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I see this a bit differently, and I frequently use the history of Google Fiber as evidence for strong net neutrality regulations. In the areas where it was dep
by BonesJustice 8y ago
I see this a bit differently, and I frequently use the history of Google Fiber as evidence for strong net neutrality regulations.
In the areas where it was deployed, Google Fiber was wildly successful. And yet, Google threw in the towel. Why?
It _isn’t_ because Google Fiber is was unprofitable. To the contrary, it was profitable _despite_ driving broadband prices way down in its service areas.
It’s because the incumbent ISPs simply have too much power. That power comes in many forms:
1. Excessive industry lobbying power;
2. Anti-competitive exclusivity agreements;
3. The ability to stall rollouts indefinitely in the absence of “one touch make ready” policies;
4. Required cooperation with and permission from governments who feel less pressured to move quickly once their residents have at least one incumbent provider;
etc.
If the incumbents are so well protected that one of the most powerful corporations in America found the barriers to entry too burdensome, then how can anyone argue that there is any semblance of a “free market”? What hope is there for startup ISPs?
The incumbents have received hundreds of billions of taxpayer dollars, so they already had a government-assisted head start. And, despite prices being so inflated that they halved overnight wherever Google Fiber rolled out, they are still able to effectively stave off meaningful competition.
Would that be possible in a healthy, competitive marketplace? No. So we need to stop treating it like one, when it clearly isn’t.
- mannanj 8y agoI'm a little surprised this didn't have a little more discussion.
- nickik 8y agoAs a libertarian who argues for government regulation being the problem and not the market a lot, I must say, I'm not surprised. This is basically normal and what you expect. People are just blind to the massive amount of regulation that struggles and often basically predetermines the market and when you try to explain how 3 different regulation combine to make the improvement impossible peoples eyes gloss over. If the regulation is not "THIS GUY HAS A MONOPOLY" its very hard to get anybody exited or even talking about these regulations.
- chuckdries 8y agoAre you arguing that these companies have their monopolies because of regulation?
- yifanl 8y agoIt's hardly outside the realm of possibility that the big telecoms are lobbying for regulation that makes it easy for them and hard for everyone else.
- IntelMiner 8y agoI mean. They did identify as a Libertarian. Isn't that one of the core philosophies of Libertarianism? That the "market will sort itself out"
- tomjakubowski 8y agoThat is true for the right-libertarianism dominant in the US (also true for some flavors of left-libertarianism). I guess that's probably what most refer to with "big-L Libertarianism".
- leetcrew 8y agoperhaps true of "big L" libertarianism, but this is not entirely a fair representation of the broader political philosophy. most libertarians i have talked to will certainly acknowledge that market failures happen even in unregulated markets. as i understand it, the core motivation for libertarianism is that power is real and impossible to "distribute" evenly. relatively more powerful people will always be able to divert state resources to serve their own ends. the only way to limit this effect is to limit the power of the state itself. so the argument is not so much that free markets are beautiful, perfect things; rather, the free market is usually preferable to the regulated markets that powerful actors will allow to occur.
- MrEldritch 8y agoThis is not an uncommon argument. It's not that the free market never leads to monopolies - but almost all of the most recognizable monopolies either owe their business model to a distortion in the market directly caused by regulation, owe their continued long-term existence to a regulatory environment that makes it unusually hard for would-be competitors to even think about trying to fight them, or owe their particular reach and dominance to special advantages imposed from outside. Monopolies, oligopolies, and cartels can (and would) certainly occur even in the mythical Ancapistan, but accidental and deliberate abuses of state power make them both more common, more stable, and worse than they would be otherwise.
- georgemcbay 8y agoNot only are the incumbents well protected, but they are increasingly few. 2 years ago I had 300 Mbps cable service at home via Time Warner Cable, then they were bought by Spectrum. Now I have 150 Mbps service. I still live in the same place and I'm still using the same cable modem (one I own, so as to avoid the ridiculous rental fees) I used back then, but 300 Mbps was simply killed as an option. I can't even pay more for it. Google Fiber may have been a useful gambit to increase the pace of rollout of other telecom's high speed offerings, but I would bet good money that it will be a very short-term play with erosion of net neutrality and further consolidation of the telecom market quickly wiping out the benefits.
- walrus01 8y agoTechnical POV: 300Mbps might have been possible two years ago because there were fewer high bandwidth customers on your segment of the DOCSIS3 network. With increased channel bonding, it's now possible to do gigabit downstream over cable. For an example, Google "24x8 docsis3 modem". You may have something like an 8x4 modem. It is an intentionally oversubscribed shared access medium on the copper you're connected to, so it will only support a finite number of 300Mbps customers. It will support more 150Mbps customers on the same segment. The upstream still has to be highly asymmetrical because they're allocating rf channels asymmetrically. The capacity of one segment of coax is still a great deal less than a GPON network, nevermind active Ethernet.
