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My recent employer was one of the ISP providing rural telecom service. These subsidies accounted for a hefty percentage of our income and the company was still

My recent employer was one of the ISP providing rural telecom service. These subsidies accounted for a hefty percentage of our income and the company was still perpetually on the edge of failure. Most of our competitors were in similar situations, loaded down with breathtakingly large amounts of debt and expensive to maintain decaying infrastructure, much of it purchased from the Baby Bells when they got out of the market. I can't say that the company was particularly well run but am certain that without the government subsidies, the business would collapse and large numbers of rural customers would be without telecom services, which extend beyond just internet access. Not sure what Starlink's existence is going to do to the company. Offering 25 Mbps aDSL with low reliability isn't going to compete very well if a customer can get 100 Mbsp service for a similar price and higher reliability. On the other hand, this might be justification the company can use to stop servicing the most expensive of the rural accounts to service while focusing on small town gigabit service that can compete with a reasonable expense to service.

runj__ 6y ago
Isn't Starlink supposed to have the lowest ping of any solution out there (light not travelling in fiber but air/space) and be a breakthrough for financial customers? Bandwidth doesn't really matter _too_ much in those applications does it?
pbreit 6y ago
According to Morgan Stanley (not the final arbiter) Starlink is the bulk of SpaceX's commercial value: https://www.cnbc.com/2020/10/22/morgan-stanley-spacex-to-be-100-billion-company-due-to-starlink-starship.html https://www.cnbc.com/2020/10/22/morgan-stanley-spacex-to-be-... SpaceX currently has a massive cost advantage in replenishing the satellite fleet which ever advancing equipment. It already offers the lowest transcontinental latencies which for high frequency trading alone would be a bonanza.
- xoa 6y ago
  >It already offers the lowest transcontinental latencies which for high frequency trading alone would be a bonanza. Inter-satellite optical links aren't ready yet (and they're only barely getting to MVP on their initial generation sat shell). When those come online yes, Starlink should have a latency advantage over most any distance sufficiently long enough to make up their fixed RTT mileage cost with their 40% speed advantage vs standard optical fiber [1]. But for the current and near future deployment Starlink satellites act purely as "bent pipes" connecting terminals to a groundstation, both with LOS to the sat. HFT gets cited a lot but probably one of their biggest bonanzas once intersat links are up will be marine and aviation internet. If you think rural pricing is bad... ---- 1: Possibly with a very few rarified exceptions that use terrestrial microwave links or if someone went to the trouble of using photonic bandgap fiber.
  - nordsieck 6y ago
    > one of their biggest bonanzas once intersat links are up will be marine and aviation internet. If you think rural pricing is bad... I'm just not convinced about marine - IMO, there just aren't that many customers out there. Aviation could be interesting, however, post Covid. One market you didn't mention is military. I can see exactly why the military is cozying up to SpaceX over Starlink. They've had multiple failed attempts[1] at integrated networked warfare initiatives. Starlink seems like a backbone the military could use to implement their vision piecemeal (and with probably a much higher success rate). ___ 1. One example: https://en.wikipedia.org/wiki/Future_Combat_Systems https://en.wikipedia.org/wiki/Future_Combat_Systems
kevin_thibedeau 6y ago
I'd love to get 25Mb DSL but you can't get that in the US where you're lucky to have anything above 4Mb. Not all of us need 100Mb+ internet access.
- nybble41 6y ago
  I live in the midwestern US and I can get 80/20 Mbps VDSL from CenturyLink. Obviously results will vary depending on your exact location, but to say "you can't get [25Mb DSL] in the US" simply isn't true.
nevdka 6y ago
The infrastructure those companies have built already exists, and the subsidies are mostly going to pay debt. If the subsidies stopped, the companies would go bankrupt. Their assets would be sold to another company, likely at a price less than the debt. The new company could therefore have a lower debt burden, and wouldn't necessarily need the subsidies to provide the same level of service. The subsidies are stopping the market from efficiently allocating capital.
- ativzzz 6y ago
  Sure, but what about the people who will have disrupted or potentially no internet access/support while the market is sorting itself out? If your plan is to be carried out, then there is ripe opportunity for a politician to come to these areas an say, "vote for me, I will protect your internet access" and then fight for the funding instead.
  - nevdka 6y ago
    Treat it like any other utility - it continues to run, just without servicing its debts. Most of the expense is paying for capital. Stop that (because bankruptcy) and the ISP can be profitable, and sold to whoever pays the most.
- spullara 6y ago
  There is some similar thing that happens with ski resorts. Something like 3 bankruptcies and debt buyouts before they are successful.
sagarm 6y ago
But why is it a problem that rural areas don't have telecom services? If they truly valued those services, they could move to where they are available. These ISP subsidies are a classic example of government waste. ISPs promise, don't deliver, and are awarded even more cash to burn. There's no reason we should support this waste of our tax dollars.
- azernik 6y ago
  Because the government has decided that the existence and viability of rural communities is a policy goal in and of itself; and that basic telecommunications services are necessary for public safety and good government in such communities. See also USPS's Universal Service Obligation, which requires it to have a minimum level of service to every single address/user in the US. This is common in developed countries (e.g. the EU requires all its member states to have universal service for both post and telecommunications). China isn't there yet, but is working towards that goal.
  - sagarm 6y ago
    Similarly, most developed countries have some form of universal healthcare. Nonetheless in America, this is considered an un-American example of socialism run amok. The same pro-individualist criticism applies to rural telecom, postal service, and infrastructure. And it applies even more directly to rural hospitals.

