
- rayiner 8y ago
  Comcast doesn’t get any significant subsidies. In fact the opposite is true. Cable service is subject to special municipal taxes (5% of gross revenue is typical) that other businesses don’t pay. We put special taxes on broadband like we do with things we want to discourage: cigarettes and alcohol, soda, etc. Also, wired broadband is not a “low but expected return” business right now. People are moving to wireless in droves (a growing percentage of households with $100k+ income have no wired service). 5G could make wired broadband obsolete for a big chunk of the population.
  - pavs 8y ago
    > People are moving to wireless in droves Some source would be nice. Are you saying they are moving to 4g or satellite? Both seem highly unlikely, considering 4g internet is billed on usage. Wireless connectivity has read QOS issues, I don't know how 5g is going to solve that. https://www.quora.com/What-are-the-problems-in-5G https://www.quora.com/What-are-the-problems-in-5G
pavs 8y ago
Really this. As an ISP owner, I have to say this is the truth. People and organization who like to badmouth big telcos and ISPs that they are ripping them off don't know anything about the business aspect of things. Because they are often thinking about small scale fixed operation cost. While there are small scale wisp success business stories and are probably profitable, they don't scale well when you are big. I wrote about my experience amd actively discourage to go to ISP business if you don't have the money or the technical knowhow and the expense knowhow. Google fibre is a posterboy of why ISP business is hard and expensive to start and scale. Yes Google faced preasure from existing business, but there are many places google did not bother because it would cost them real big investment. They only went to places where they could piggyback on existing infranstructure. Because they know it will take them many decades to see a return in their investment, thats not how google business model works. https://www.slashgeek.net/2016/05/31/starting-isp-really-hard-dont/ https://www.slashgeek.net/2016/05/31/starting-isp-really-har...
- electricEmu 8y ago
  TFA isn't about starting an ISP. It's about net neutrality, ISPs, and through United States. You've stated that returns take time. That can be, and is already, costed into an ISP's stock. Why do strong net neutrality laws prevent ISPs from making enough returns? How did ISPs turn record profits when net neutrality laws were in place a short time ago?
  - pavs 8y ago
    I was talking specifically about the person I replied to and many others (actually most comments) in the discussion which had nothing specific about net neutrality about ISPs being profitable.
- everybodyknows 8y ago
  Great link. The revelation for me: On-premise gear specific to upstream sources -- Netflix, Google -- turns out to be a business requirement. So NG are more effectively natural monopolies than we might have guessed. Unhappy implications for small WISPs, and for smaller video sites -- Vimeo.

by cbhl 8y ago

matthewmcg 8y ago

Makes sense. Comcast does everything they can to get you to add legacy cable to your Internet only service.

electricEmu 8y ago

The 10-K for 2017 is great. You pointed out some great reasons the infrastructure and programming sides could be split. > Cable companies borrow lots of money in order to do this -- Comcast's Form 10-K shows that they have 64 billion dollars of debt. In order to get bank loans that big, you need to show that you can pay it back. But they only have 3.4 billion in cash; the way they keep their balance sheet from falling apart is knowing you pay your monthly cable bill ("Receivables, net" of 8.4 billion). I wonder would these look like split out into "internet infrastructure", and "media infrastructure". I bet it would be a stable business with low, but expected, returns, and another with lots of volatility. As a United States Citizen, I wouldn't mind providing subsidies and incentives for an internet company to expand internet connectivity. I do take offense to a media company taking subsidies to _also_ expand a media empire with those funds. > Comcast had 41 billion dollars of "Residential" revenue last year, but only 14.7 billion dollars of that was for Internet. Yes, a split out company would have a smaller market cap. That's actually larger than I expected! > The big expense line item is 13 billion on "Programming" Exactly. Get that shit out of my internet provider. In my opinion, the American Public's real long-term business risk is the over consolidation of businesses. That means that Comcast gets to continue posting record breaking profits while offering shitter services, meanwhile expanding their media empire.

Casseres 8y ago
> As a United States Citizen, I wouldn't mind providing subsidies and incentives for an internet company to expand internet connectivity. We already did, to the tune of somewhere between 100 to 400 billion dollars in tax breaks in the 1990s for fiber that they never delivered. Search terms: broadband scandal
- __jal 8y ago
  Not to mention the seemingly endless series of subsidies at the city level, in return for bupkis. Some examples having to do with one connectivity slumlord: https://www.techdirt.com/articles/20131012/02124724852/decades-failed-promises-verizon-it-promises-fiber-to-get-tax-breaks-then-never-delivers.shtml https://www.techdirt.com/articles/20131012/02124724852/decad...
- rayiner 8y ago
  Read the actual source of those claims. It’s not “100 to 400 billion in tax breaks.” See: https://news.ycombinator.com/item?id=7709556 https://news.ycombinator.com/item?id=7709556.
rayiner 8y ago
Comcast doesn’t get any significant subsidies. In fact the opposite is true. Cable service is subject to special municipal taxes (5% of gross revenue is typical) that other businesses don’t pay. We put special taxes on broadband like we do with things we want to discourage: cigarettes and alcohol, soda, etc. Also, wired broadband is not a “low but expected return” business right now. People are moving to wireless in droves (a growing percentage of households with $100k+ income have no wired service). 5G could make wired broadband obsolete for a big chunk of the population.
- pavs 8y ago
  > People are moving to wireless in droves Some source would be nice. Are you saying they are moving to 4g or satellite? Both seem highly unlikely, considering 4g internet is billed on usage. Wireless connectivity has read QOS issues, I don't know how 5g is going to solve that. https://www.quora.com/What-are-the-problems-in-5G https://www.quora.com/What-are-the-problems-in-5G

pavs 8y ago

Really this. As an ISP owner, I have to say this is the truth. People and organization who like to badmouth big telcos and ISPs that they are ripping them off don't know anything about the business aspect of things. Because they are often thinking about small scale fixed operation cost. While there are small scale wisp success business stories and are probably profitable, they don't scale well when you are big. I wrote about my experience amd actively discourage to go to ISP business if you don't have the money or the technical knowhow and the expense knowhow. Google fibre is a posterboy of why ISP business is hard and expensive to start and scale. Yes Google faced preasure from existing business, but there are many places google did not bother because it would cost them real big investment. They only went to places where they could piggyback on existing infranstructure. Because they know it will take them many decades to see a return in their investment, thats not how google business model works. https://www.slashgeek.net/2016/05/31/starting-isp-really-hard-dont/ https://www.slashgeek.net/2016/05/31/starting-isp-really-har...

electricEmu 8y ago
TFA isn't about starting an ISP. It's about net neutrality, ISPs, and through United States. You've stated that returns take time. That can be, and is already, costed into an ISP's stock. Why do strong net neutrality laws prevent ISPs from making enough returns? How did ISPs turn record profits when net neutrality laws were in place a short time ago?
- pavs 8y ago
  I was talking specifically about the person I replied to and many others (actually most comments) in the discussion which had nothing specific about net neutrality about ISPs being profitable.
everybodyknows 8y ago
Great link. The revelation for me: On-premise gear specific to upstream sources -- Netflix, Google -- turns out to be a business requirement. So NG are more effectively natural monopolies than we might have guessed. Unhappy implications for small WISPs, and for smaller video sites -- Vimeo.