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I view the broadband industry as a fascinating example of what happens when an infrastructure industry meets the technology industry. TWC and friends were estab

by jfasi 13y ago

I view the broadband industry as a fascinating example of what happens when an infrastructure industry meets the technology industry. TWC and friends were established to enact a business plan that's been viable and profitable for centuries: laying down expensive infrastructure is economically feasible if most of the cost comes up front and you can charge rents on it for decades. Stability is crucial. This is the economic reasoning that built the cable TV network, and the phone network before that, and the power grid before that, and the railroad network before that, etc. Trouble is, this business model severely discourages new development (witness the "No one wants gigabit" rationale). Why interrupt your twenty year plan just to extend its life a year or two into the future? This isn't a bad thing if your industry is basically a utility industry, where technological changes move at a glacial pace. God help you if you enter into the technology industry armed only with the economic and managerial tools of a utility juggernaut. So we've got ourselves a conflict. On one side there are irritated customers wondering why their service is so poor and why their bills are so high. On the other there are communications utilities providers: while they have a legitimate business need to keep their networks profitable, they are paying the price for committing the gravest sin possible in the technology world: complacency.

mahyarm 13y ago
So why does broadband in other countries not have this problem, like Scandinavia, or Korea & Japan?
- mbesto 13y ago
  For the same reasons those countries implement things like universal health care. The crux of the issue with the US however is that being powerful here can mean greater power elsewhere. For example, if I have 100% market share in Sweden, it doesn't necessarily give me the capital and muscle to become the biggest internet provider in all of Europe. Whereas if you become the superpower in the US, expansion (read -> growth) is much easier to obtain.
- saosebastiao 13y ago
  Sprawl makes infrastructure investment orders of magnitude more expensive. For example, a small business [1] provides the fastest consumer access in the city of Seattle, but they refuse to do business outside of extremely high density buildings. There is no way a small business could do the same in McSuburbia. In the sprawly world outside of the US's dense cities, only municipal governments with a lot of political willpower have the resources to invest in the infrastructure needed for fast internet. [1] http://www.condointernet.net/ http://www.condointernet.net/
  - insuffi 13y ago
    I don't have direct experience with the state of the internet in the U.S., but isn't it terrible in large, metropolitan cities as well? I'm really just using the anecdata I've been reading on HN. Furthermore, afaik many small towns even in eastern europe(while making great strides, no particularly huge cities) boast 100 mbit connections. Assuming both of those statements are true, It doesn't seem to me like the economies of scale argument is valid here. EDIT: 100 mbit/$20, 500 mbit/$30, checked my ISP.
    - dublinben 13y ago
      You're absolutely correct. Population density is a red herring in this issue. The broadband situation is no better in the major cities of the U.S than it is in the rest of the country. Major cities in the rest of the developed world have much better connections somehow. One of the first deployments of gigabit fiber in the U.S. was in Chatanooga TN, with a population density of 471.9/km2. New York City has a population density of 10,640/km2. Romania's third largest city, Timișoara, with population density of only 2,446.58/km2 is considered the city with the fastest internet in the world. http://www.romania-insider.com/romanian-city-comes-out-first-in-the-world-in-internet-download-speed-ranking/103102/ http://www.romania-insider.com/romanian-city-comes-out-first...
      - saosebastiao 13y ago
        Density is not something that can be described adequately in a single number. It is entirely possible to have high residential densities in cities with remarkably low average densities. Moscow is a great example of this...their plazas and parks drive down average density way beyond the density that the average person experiences. Everybody talks about the last mile being the most expensive part of infrastructure, but if the last meter is 90% of the cost of the last mile (I don't know what the exact proportion is, but it is definitely close), then 100 houses in 10 sq km census block is going to be in a cost category that is orders of magnitude higher than 100 apartments in a tower with a 9.9 sq km park around it.
- Moru 13y ago
  Sweden here: 15 years ago we were happily renting a 1.5Mbps internet connection in a very small village in the desolate areas of northern sweden. The network was fiber though and was quickly upgraded to 10 and 100 Mbps. Cost was about $60 per month in the start, now it is $38 per month. No limits the last 10 years.
- njsteinsund 13y ago
