12 ms·

ISPs are spending less on their networks as they make more money off them

156 points by markmassie 12y ago

opendais 12y ago
Yep, welcome to capitalism. When you need to raise your profits to justify high prices for shareholders, it is a race to the bottom to see with how little you can spend for market competitive pricing.
- jjoonathan 12y ago
  Which would be fine so long as there's a reasonable amount of competition. Too little competition means price gouging. Too much competition means everyone focuses on cheating rather than creating value. It would be more productive to focus on figuring out how to enact regulation/deregulation to tune the level of competition rather than bashing capitalism.
  - opendais 12y ago
    The underlying problem is the market economics of laying fiber basically means it doesn't make sense for more than 1-2 companies to do it in a given geographical area. :/ We need municipal public fiber that is leased to anyone who wants to operate an ISP.
    - hyperliner 12y ago
      But, once the municipality is done with the fiber, then running the service is "relatively easy." Since the primary asset you are selling is bandwidth, what would be left to let more than one competitor compete for/differentiate? Service? Possibly, maybe faster setup times, etc. But those are "one time" things only. I think bandwidth is becoming a necessity and local government can deliver it (for the record, I did not vote for Obama last time! ;-)
      - opendais 12y ago
        The ISPs would still need to pay for the interconnects b/t the municipal ISP and, say, Level 3. So performance, etc. as well. The way I envision it working is: FTTH is the municipal and they hook it up to a single interchange. From there, someone has to pay for the routing to the rest of the internet, etc. Its the FTTH that is screwed up.
      - xcrunner529 12y ago
        Ask Australia and the UK. Works great for them.
        vertex-four 12y ago
        ISPs here (the UK) primarily use the same physical last mile (along with their own hardware in the exchanges), and often the same backbone infrastructure, but differentiate on pricing and service. There's also enough money caught up in the retail ISP business that if the infrastructure maintainers failed to do their jobs, the retail ISPs could reasonably compete with them, at least in key markets. This, combined with a strong telecoms regulator pressuring them into developing and maintaining infrastructure, generally works out reasonably well; much of the country, including a lot of small towns, now have 50-70Mbps unlimited unshapedc FTTC for a reasonable price.
        xcrunner529 12y ago
        This article goes into more detail of why it works and how the US should follow it (from a former brit): http://arstechnica.com/tech-policy/2014/06/we-dont-need-net-neutrality-we-need-competition/ http://arstechnica.com/tech-policy/2014/06/we-dont-need-net-...
      - toast0 12y ago
        If multiple providers were leasing the fiber, they could compete on how they handle the data on the other side of the last mile: how they're connected to other networks (peering and transit), price, oversubscription rates, acceptable use policy, willingness to install caching boxes provided by content providers, what services are included and their quality (dns/mail/vpn/homepage/news/shell).
    - PeterisP 12y ago
      Nope, in urban areas it definitely makes sense for 4, 5 or more companies to offer broadband in a single apartment building; in countries where this isn't artificially restricted this is the natural result of market competition. Suburbs are different, but USA lacks competition even in cities that have extremely dense population and huge demand.
  - hyperliner 12y ago
    "Centralized planning"? I don't think you can "tune the level" because the thing is not algorithmic. Every town / situation is unique. That's why every project is managed at the local and state levels, gets political, some interest group wants discounts, etc. In the meantime, all a company wants to do is to recoup its billions. Maybe this is a problem where over time the government takes over and gives ok service for a while, then it sucks again (as many government initiatives do), then it gets privatized again, etc., all over a few decades (so irrelevant for today's consumers).
- InclinedPlane 12y ago
  This isn't capitalism, it's the opposite of capitalism. It's regulatory capture and government corruption. Most major ISPs are cable companies, and most ISPs/cable companies have a cozy legal arrangement with municipal areas to lock out competition. The free market is not in operation here.
  - opendais 12y ago
    http://fiber.usinternet.com/coverage-areas/ http://fiber.usinternet.com/coverage-areas/ They must be a major ISP? Such coverage. Oh my.
  - hyperliner 12y ago
    It's not necessarily "cozy." They needed that to deliver service to places that would otherwise not get it. Another POV: https://news.ycombinator.com/item?id=8064947 https://news.ycombinator.com/item?id=8064947 from Chattanooga TN.
  - icebraining 12y ago
    Capitalism doesn't require free markets. As long as the ISPs are privately owned and operated for profit, it's still capitalism.
    - InclinedPlane 12y ago
      You've created a unique definition of capitalism that applies even to state run industries.
      - audunw 12y ago
        No, actually that's roughly the original definition of the word. But then word definitions change over time, and it's now come to be equated with free market capitalism where the capital is privately held. So you're not entirely mistaken in pointed that out. Then again if we go by the common usage, communism is an entirely useless word, as it has come to mean "whatever china is doing".
