6 ms·

> that providing cell service is 100x to 300x harder than providing electricity? Yes, unfortunately. It's at least that much harder. For a similar comparison t

> that providing cell service is 100x to 300x harder than providing electricity? Yes, unfortunately. It's at least that much harder. For a similar comparison think of traditional radio - you buy the radio, and that's it. You might wonder how that's possible when it costs so much to beam data to your phone wirelessly? It's a complex question with a lot of nuance, but there are two important reasons that float to the top: First, Internet requires reliable two way communication. Neither radio or electricity require that. These means economies of scales work in favor of electricity generation and radio transmission - they can put up a huge plant or radio tower, crank the power up, and serve a lot of customers far away. The customer's device doesn't have to talk back. Imagine if each home had to have a mini generator to send electricity back to the power plant - that would cost a lot! Second, Internet service requires much, much more precise electronics than power or radio transmission. The Ethernet port on your laptop can understand signalling at (at least) 1gbps (1 billion bits per second, more or less). And that's not even that much - large networks today are doing 100 of times that on single physical connections, with electronics on both sides both modulating and demodulating those signals simultaneously. All that expensive (both to design and to manufacture) electronics adds up, and is accounted for in the cost of getting those bits to you.

grecy 6y ago
I worked for a North American Telco in IT, and I like everything about your answer. I will also add that Telcos are wickedly inefficient. Multi-million dollar projects just to update a public website, tens of millions in advertising, more PMs and Business Analysts and Middle Managers than people doing actual work, etc. etc. Of course they want to make a tidy profit too.
zbrozek 6y ago
This doesn't really make sense to me. The big difference I see is the cost to buy spectrum and the inherent geographic monopoly of owning it. Transformers and switchcraft are heavy-iron things which cost a lot because they're safety-rated and built with a large amount of actual matter. Transceivers and antennas are comparatively cheap to manufacture (but with higher margins) and generally don't incinerate things if they fail. In my area the cost to deploy service seems to be primarily driven by the cost of labor to bury things. That impacts electricity more than cell data, as you actually have to physically reach every one of your customers. Also your meter is two-way. It's just sending your usage data back, not power.
- grahamburger 6y ago
  > Also your meter is two-way. It's just sending your usage data back, not power. This is actually a pretty good illustration of what I'm talking about - sending a few bytes a month for power usage data is much different than maintaining a constant bit rate of >0mbps from each customer. It's the difference between broadcasting 40 channels to everyone and reserving 1 channel for a bit of upload (fairly easy with old technology) and giving everyone their own channel for upload (much more difficult). You're not wrong that a huge portion of the costs is putting things in the ground, though. The advantage that power companies have is that a lot of that work has already been done, and they don't have to upgrade as often because power usage requirements aren't changing as rapidly as bandwidth requirements. They also have the (arguable) advantage of usually being a government granted monopoly, so they don't have to worry about building something out and then being undercut by a competitor. There is a lot to dig in to here, but consider this from a different perspective - there is actually quite a bit of competition among mobile providers, and yet prices aren't dropping very quickly. You could argue that that's because of corruption and collusion (in some cases it probably is) but also consider that any one of those companies would absolutely love to take market share from the cable companies. If Verizon could undercut Comcast and give you Internet and TV at home over their wireless network they would do that in a heartbeat. The only reason they're not doing it is because it would be too expensive. Or, more precisely, they are trying to do it, that's what 5G is, and it's costing them a fortune. EDIT: Also consider another perspective - the power companies themselves would love to provide Internet service! On paper they are in a great position to be able to do that. They already have infrastructure, technicians, billing platforms, captive customers, etc. The reason they're not doing it is because their infrastructure doesn't support it, and couldn't really be made to do it without spending so much money on it that they could not be cost-competitive with existing products.
  - zbrozek 6y ago
    Personally I think mobile is tolerably (but not ideally) competitive. I think the costs are driven by the high costs of spectrum and marketing/customer acquisition. And the product is reasonably high-value, so prices _can_ be high. A useful comparison is the cost of fixed wireless internet service vs mobile service. The price/GB of the former is usually far lower than the latter despite running on exactly the same infrastructure. I merely point out that I struggle to believe that the physical infrastructure costs are large components of the cost of service. Unlike power delivery, where the physical distribution infrastructure seems to be the majority share. Or at least it is if my bill breakdown is to be believed.

grecy 6y ago

I worked for a North American Telco in IT, and I like everything about your answer. I will also add that Telcos are wickedly inefficient. Multi-million dollar projects just to update a public website, tens of millions in advertising, more PMs and Business Analysts and Middle Managers than people doing actual work, etc. etc. Of course they want to make a tidy profit too.

zbrozek 6y ago

This doesn't really make sense to me. The big difference I see is the cost to buy spectrum and the inherent geographic monopoly of owning it. Transformers and switchcraft are heavy-iron things which cost a lot because they're safety-rated and built with a large amount of actual matter. Transceivers and antennas are comparatively cheap to manufacture (but with higher margins) and generally don't incinerate things if they fail. In my area the cost to deploy service seems to be primarily driven by the cost of labor to bury things. That impacts electricity more than cell data, as you actually have to physically reach every one of your customers. Also your meter is two-way. It's just sending your usage data back, not power.

grahamburger 6y ago
> Also your meter is two-way. It's just sending your usage data back, not power. This is actually a pretty good illustration of what I'm talking about - sending a few bytes a month for power usage data is much different than maintaining a constant bit rate of >0mbps from each customer. It's the difference between broadcasting 40 channels to everyone and reserving 1 channel for a bit of upload (fairly easy with old technology) and giving everyone their own channel for upload (much more difficult). You're not wrong that a huge portion of the costs is putting things in the ground, though. The advantage that power companies have is that a lot of that work has already been done, and they don't have to upgrade as often because power usage requirements aren't changing as rapidly as bandwidth requirements. They also have the (arguable) advantage of usually being a government granted monopoly, so they don't have to worry about building something out and then being undercut by a competitor. There is a lot to dig in to here, but consider this from a different perspective - there is actually quite a bit of competition among mobile providers, and yet prices aren't dropping very quickly. You could argue that that's because of corruption and collusion (in some cases it probably is) but also consider that any one of those companies would absolutely love to take market share from the cable companies. If Verizon could undercut Comcast and give you Internet and TV at home over their wireless network they would do that in a heartbeat. The only reason they're not doing it is because it would be too expensive. Or, more precisely, they are trying to do it, that's what 5G is, and it's costing them a fortune. EDIT: Also consider another perspective - the power companies themselves would love to provide Internet service! On paper they are in a great position to be able to do that. They already have infrastructure, technicians, billing platforms, captive customers, etc. The reason they're not doing it is because their infrastructure doesn't support it, and couldn't really be made to do it without spending so much money on it that they could not be cost-competitive with existing products.
- zbrozek 6y ago
  Personally I think mobile is tolerably (but not ideally) competitive. I think the costs are driven by the high costs of spectrum and marketing/customer acquisition. And the product is reasonably high-value, so prices _can_ be high. A useful comparison is the cost of fixed wireless internet service vs mobile service. The price/GB of the former is usually far lower than the latter despite running on exactly the same infrastructure. I merely point out that I struggle to believe that the physical infrastructure costs are large components of the cost of service. Unlike power delivery, where the physical distribution infrastructure seems to be the majority share. Or at least it is if my bill breakdown is to be believed.