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There are a lot of folks on forums like this who think networks like FiOS should be regulated into being essentially dumb pipes. Verizon and their investors see

There are a lot of folks on forums like this who think networks like FiOS should be regulated into being essentially dumb pipes. Verizon and their investors see some chance of this happening, and even if it didn't, it turns out there aren't a lot of "value added" services you can sell to consumers over a proprietary network; they just want the internet. You can't make the margins as a "dumb pipe" that Verizon needs to justify the capital investment in FiOS. That's the long and the short of it. They had dreams of selling pay-per-view movies, video chat, and a dozen other applications over their network for big $$$. Instead they're fighting with Comcast over the same $120 in cable and internet bills, while Netflix, Google, and Apple build their high-margin businesses on VZ's fiber.

rayiner 13y ago
It's amazing to me how many people here on HN complain on one hand about companies not wanting to make massive capital investments to build out faster internet service while simultaneously espousing regulating such services into low-margin dumb pipes.
- ericd 13y ago
  I think there's a simple solution - municipal fiber everywhere with companies allowed to lease access. Internet access looks like a utility and quacks like a utility, so it should be treated like one. The timeline for breaking even on the investment has been pretty reasonably short in the examples I've seen.
  - rayiner 13y ago
    The municipalities have no money to build, and more importantly, to maintain and continually upgrade, such networks. Heck, they can barely maintain utility systems that evolve far slower than internet connectivity: power and water. See: http://www.nytimes.com/2009/04/18/us/18water.html?_r=0 http://www.nytimes.com/2009/04/18/us/18water.html?_r=0. People outside of HN won't be anywhere near sufficiently eager to earmark sufficient public dollars to properly maintain such networks, not when pensions systems are underfunded and schools are putting teachers on furlough.
    - mhurron 13y ago
      Yep, it'll never happen. Except where it did before the State stepped in to ensure Comcast/TWC didn't have competition. But other than that it'll never happen.
    - ericd 13y ago
      I don't know enough about fiber to have a very intelligent discussion about it, but from what I've heard, one of the nice things about fiber is that you can run increasing amounts of bandwidth through the same fiber once it's laid as the endpoints improve. I would expect that the buildout could be funded by a municipal bond issue, with the repayment being handled via the revenue from the customer-facing companies that lease access to the infrastructure. I've heard of municipal networks like this being run profitably and being repaid in a reasonable timeframe (on the order of a decade or two), but unfortunately I don't know more than that.
      - res0nat0r 13y ago
        I think the point is: local governments can barely pay for essential services (water, power) that most everyone in their district needs. High speed fibre that a small subset of their constituents would use is way down on the list.
        ericd 13y ago
        I think you're right that that was his point. It wouldn't necessarily come out of their budgets, though, it could be done with debt financing on the project itself, repaid purely from the revenues from leasing access to the network to the customer facing ISPs. I also don't think it would necessarily be used by a small subset of the constituents - it seems as though it could potentially be much cheaper than alternative high-speed arrangements, since the customer facing companies would actually have some competition. Once the initial construction debt was paid down, the govt. could likely reduce the access lease cost, which would be passed on by the competitive ISPs, further enabling access by poorer residents. I think it would be great for the long-term economic prospects of those areas as it broadens access and makes heavy uses like remote work more viable. Plus, a good internet connection is a much cheaper form of entertainment than many of the alternatives, including cable, so it could actually save many people money.
- foobarqux 13y ago
  Many other countries have built high speed consumer fiber networks, some of them heavily regulated. Something isn't working in the United States.
  - rayiner 13y ago
    The U.S. is ranked #8 in average broadband connection speed in Akamai's most recent State of the Internet. That puts it ahead of most of Europe: http://www.akamai.com/dl/documents/akamai_soti_q213.pdf?WT.mc_id=soti_Q213 http://www.akamai.com/dl/documents/akamai_soti_q213.pdf?WT.m... (page 13). If you look at more densely populated coastal states, the U.S. looks even better. Yeah, South Korea has widespread fiber internet. More than half the country lives in the Seoul metro area. You can't compare.
    - foobarqux 13y ago
      Nation-wide averages tell a story that no one is interested in. Do you have data on densely populated coastal states? I want to compare speed and speed/Mbps to areas like Warsaw and Stockholm with high density cities in the US.
      - rayiner 13y ago
        The problem with drilling deeper is that America is organized quite differently than European countries. It is typical for a European city like Stockholm or London for 40-60% of the people in a metro area to live in the denser, core city. In the U.S., that number is more typically 10-20%. Moreover, because of historical reasons, the dense inner cities in the U.S. that are most geographically amenable to building out fiber have huge proportions of poor people who couldn't afford it. Middle class people who might buy fiber are disproportionately more likely to live out in suburban areas less suitable for building such infrastructure. Very concrete example: Delaware is one of the fastest states in the U.S., with average connection speeds in Akamai's study comparable to the top 5 countries in the global list. I live in the largest city in the state, a major rail hub, in the heart of downtown, and can't get fast internet because the area is so poor. But the suburbs right around us have fiber. Per-city breakouts aren't in Akamai's most recent report, but here's one for Q4 '11: http://tumblr.thefjp.org/post/22270191498/the-worlds-fastest-internet-cities http://tumblr.thefjp.org/post/22270191498/the-worlds-fastest.... The fastest city in Sweden at 11.3 mbps wasn't that dramatically faster than the fastest in the U.S. at 8.4 mbps. Asia of course dominates, but that's because Japan and Korea have tons of very densely-built cities.
skyebook 13y ago
Its a shame, regulated pipes is starting to look like the most reasonable solution when providers are doing exactly what you said, eyeing up higher margin models and drooling. Regardless of opinions on free market, political leanings, etc, the fact that this is standing in the way of progress is bad news for everyone.