  - 12y ago
- virtue3 12y ago
  only it's not capitalism. It's crony capitalism / government enforced oligarchies where there _is_ no market rate...
  - opendais 12y ago
    Microsoft was a government enforced ogliarchy too? :/
    - icebraining 12y ago
      Sure. Software patents are an obvious case of State enforced monopolism.
      - opendais 12y ago
        Software patents aren't what created Microsoft or its monopoly. Apple, Linux both survived just fine. They just didn't control a ridiculous percentage of the market.
        perrylaj 12y ago
        It's a little disingenuous to claim that Apple and Linux 'survived just fine'. During Microsoft's height, Linux was in its infancy, and Apple would have likely died were it not for Microsoft's $150M investment in Apple mere weeks before it was to file bankruptcy. Though, I'll agree that software patents weren't what created the MS monopoly (though they are certainly using them now to try and hold on to their current market). There were many factors that led to MS's monopoly, some of which the government (and/or its negligence) was party to.
    - marcosdumay 12y ago
      MS Office is a government imposed monopoly on several places. But even where it's not government imposed, it's imposed by society, a real problem that should be fixed by governments.
      - 12y ago
- bunderbunder 12y ago
  Having been in the position of living in a city of over 1 million residents and therefore being able to choose my broadband provider from a generous selection of one option, I would really like to be welcomed to capitalism. Capitalism sounds lovely. Even if it doesn't promote higher quality service, market competitive pricing alone would be a huge improvement over what I'm used to.
  - hyperliner 12y ago
    It's a tough one though. It takes a lot of resources to bring the service to you, regardless of how much it sucks. Imagine if it did not suck. We would have to pay more for that.
    - MagicWishMonkey 12y ago
      Tax dollars paid for a lot of the work done to install the basic infrastructure. The telecoms still have a lot of skin in the game, but they've had lots of help along the way. Consumers are getting screwed in both ends, regardless.
      - hyperliner 12y ago
        Yes, it was a joint project. Without those dollars, the project would not have gotten done. It's a JV. Everybody knew the terms going in, and changing them after the fact is like changing rules "after you are losing." (I did not understand what were the two ends).
        rayiner 12y ago
        Everyone did know the terms going in. The premise of the 1996 deregulation was that the telcos would lose their legal monopolies, and competition would lead to higher investment and better service. The states torpedoed it, using universal service requirements to make competing with the incumbents unattractive in the very places (dense cities) where it would make the most sense. Who is changing the terms after the fact? The deal was that these networks would be built with private money and privately owned. There is very little public money in there, particularly in the cable network. Since deregulation in 1996 the cable companies have built massive fiber-coax networks mostly at their own expense. Its changing the terms to come in after the fact and try to treat it as public infrastructure.
- pwarner 12y ago
  The problem is these companies try to act as utilities, not technology companies. They borrow large sums of money (look at dept of AT&T or VZ), invest some of it in their network, but use big chunks to pass on to shareholders as dividends. They are financial companies, not technology companies. They are far more concerned with paying a few cents more in dividend per share than delivering a few more Mbps. I guess that it capitalism, but it is short sighted. I think the days may be numbered. It would require a good investment of capital, but Google fiber for example shows that from the technology side it would be trivial to disrupt them.
  - deleted 12y ago
    [deleted]
- hippiehippo 12y ago
  Tell that to people of Eastern Europe, where 10 years ago it was a free-for-all build-your-network without any regulation or state intervention. At one time I had half a dozen ISPs at my door to choose from, from companies with 100 subscribers to corporations with half a million household customers. Thank you, Capitalism, for offering me a gigabit connection for $16.8 per month (btw, my ISP just reduced their price from $18 per month a couple of months ago). Seriously, how the hell do some people think that local authorities imposing restrictions/roadblocks on building of new last-mile alternatives is "capitalism"?
  - opendais 12y ago
    The local authorities don't really provide roadblocks in many, many cities. Its FUD. I linked to a tiny ISP lower that provides gigabit to like 200 city blocks. The problem is lack of desire to invest because its expensive and incumbents exist. http://fiber.usinternet.com/coverage-areas/ http://fiber.usinternet.com/coverage-areas/ <- this company for instance
sp332 12y ago
Where did the data come from? Is there info for any other ISPs?