  Take Norway; here all the copper lines used for DSL used to be owned by the national phone company. Then competition was established by forcing the national phone company to sell access to the lines at a set rate to anyone that wanted to deliver internet access. A monthly "line rental" is charged to the end customer - so that the cost is transparent. "Line rental" is about $13/month and a 20Mb/1Mb ADSL is $50/month (Cheapest 100Mb/100Mb (fiber) is $80.) There is a site for comparing prices (telepriser.no) run by the equivalent to the FCC, showing all the suppliers offerings.
chimeracoder 13y ago
> I view the broadband industry as a fascinating example of what happens when an infrastructure industry meets the technology industry. I don't disagree with your comment, but your argument would seem to apply to the rest of the world, whereas in fact the US is in a fairly unique situation among developed countries. Most of the current situation can be explained by the fact that broadband is currently the only unregulated public utility. In NYC, I don't really pay much attention to electricity, gas, and water. ConEd kind of sucks, and I wish they were better, but really, they work well enough most of the time, and I'm not sure that I could name anybody else who would do it better. The problem is that we sold off monopoly rights to broadband without attaching any strings of regulation, etc. Why should they bother to upgrade their infrastructure? Heck, we literally paid the cable companies billions of dollars of government money to do exactly that, and because we failed to enforce that with any real teeth, they just took the money and ran. Of course they're not going to listen when consumers say they "want gigabit". It would make no business sense to do otherwise, especially when 80% of your customers are unable to vote with their wallet and use a competing service[0]. There's a case to be made for either a free-market approach to broadband, or a more "socialized", regulated monopoly. Unfortunately, what we currently have is a hybrid of both, and it happens to hit upon the worst of both worlds. [0] There's a South Park clip that does a great job of describing this relationship. I won't link to it here, because it's rather crude and possibly (?) a bit NSFW, but searching "south park cable" on Youtube should lead you to it if you want to laugh, sigh, and cry all at the same time.
- jfasi 13y ago
  I disagree in terms of regulation: there is plenty of regulation on broadband internet, except it tends to discourage competition against broadband providers. This isn't a problem that is going to be solved by placing regulations on the industry. Your example of past subsidies provides an excellent argument for this: given the political clout these entities hold and have in the past used to stilt legislation in their favor, what leads us to believe we're going to do any better with new regulations? At the end of the day, the market is demanding better internet service. While telecommunications providers are certain to wage war against the injection against honest competition into their sector, things are actually looking pretty good in my mind. The FCC sees market demand and is working to tear down anti-competitive legislative barriers [1]. Smaller efforts such as Google Fiber are doing the hard work of convincing the public that better service is within reach. http://www.slate.com/blogs/future_tense/2014/02/20/fcc_s_plan_to_reboot_net_neutrality_might_transform_municipal_broadband.html http://www.slate.com/blogs/future_tense/2014/02/20/fcc_s_pla...
jseliger 13y ago
and the railroad network before that, etc And don't forget: The telegraph industry! Neal Stephenson writes about it in "Mother Earth, Mother Board:" http://www.wired.com/wired/archive/4.12/ffglass_pr.html http://www.wired.com/wired/archive/4.12/ffglass_pr.html , which is fascinating and worth reading. On one side there are irritated customers wondering why their service is so poor and why their bills are so high One other "don't forget": a lot of people who pay attention are unhappy about franchise agreements and telco efforts to prohibit local utility fiber deployments by outlawing them at the state level (see https://news.ycombinator.com/item?id=7271044 https://news.ycombinator.com/item?id=7271044). Local municipalities that say, "Fuck it, we're going to roll our own" often find themselves forbidden because of successful lobbying at the state level.
bluedino 13y ago
>> this business model severely discourages new development (witness the "No one wants gigabit" rationale) It's not that I want/need gigabit, it's that the only thing I can get in some locations is unusable. I'm looking at you, 1.5mb/768k DSL lines. It's barely enough for web surfing and useless for streaming video or doing things like gaming, video conferencing....
dba7dba 13y ago
US achieved its greatness because of free flow of movement of people and their ideas. Roads and freeways and highways were plenty, fast and easily accessible, to both sellers of services/goods and consumers. In this new world, internet access is the new road. Good internet access will generate new services/goods and encourage consumption by consumers. This will inevitably lead to snowball effect of creating more wealth for the society. US shouldn't be held hostage by a few people in an executive suite in Philadelphia who want to make a few bucks so they can own a few extra mansions and a private jet or 2. US is a greater country than that.

