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I'm assuming that the various ISPs have agreements between each other to not expand onto each others "turf"? Otherwise how does competition not naturally spread

by Lockyy 14y ago

I'm assuming that the various ISPs have agreements between each other to not expand onto each others "turf"? Otherwise how does competition not naturally spread? If they do, how do they get away with that? More puzzling to me is how ISPs squash towns plans to implement their own networks. I'm very ignorant on how things got so bad over in the US, I've always had a multitude of ISPs over here in England.

wwwtyro 14y ago
I was under the impression that local governments offer them franchise agreements and keep competitors out.
rayiner 14y ago
They don't have agreements (which would be illegal), but they don't need them. See: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly. When Comcast owns all the fiber in, say Chicago, it's pretty much impossible to encroach on their turf in a cost-effective way. Say Verizon wanted to come in. They'd have to build their own network, and so could never compete with Comcast on price because of the huge capital expenditure required.
- velodrome 14y ago
  The US should do what it does for gas mileage (CAFE Rules). A national roadmap for bandwidth speed (and latency).
  - AnthonyMouse 14y ago
    This is actually not a bad idea. Or something similar but maybe even better: Set up a cross-ISP subsidy program. Whoever has the fastest connections in the country receives a subsidy and whoever has the slowest connections has to pay it. Don't even put bandwidth numbers in -- just rank them all by the speed of the unmetered connections they offer for less than $80/month, then the slowest 33% pays a substantial tax to subsidize the fastest 33%. Presto, instant competition to be the fastest, even though they're all in different geographic areas.
    - rayiner 14y ago
      That makes absolutely no sense. What would happen is that urban ISP's would win immediately, and then rural ISP's would be stuck basically cementing that lead in place by subsidizing the leaders' capital expenditures.
      - AnthonyMouse 14y ago
        You're first assuming that there is such a thing as a rural or urban ISP. Have you seen the coverage map for AT&T or Comcast? They're all over the map. But more than that, there is no reason to think that building a high speed network in a rural area would be impossible rather than merely expensive. So all they have to do is to do it first and they'll be the ones receiving the subsidy. And actually digging the hole in the ground is what costs a lot in rural areas, the terminating equipment doesn't cost anything more just because the wires are longer. So they install fiber to the home once and having paid that cost, the future upgrade costs become equalized with urban areas because all future upgrades come from upgrading the terminating equipment rather than having to put any new wires in the ground. And if we ever want to have fiber in rural areas then that has to happen eventually anyway, so why put it off? And, even if you're right, the result is still for urban ISPs to compete with each other to be the fastest and for rural ISPs to compete with each other to not be the slowest. The losers of that competition then have less profit for their shareholders -- or, if they lose very badly, their network is auctioned off to someone with more capital who can make the necessary upgrades. I am not seeing how we can lose here unless "we" are greedy telco shareholders who don't want to pay for upgrades.
        rayiner 14y ago
        One fiber run to a high rise in Chicago hits as many customers as wiring up an entire town in rural Illinois. The idea that ISP's that serve less populated areas could somehow beat ISP's that serve mostly urban areas is completely ridiculous. What would happen is that the urban ISP's would win the race, and the ISP's with low density service areas would just go out of business perpetually paying the subsidy. It's like trying to incentivize competition in baseball by requiring losing teams to subsidize winning ones. Basically everyone would just be paying to make the Yankee's roster even more iron clad than it is now.
tcwc 14y ago
In the UK our situation is much better, although BT owns most of the physical cable "Local loop unbundling" forces them to share their lines with competitors. It seems in the US the only people you can buy from own the physical infrastructure. Once one company has already built their network in an area they form a natural monopoly - it's not economical for competitors to come in and rebuild the network when they know they'll only be able to get a certain % of households to switch.
- aidenn0 14y ago
  That used to not be the case with DSL, but about a decade ago the FCC reclassified internet services in such a way that it was no longer the case. The theory was that this would encourage the providers to upgrade the local loop. [edit] The above was from memory, and it is actually a lot more complicated than that. The decoupling of broadband from voice was challenged in court and the FCC had to change their rules somewhat. I'm not sure what current requirements are. See also: http://openjurist.org/359/f3d/554/united-states-telecom-association-v-federal-communications-commission http://openjurist.org/359/f3d/554/united-states-telecom-asso... A quick key for reading that: ILEC == people who own the copper CLEC == people who want to use the copper.