rayiner 13y ago

It's amazing to me how many people here on HN complain on one hand about companies not wanting to make massive capital investments to build out faster internet service while simultaneously espousing regulating such services into low-margin dumb pipes.

ericd 13y ago
I think there's a simple solution - municipal fiber everywhere with companies allowed to lease access. Internet access looks like a utility and quacks like a utility, so it should be treated like one. The timeline for breaking even on the investment has been pretty reasonably short in the examples I've seen.
- rayiner 13y ago
  The municipalities have no money to build, and more importantly, to maintain and continually upgrade, such networks. Heck, they can barely maintain utility systems that evolve far slower than internet connectivity: power and water. See: http://www.nytimes.com/2009/04/18/us/18water.html?_r=0 http://www.nytimes.com/2009/04/18/us/18water.html?_r=0. People outside of HN won't be anywhere near sufficiently eager to earmark sufficient public dollars to properly maintain such networks, not when pensions systems are underfunded and schools are putting teachers on furlough.
  - mhurron 13y ago
    Yep, it'll never happen. Except where it did before the State stepped in to ensure Comcast/TWC didn't have competition. But other than that it'll never happen.
  - ericd 13y ago
    I don't know enough about fiber to have a very intelligent discussion about it, but from what I've heard, one of the nice things about fiber is that you can run increasing amounts of bandwidth through the same fiber once it's laid as the endpoints improve. I would expect that the buildout could be funded by a municipal bond issue, with the repayment being handled via the revenue from the customer-facing companies that lease access to the infrastructure. I've heard of municipal networks like this being run profitably and being repaid in a reasonable timeframe (on the order of a decade or two), but unfortunately I don't know more than that.
    - res0nat0r 13y ago
      I think the point is: local governments can barely pay for essential services (water, power) that most everyone in their district needs. High speed fibre that a small subset of their constituents would use is way down on the list.
      - ericd 13y ago
        I think you're right that that was his point. It wouldn't necessarily come out of their budgets, though, it could be done with debt financing on the project itself, repaid purely from the revenues from leasing access to the network to the customer facing ISPs. I also don't think it would necessarily be used by a small subset of the constituents - it seems as though it could potentially be much cheaper than alternative high-speed arrangements, since the customer facing companies would actually have some competition. Once the initial construction debt was paid down, the govt. could likely reduce the access lease cost, which would be passed on by the competitive ISPs, further enabling access by poorer residents. I think it would be great for the long-term economic prospects of those areas as it broadens access and makes heavy uses like remote work more viable. Plus, a good internet connection is a much cheaper form of entertainment than many of the alternatives, including cable, so it could actually save many people money.
foobarqux 13y ago
Many other countries have built high speed consumer fiber networks, some of them heavily regulated. Something isn't working in the United States.
- rayiner 13y ago
  The U.S. is ranked #8 in average broadband connection speed in Akamai's most recent State of the Internet. That puts it ahead of most of Europe: http://www.akamai.com/dl/documents/akamai_soti_q213.pdf?WT.mc_id=soti_Q213 http://www.akamai.com/dl/documents/akamai_soti_q213.pdf?WT.m... (page 13). If you look at more densely populated coastal states, the U.S. looks even better. Yeah, South Korea has widespread fiber internet. More than half the country lives in the Seoul metro area. You can't compare.
  - foobarqux 13y ago
    Nation-wide averages tell a story that no one is interested in. Do you have data on densely populated coastal states? I want to compare speed and speed/Mbps to areas like Warsaw and Stockholm with high density cities in the US.
    - rayiner 13y ago
      The problem with drilling deeper is that America is organized quite differently than European countries. It is typical for a European city like Stockholm or London for 40-60% of the people in a metro area to live in the denser, core city. In the U.S., that number is more typically 10-20%. Moreover, because of historical reasons, the dense inner cities in the U.S. that are most geographically amenable to building out fiber have huge proportions of poor people who couldn't afford it. Middle class people who might buy fiber are disproportionately more likely to live out in suburban areas less suitable for building such infrastructure. Very concrete example: Delaware is one of the fastest states in the U.S., with average connection speeds in Akamai's study comparable to the top 5 countries in the global list. I live in the largest city in the state, a major rail hub, in the heart of downtown, and can't get fast internet because the area is so poor. But the suburbs right around us have fiber. Per-city breakouts aren't in Akamai's most recent report, but here's one for Q4 '11: http://tumblr.thefjp.org/post/22270191498/the-worlds-fastest-internet-cities http://tumblr.thefjp.org/post/22270191498/the-worlds-fastest.... The fastest city in Sweden at 11.3 mbps wasn't that dramatically faster than the fastest in the U.S. at 8.4 mbps. Asia of course dominates, but that's because Japan and Korea have tons of very densely-built cities.

skyebook 13y ago

Its a shame, regulated pipes is starting to look like the most reasonable solution when providers are doing exactly what you said, eyeing up higher margin models and drooling. Regardless of opinions on free market, political leanings, etc, the fact that this is standing in the way of progress is bad news for everyone.