by jfasi 13y ago

mahyarm 13y ago

So why does broadband in other countries not have this problem, like Scandinavia, or Korea & Japan?

mbesto 13y ago
For the same reasons those countries implement things like universal health care. The crux of the issue with the US however is that being powerful here can mean greater power elsewhere. For example, if I have 100% market share in Sweden, it doesn't necessarily give me the capital and muscle to become the biggest internet provider in all of Europe. Whereas if you become the superpower in the US, expansion (read -> growth) is much easier to obtain.
saosebastiao 13y ago
Sprawl makes infrastructure investment orders of magnitude more expensive. For example, a small business [1] provides the fastest consumer access in the city of Seattle, but they refuse to do business outside of extremely high density buildings. There is no way a small business could do the same in McSuburbia. In the sprawly world outside of the US's dense cities, only municipal governments with a lot of political willpower have the resources to invest in the infrastructure needed for fast internet. [1] http://www.condointernet.net/ http://www.condointernet.net/
- insuffi 13y ago
  I don't have direct experience with the state of the internet in the U.S., but isn't it terrible in large, metropolitan cities as well? I'm really just using the anecdata I've been reading on HN. Furthermore, afaik many small towns even in eastern europe(while making great strides, no particularly huge cities) boast 100 mbit connections. Assuming both of those statements are true, It doesn't seem to me like the economies of scale argument is valid here. EDIT: 100 mbit/$20, 500 mbit/$30, checked my ISP.
  - dublinben 13y ago
    You're absolutely correct. Population density is a red herring in this issue. The broadband situation is no better in the major cities of the U.S than it is in the rest of the country. Major cities in the rest of the developed world have much better connections somehow. One of the first deployments of gigabit fiber in the U.S. was in Chatanooga TN, with a population density of 471.9/km2. New York City has a population density of 10,640/km2. Romania's third largest city, Timișoara, with population density of only 2,446.58/km2 is considered the city with the fastest internet in the world. http://www.romania-insider.com/romanian-city-comes-out-first-in-the-world-in-internet-download-speed-ranking/103102/ http://www.romania-insider.com/romanian-city-comes-out-first...
    - saosebastiao 13y ago
      Density is not something that can be described adequately in a single number. It is entirely possible to have high residential densities in cities with remarkably low average densities. Moscow is a great example of this...their plazas and parks drive down average density way beyond the density that the average person experiences. Everybody talks about the last mile being the most expensive part of infrastructure, but if the last meter is 90% of the cost of the last mile (I don't know what the exact proportion is, but it is definitely close), then 100 houses in 10 sq km census block is going to be in a cost category that is orders of magnitude higher than 100 apartments in a tower with a 9.9 sq km park around it.
Moru 13y ago
Sweden here: 15 years ago we were happily renting a 1.5Mbps internet connection in a very small village in the desolate areas of northern sweden. The network was fiber though and was quickly upgraded to 10 and 100 Mbps. Cost was about $60 per month in the start, now it is $38 per month. No limits the last 10 years.
njsteinsund 13y ago
Take Norway; here all the copper lines used for DSL used to be owned by the national phone company. Then competition was established by forcing the national phone company to sell access to the lines at a set rate to anyone that wanted to deliver internet access. A monthly "line rental" is charged to the end customer - so that the cost is transparent. "Line rental" is about $13/month and a 20Mb/1Mb ADSL is $50/month (Cheapest 100Mb/100Mb (fiber) is $80.) There is a site for comparing prices (telepriser.no) run by the equivalent to the FCC, showing all the suppliers offerings.