- jjeaff 8y agoYou'd think by now they would finally start having a bit more upstream traffic so they could even out the assymetry a bit. But here I am on my 500mbps down, 30mbps up connection.
- walrus01 8y agoIn one place I have 225 down, 6.5 up. Annoying as hell trying to upload a 4K video to YouTube, or scp it somewhere.
- mtgx 8y ago
- rayiner 8y agoSeveral of your factual assumptions are just wrong. For example, there are no "exclusivity agreements"--those have been illegal under federal law since 1994. Also, ISPs never received "hundreds of billions of taxpayer dollars." That number is a total fabrication: https://news.ycombinator.com/item?id=7709556 https://news.ycombinator.com/item?id=7709556. But leaving the facts aside, this is something you can logic through. Instead of speculating about what problems Google might have faced, look to its actual conduct to see what problems it tried to avoid. If "industry lobbying power" was the problem, you'd expect Google would try to deploy fiber somewhere it had the leg-up lobbying-wise, like Seattle or San Francisco or Mountain View. It never did that. Under your theory, you have to assume that Comcast (based in Philadelphia) has more lobbying muscle in Google's own back yard than Google. What did Google do instead? It went to medium-sized cities in Red states with overhead utility lines. Atlanta, Austin, Provo, Kansas City, etc. Why? Because those cities waived regulatory requirements they applied to incumbents, including the crucial one of build-out requirements (the requirement to build out to the whole city). Google went places like Kansas City, which fast tracked permitting, gave free leases of public land for fiber huts, and waived the obligation to cover low income neighborhoods. Indeed, the willingness to waive build out requirements (which are routine in the industry), is one thing these disparate Fiber cities have in common. All of this tells you that the basic problem with Fiber was profitability (not just making a profit, but enough profit compared to what else Google could be doing with that money). Build-out requirements kill profitability, because you’re forced to spend a lot of money building to neighborhoods where you can expect few customers. (The major cost of a fiber build is wiring the neighborhood, not hooking up each house.) That’s why a cornerstone of Fiber was the idea of “fiberhoods”—neighborhoods with demonstrated demand for fiber. (Of course, remember, the initial fiberhood selection exluded most low income neighborhoods in KC, as you’d expect. Google was forced to back peddle and add a bunch of low income neighborhoods in. But that misstep tells you a lot about the money math that was driving Fiber.)
- BonesJustice 8y ago> For example, there are no "exclusivity agreements"--those have been illegal under federal law since 1994. I’m not sure we’re talking about the same kinds of agreements; I’m not referring to agreements between providers and municipalities, but between providers and developers, large residential management companies, and HOA-type entities. I do not know whether those are illegal, but in my experience they are prevalent enough that it doesn’t seem to matter. They still get signed, and presumably at least one party believes such covenants are enforceable (I have no idea whether they are or not). > If "industry lobbying power" was the problem, you'd expect Google would try to deploy fiber somewhere it had the leg-up lobbying-wise, like Seattle or San Francisco. It never did that. Under your theory, you have to assume that Comcast (based in Philadelphia) has more lobbying muscle in Google's own back yard than Google. I would expect cities where incumbent ISPs’ political influence is weakest to already be benefiting from increased competition, and indeed, that seems to be the case. I wouldn’t expect Google to prioritize cities that are already well served by multiple providers.
- dmead 8y agoit definitely is/was not profitable. you need a vast subscriber base to make economies of scale become useful
- TheLastSamurai 8y ago>> If the incumbents are so well protected that one of the most powerful corporations in America found the barriers to entry too burdensome, then how can anyone argue that there is any semblance of a “free market”? Yes, that's the biggest problem and I'm tired of repeating it. If Google can't do it, then what hope do the other minnows and plebeians have? Its high time that the average lazy American should wake up and revolt against the establishment for this injustice now.
- Gustomaximus 8y agoRevolt is a stong word. People need to 1) have a general interest in many areas and 2) Hold their politicions accountable. Currently it almost feels as though corruption is becoming acceptable. I keep seeing people say: "they're all corrupt so its political to arrest them for the less serious things." This seems a sign of the system breaking. Also without trying to kick of tribalism here, I think wealth inequality drives this corrupt and short term behaviour somewhat. People start relaxing ethics as their focus turns to getting ahead. I feel if everyone is more balanced economically other things become more important for your feelings of self importance such as being judged for the person you are rather than your net worth.
