4 ms·

"It's not worth it for multiple providers to wire up an apartment or neighbourhood when there is already an existing provider there." Except that it is kinda w

"It's not worth it for multiple providers to wire up an apartment or neighbourhood when there is already an existing provider there." Except that it is kinda worth it if they'd think for a moment just how many folk would instantly switch to any competition that arrived in an area that's been consistently screwed over by the only provider there… All they'd have to do is offer honest services at a fair price and they'd steal a massive chunk of the area's subscriber base.

fyfy18 6y ago
I think the issue here is there isn't much profit to be made though. This isn't the US where you pay $100/mo for slow DSL with a ridiculous datacap.... I pay €19/mo for FTTH at 1gbit up/down and no data limits. My apartment building has 20 properties, so if a competitor came in offering the same for €15/mo and managed to convert half of the properties that would be... €150/mo revenue. How long would it take to even pay back the GPON hardware they need to install in the building? My provider hasn't attempted to screw us over at all yet (been with them for 4 years), but I am concerned that they are our only choice, so if they wanted to double prices we'd probably pay.
michaelt 6y ago
Imagine the cost of providing fiber is $50/month, and Company A has wired up a town and charges customers $100/month. You're the CEO of Company B, and you have two choices: You can wire up the same town, charge $60/month, Company A will drop their prices to match, and you get to make a profit of $10/month from half the town. Or you can wire up a different town, and charge $100/month - giving you a profit of $50/month from the entire town. Which one would you do first?
- richardwhiuk 6y ago
  You'll almost nothing a month, as the price races to the bottom - it'll likely be worse than $10 a month
- mattnewton 6y ago
  This is why we need municipal competition, we have a last-mile cartel where they have agreed to not compete and just extract rent in the US.
- wayoutthere 6y ago
  It's actually more like "Company A will drop prices to $40/mo in your coverage area as soon as you start your build-out". Company A has already sunk cost into the infrastructure so they can afford to do this and remain cash-flow positive. As soon as you go out of business they know they can just raise the price again. For this reason, "overbuilders" tend to target high-income areas where additional bundled services increase the ARPU (annual revenue per user) beyond the base service. There's also usually a higher "take rate" (subscribers per total homes served) in high-income areas. The up-front capital investment required to build out telecom services is absolutely staggering -- we're talking billions for even a small area of a city.

fyfy18 6y ago

I think the issue here is there isn't much profit to be made though. This isn't the US where you pay $100/mo for slow DSL with a ridiculous datacap.... I pay €19/mo for FTTH at 1gbit up/down and no data limits. My apartment building has 20 properties, so if a competitor came in offering the same for €15/mo and managed to convert half of the properties that would be... €150/mo revenue. How long would it take to even pay back the GPON hardware they need to install in the building? My provider hasn't attempted to screw us over at all yet (been with them for 4 years), but I am concerned that they are our only choice, so if they wanted to double prices we'd probably pay.

michaelt 6y ago

Imagine the cost of providing fiber is $50/month, and Company A has wired up a town and charges customers $100/month. You're the CEO of Company B, and you have two choices: You can wire up the same town, charge $60/month, Company A will drop their prices to match, and you get to make a profit of $10/month from half the town. Or you can wire up a different town, and charge $100/month - giving you a profit of $50/month from the entire town. Which one would you do first?

richardwhiuk 6y ago
You'll almost nothing a month, as the price races to the bottom - it'll likely be worse than $10 a month
mattnewton 6y ago
This is why we need municipal competition, we have a last-mile cartel where they have agreed to not compete and just extract rent in the US.
wayoutthere 6y ago
It's actually more like "Company A will drop prices to $40/mo in your coverage area as soon as you start your build-out". Company A has already sunk cost into the infrastructure so they can afford to do this and remain cash-flow positive. As soon as you go out of business they know they can just raise the price again. For this reason, "overbuilders" tend to target high-income areas where additional bundled services increase the ARPU (annual revenue per user) beyond the base service. There's also usually a higher "take rate" (subscribers per total homes served) in high-income areas. The up-front capital investment required to build out telecom services is absolutely staggering -- we're talking billions for even a small area of a city.