chimeracoder 13y ago

> I view the broadband industry as a fascinating example of what happens when an infrastructure industry meets the technology industry. I don't disagree with your comment, but your argument would seem to apply to the rest of the world, whereas in fact the US is in a fairly unique situation among developed countries. Most of the current situation can be explained by the fact that broadband is currently the only unregulated public utility. In NYC, I don't really pay much attention to electricity, gas, and water. ConEd kind of sucks, and I wish they were better, but really, they work well enough most of the time, and I'm not sure that I could name anybody else who would do it better. The problem is that we sold off monopoly rights to broadband without attaching any strings of regulation, etc. Why should they bother to upgrade their infrastructure? Heck, we literally paid the cable companies billions of dollars of government money to do exactly that, and because we failed to enforce that with any real teeth, they just took the money and ran. Of course they're not going to listen when consumers say they "want gigabit". It would make no business sense to do otherwise, especially when 80% of your customers are unable to vote with their wallet and use a competing service[0]. There's a case to be made for either a free-market approach to broadband, or a more "socialized", regulated monopoly. Unfortunately, what we currently have is a hybrid of both, and it happens to hit upon the worst of both worlds. [0] There's a South Park clip that does a great job of describing this relationship. I won't link to it here, because it's rather crude and possibly (?) a bit NSFW, but searching "south park cable" on Youtube should lead you to it if you want to laugh, sigh, and cry all at the same time.

jfasi 13y ago
I disagree in terms of regulation: there is plenty of regulation on broadband internet, except it tends to discourage competition against broadband providers. This isn't a problem that is going to be solved by placing regulations on the industry. Your example of past subsidies provides an excellent argument for this: given the political clout these entities hold and have in the past used to stilt legislation in their favor, what leads us to believe we're going to do any better with new regulations? At the end of the day, the market is demanding better internet service. While telecommunications providers are certain to wage war against the injection against honest competition into their sector, things are actually looking pretty good in my mind. The FCC sees market demand and is working to tear down anti-competitive legislative barriers [1]. Smaller efforts such as Google Fiber are doing the hard work of convincing the public that better service is within reach. http://www.slate.com/blogs/future_tense/2014/02/20/fcc_s_plan_to_reboot_net_neutrality_might_transform_municipal_broadband.html http://www.slate.com/blogs/future_tense/2014/02/20/fcc_s_pla...

jseliger 13y ago

and the railroad network before that, etc And don't forget: The telegraph industry! Neal Stephenson writes about it in "Mother Earth, Mother Board:" http://www.wired.com/wired/archive/4.12/ffglass_pr.html http://www.wired.com/wired/archive/4.12/ffglass_pr.html , which is fascinating and worth reading. On one side there are irritated customers wondering why their service is so poor and why their bills are so high One other "don't forget": a lot of people who pay attention are unhappy about franchise agreements and telco efforts to prohibit local utility fiber deployments by outlawing them at the state level (see https://news.ycombinator.com/item?id=7271044 https://news.ycombinator.com/item?id=7271044). Local municipalities that say, "Fuck it, we're going to roll our own" often find themselves forbidden because of successful lobbying at the state level.

bluedino 13y ago

>> this business model severely discourages new development (witness the "No one wants gigabit" rationale) It's not that I want/need gigabit, it's that the only thing I can get in some locations is unusable. I'm looking at you, 1.5mb/768k DSL lines. It's barely enough for web surfing and useless for streaming video or doing things like gaming, video conferencing....

dba7dba 13y ago

US achieved its greatness because of free flow of movement of people and their ideas. Roads and freeways and highways were plenty, fast and easily accessible, to both sellers of services/goods and consumers. In this new world, internet access is the new road. Good internet access will generate new services/goods and encourage consumption by consumers. This will inevitably lead to snowball effect of creating more wealth for the society. US shouldn't be held hostage by a few people in an executive suite in Philadelphia who want to make a few bucks so they can own a few extra mansions and a private jet or 2. US is a greater country than that.