- kodablah 8y ago> Google threw in the towel. Why? [...] It’s because the incumbent ISPs simply have too much power Is this why? I am not aware of any disclosed reasons. I was under the impression that they ended their experiment and realized being an ISP wasn't in line with their business model, profits weren't large enough, and the execs just didn't want to be in that market. Sure incumbency and lobbying happened (and won't change with net neutrality and happens in any entrenched market they'd enter), but is that why Google stopped rollouts? Do you have evidence of this? And if not, why is your speculation more accurate than mine? Also, if this is not for sure why they stopped, do you believe other efforts to promote net neutrality are harmed by frequently using examples like this that may be inaccurate to assist?
- tudorconstantin 8y agoI think that free competition alone is responsible for having cheaper and better internet access: in Romania I pay 10$/month for a 1gb, unlimited traffic, internet connection. I think we have this for about 3-5 years. In a country with very few companies that are bigger than 1% of what Google or AOL or AT&T are. In a country where an entrepreneur doesn't even dream of having access to the big investor money needed to start an optical fiber ISP. What you're paying in US is 10x-100x more expensive than that. One can only imagine the margins your ISPs make and the profit opportunities other entrepreneurs have in this space. If it's not about the incumbent's overwhelming power, what can it be? Lack of entrepreneurial spirit in US? Lack of technological knowledge?(you invented this whole internet thing ffs) Lack of desire for easy profits? I doubt.
- Mediterraneo10 8y ago> in Romania I pay 10$/month for a 1gb, unlimited traffic, internet connection. I think we have this for about 3-5 years. 1GB is fairly new in Romania, but already by 2007 fiber had been rolled out in the major cities (wise use of EU funds?) and at least 300Mbps or 500Mbps connections for 10€/month have long been routine. (Incidentally, even though gigabit is becoming common, not many people realize they have to upgrade their routers – wifi in cafes is almost never gigabit, even if the ISP’s link supports it, just because the cafe owners will simply grab a cheap router from the shop and that is unlikely to be gigabit.) Even before wide availability of fiber, cable and DSL connections offered pretty high speeds for that medium. In Cluj your ISP would even give you the username and password for a private server where you could share films and music with other people in the same city, so of course download speeds would be extremely fast. Good times.
- shaklee3 8y agoPlease cite your sources showing where they were profitable. Everything I've read shows that they were not profitable.
- intended 8y agoAs I recall, American telecom firms have some of the highest revenue per user - this is the key metric that all telcos get compared on (apples to apples metric). American telcos have the highest ARPU in the world. If they are not profitable, then the rest of the world is positively broke - https://www.strategyand.pwc.com/media/file/An-industry-at-risk.pdf https://www.strategyand.pwc.com/media/file/An-industry-at-ri... This is the first OK free report I found. Someone in finance or with access will have a wealth of better reports.
- shaklee3 8y agoAmerican telecoms are not a comparison. Google had to pay for all the infrastructure to roll out the fiber, whereas others were susbsidized by the government.
- intended 8y agoTelcos are compared to each other, the same way car firms are - that’s the essence of a comp. Google fiber is, in the end, compared to the same companies because they had to make the same capex. The subsidy will be accounted for in the financial calculus.
- shaklee3 8y agoExactly. But Google had no subsidy as far as I know, so the margin to be profitable must be higher.
- drdaeman 8y agoHow is NN supposed to fix the entry barrier issues? I think you need a very different sort of regulations (anti-monopoly) and deregulations (barrier removal). I don't want to argue whenever NN is good or not so much (I'm not sure myself), but my point is the effort seems massively misdirected. Everyone's raving about not policing traffic; states are passing regulations, but (across the ocean, I admit) I don't see anything happening so you guys can get closer to having lots of new ISPs and actual competition.
- dingaling 8y agoNone of those points, regardless of validity or otherwise, have the slightest connection to net neutrality. In fact when Google Fiber first launched they were decidedly not net-neutral; they banned server-hosting.
- bogomipz 8y ago>"1. Excessive industry lobbying power;" Google has long cultivated a substantial lobbying effort in Washington. In fact it outspent any other single private company in it's lobbying in 2017. [1] >"2. Anti-competitive exclusivity agreements;" There's no such thing at either the municipal level, state level or otherwise. Exclusivity agreements for carriers don't exist. >"3. The ability to stall rollouts indefinitely in the absence of “one touch make ready” policies;" Telephone poles which were an issue in the Austin rollout are not an issue in many(most?) US cities where there are no telephone poles and cable vaults and ducting are underground and not owned by the incumbents. >"4. Required cooperation with and permission from governments who feel less pressured to move quickly once their residents have at least one incumbent provider;" Is there any evidence of this? Politician love to take credit for innovations and improvements that they had very little to do with. [1] https://www.washingtonpost.com/news/the-switch/wp/2018/01/23/google-outspent-every-other-company-on-federal-lobbying-in-2017/?utm_term=.ab51555294ee https://www.washingtonpost.com/news/the-switch/wp/2018/01/23...
- mandeepj 8y ago> Excessive industry lobbying power Which ISP would have more power than Google? :-)