runj__ 6y ago

Isn't Starlink supposed to have the lowest ping of any solution out there (light not travelling in fiber but air/space) and be a breakthrough for financial customers? Bandwidth doesn't really matter _too_ much in those applications does it?

pbreit 6y ago

According to Morgan Stanley (not the final arbiter) Starlink is the bulk of SpaceX's commercial value: https://www.cnbc.com/2020/10/22/morgan-stanley-spacex-to-be-100-billion-company-due-to-starlink-starship.html https://www.cnbc.com/2020/10/22/morgan-stanley-spacex-to-be-... SpaceX currently has a massive cost advantage in replenishing the satellite fleet which ever advancing equipment. It already offers the lowest transcontinental latencies which for high frequency trading alone would be a bonanza.

xoa 6y ago
>It already offers the lowest transcontinental latencies which for high frequency trading alone would be a bonanza. Inter-satellite optical links aren't ready yet (and they're only barely getting to MVP on their initial generation sat shell). When those come online yes, Starlink should have a latency advantage over most any distance sufficiently long enough to make up their fixed RTT mileage cost with their 40% speed advantage vs standard optical fiber [1]. But for the current and near future deployment Starlink satellites act purely as "bent pipes" connecting terminals to a groundstation, both with LOS to the sat. HFT gets cited a lot but probably one of their biggest bonanzas once intersat links are up will be marine and aviation internet. If you think rural pricing is bad... ---- 1: Possibly with a very few rarified exceptions that use terrestrial microwave links or if someone went to the trouble of using photonic bandgap fiber.
- nordsieck 6y ago
  > one of their biggest bonanzas once intersat links are up will be marine and aviation internet. If you think rural pricing is bad... I'm just not convinced about marine - IMO, there just aren't that many customers out there. Aviation could be interesting, however, post Covid. One market you didn't mention is military. I can see exactly why the military is cozying up to SpaceX over Starlink. They've had multiple failed attempts[1] at integrated networked warfare initiatives. Starlink seems like a backbone the military could use to implement their vision piecemeal (and with probably a much higher success rate). ___ 1. One example: https://en.wikipedia.org/wiki/Future_Combat_Systems https://en.wikipedia.org/wiki/Future_Combat_Systems

kevin_thibedeau 6y ago

I'd love to get 25Mb DSL but you can't get that in the US where you're lucky to have anything above 4Mb. Not all of us need 100Mb+ internet access.

nybble41 6y ago
I live in the midwestern US and I can get 80/20 Mbps VDSL from CenturyLink. Obviously results will vary depending on your exact location, but to say "you can't get [25Mb DSL] in the US" simply isn't true.

nevdka 6y ago

The infrastructure those companies have built already exists, and the subsidies are mostly going to pay debt. If the subsidies stopped, the companies would go bankrupt. Their assets would be sold to another company, likely at a price less than the debt. The new company could therefore have a lower debt burden, and wouldn't necessarily need the subsidies to provide the same level of service. The subsidies are stopping the market from efficiently allocating capital.

ativzzz 6y ago
Sure, but what about the people who will have disrupted or potentially no internet access/support while the market is sorting itself out? If your plan is to be carried out, then there is ripe opportunity for a politician to come to these areas an say, "vote for me, I will protect your internet access" and then fight for the funding instead.
- nevdka 6y ago
  Treat it like any other utility - it continues to run, just without servicing its debts. Most of the expense is paying for capital. Stop that (because bankruptcy) and the ISP can be profitable, and sold to whoever pays the most.
spullara 6y ago
There is some similar thing that happens with ski resorts. Something like 3 bankruptcies and debt buyouts before they are successful.

sagarm 6y ago

But why is it a problem that rural areas don't have telecom services? If they truly valued those services, they could move to where they are available. These ISP subsidies are a classic example of government waste. ISPs promise, don't deliver, and are awarded even more cash to burn. There's no reason we should support this waste of our tax dollars.

azernik 6y ago
Because the government has decided that the existence and viability of rural communities is a policy goal in and of itself; and that basic telecommunications services are necessary for public safety and good government in such communities. See also USPS's Universal Service Obligation, which requires it to have a minimum level of service to every single address/user in the US. This is common in developed countries (e.g. the EU requires all its member states to have universal service for both post and telecommunications). China isn't there yet, but is working towards that goal.
- sagarm 6y ago
  Similarly, most developed countries have some form of universal healthcare. Nonetheless in America, this is considered an un-American example of socialism run amok. The same pro-individualist criticism applies to rural telecom, postal service, and infrastructure. And it applies even more directly to rural hospitals.