by Lockyy 14y ago

wwwtyro 14y ago

I was under the impression that local governments offer them franchise agreements and keep competitors out.

rayiner 14y ago

They don't have agreements (which would be illegal), but they don't need them. See: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly. When Comcast owns all the fiber in, say Chicago, it's pretty much impossible to encroach on their turf in a cost-effective way. Say Verizon wanted to come in. They'd have to build their own network, and so could never compete with Comcast on price because of the huge capital expenditure required.

velodrome 14y ago
The US should do what it does for gas mileage (CAFE Rules). A national roadmap for bandwidth speed (and latency).
- AnthonyMouse 14y ago
  This is actually not a bad idea. Or something similar but maybe even better: Set up a cross-ISP subsidy program. Whoever has the fastest connections in the country receives a subsidy and whoever has the slowest connections has to pay it. Don't even put bandwidth numbers in -- just rank them all by the speed of the unmetered connections they offer for less than $80/month, then the slowest 33% pays a substantial tax to subsidize the fastest 33%. Presto, instant competition to be the fastest, even though they're all in different geographic areas.
  - rayiner 14y ago
    That makes absolutely no sense. What would happen is that urban ISP's would win immediately, and then rural ISP's would be stuck basically cementing that lead in place by subsidizing the leaders' capital expenditures.
    - AnthonyMouse 14y ago
      You're first assuming that there is such a thing as a rural or urban ISP. Have you seen the coverage map for AT&T or Comcast? They're all over the map. But more than that, there is no reason to think that building a high speed network in a rural area would be impossible rather than merely expensive. So all they have to do is to do it first and they'll be the ones receiving the subsidy. And actually digging the hole in the ground is what costs a lot in rural areas, the terminating equipment doesn't cost anything more just because the wires are longer. So they install fiber to the home once and having paid that cost, the future upgrade costs become equalized with urban areas because all future upgrades come from upgrading the terminating equipment rather than having to put any new wires in the ground. And if we ever want to have fiber in rural areas then that has to happen eventually anyway, so why put it off? And, even if you're right, the result is still for urban ISPs to compete with each other to be the fastest and for rural ISPs to compete with each other to not be the slowest. The losers of that competition then have less profit for their shareholders -- or, if they lose very badly, their network is auctioned off to someone with more capital who can make the necessary upgrades. I am not seeing how we can lose here unless "we" are greedy telco shareholders who don't want to pay for upgrades.
      - rayiner 14y ago
        One fiber run to a high rise in Chicago hits as many customers as wiring up an entire town in rural Illinois. The idea that ISP's that serve less populated areas could somehow beat ISP's that serve mostly urban areas is completely ridiculous. What would happen is that the urban ISP's would win the race, and the ISP's with low density service areas would just go out of business perpetually paying the subsidy. It's like trying to incentivize competition in baseball by requiring losing teams to subsidize winning ones. Basically everyone would just be paying to make the Yankee's roster even more iron clad than it is now.

tcwc 14y ago

In the UK our situation is much better, although BT owns most of the physical cable "Local loop unbundling" forces them to share their lines with competitors. It seems in the US the only people you can buy from own the physical infrastructure. Once one company has already built their network in an area they form a natural monopoly - it's not economical for competitors to come in and rebuild the network when they know they'll only be able to get a certain % of households to switch.

aidenn0 14y ago
That used to not be the case with DSL, but about a decade ago the FCC reclassified internet services in such a way that it was no longer the case. The theory was that this would encourage the providers to upgrade the local loop. [edit] The above was from memory, and it is actually a lot more complicated than that. The decoupling of broadband from voice was challenged in court and the FCC had to change their rules somewhat. I'm not sure what current requirements are. See also: http://openjurist.org/359/f3d/554/united-states-telecom-association-v-federal-communications-commission http://openjurist.org/359/f3d/554/united-states-telecom-asso... A quick key for reading that: ILEC == people who own the copper CLEC == people who want to use the copper.