- noobermin 12y ago
  I'd be interested to see data from other countries.
hyperliner 12y ago
I don't know why people get PO'd that companies make money. That's the way capitalism works. It's not like anybody can just invest billions of dollars in infrastructure and hope to make money on it. Then again, the town of Chattanooga TN may be on to something: https://news.ycombinator.com/item?id=8064947 https://news.ycombinator.com/item?id=8064947
- finnn 12y ago
  Unless you live in one of these states: http://broadbandnow.com/report/municipal-broadband-roadblocks/ http://broadbandnow.com/report/municipal-broadband-roadblock...
- audunw 12y ago
  There's a huge difference between "companies exist only to pay (short term) shareholder dividends" and "shareholders are one of the ways companies raise capital to accomplish its mission" It's two different cultural perceptions that have a big outcome on how companies are managed. I think it's OK for people to be PO'ed when companies are managed by the first mindset. Because healthy capitalism is as much about culture as it is the concrete laws and regulations. Unfortunately I think the US is struggling with a bad culture here, as evidenced by "corruption" being relabeled as "lobbying", which has become culturally accepted.
eli 12y ago
"Before you jump to any conclusions about these companies, though, remember that the turn of the millennium was precisely when a lot of modern Internet cabling was being rolled out." I feel like this is a very important point that is getting lost. Of course costs are going to be higher and profits lower (or even negative!) when you're laying lots of new fiber and deploying new equipment. Maintaining that equipment in subsequent years will cost much less and you'll make more money those years selling service on it. There's nothing inherently wrong here.
- fleitz 12y ago
  Yup, the cables are usually the expensive part too. Routers are cheap compared to fibre (labour costs, access rights, etc, etc, etc).
  - zanny 12y ago
    Yet with all this purported modern fiber, only like 5% of the US population at most have access to speeds over 100MB/s, and only at exorbitant prices that do not reflect the current low cost of maintenance of that infrastructure deployed a decade ago (when these companies were, note, still profitable).
- deevus 12y ago
  This felt like the main point of the article for me. Geographically it is very relevant to me (and fellow Australians, even if they are too stupid to see through our government's crap).
- hrjet 12y ago
  The graph I would like to see here is "integrated expense" and "integrated income" over the years. That would indicate when the point-of-break-even happened (or will happen).
  - Fuxy 12y ago
    My guess is they were barely loosing any money in the years they upgraded their network and have recovered their investment within a few years while raising prices even more under the false pretense of needing/wanting to upgrading their network even further. It would be interesting to have a line on that graph showing when ISP's weren't required to abide by FCC rules because they were not classified under title 2.
deleted 12y ago
[deleted]
Berobero 12y ago
I'd be more interested to see how more regional expenditures on infrastructure do (or possibly don't) change in response to new, viable competition, such as Google Fiber.
- delucain 12y ago
  This is anecdotal and not the hard figures you're asking for, but I know in Austin both Grande and AT&T (two of the three ISPs in town) started offering gigabit packages. In almost all neighborhoods AT&T beat Google in getting fiber to people's doors. This went from being something they weren't even hinting at to being a reality within a year of Google announcing their intentions to provide fiber in Austin. And while Grande is still only offering fiber in high end neighborhoods, AT&T has pretty good coverage with it.
cmapes 12y ago
I don't see anything too surprising here. The big problem is the lack of disruption and innovation due to the government sponsored monopolies of internet/cable/network carriers over geographic regions. However, it's normal to spend a lot of money on CAPEX and make higher profits on the services after the financing for capital expenditures used to expand the services has paid off. The only people who might find this less than obvious are probably solely from the lean internet business space, and haven't had any real experience in manufacturing or other capital-heavy businesses.
- _asciiker_ 12y ago
  I agree. I live in a country where external connectivity is done by the cheapest possible nodes...
- drawkbox 12y ago
  This is the saddest part about it. Cable companies and broadband were once the tip of the spear of innovation in terms of internet speed. In '95 in Chandler, AZ I went from a 56k to a broadband connection up to 6 Mbps broadband connection (with so few on the nodes then) in one day. It was amazing innovation and almost magical. The sad part is that the same companies that brought that are the same companies keeping us from leaps like that now, no longer disrupting or innovating, bean counting instead while the US broadband and subsequent innovation possibilities / new markets burn. The best way to make more money and be more liked as a company if you are in broadband is to jump up a level and put your competitors on their heels by giving more speed/bandwidth, but there are no competitors worthy yet to challenge and shake up internet connections like cable companies did back when phone companies were lethargic.
  - zo1 12y ago
    "jump up a level and put your competitors on their heels by giving more speed/bandwidth, but there are no competitors worthy yet to challenge and shake up internet connections like cable companies did back when phone companies were lethargic." That's not going to happen as long as you have a government-aided cartel. There is simply no way a competitor can come up and "shake up" the landscape because there are so many regulations and red-tape. Those regulations increase the cost and barrier to entry. So unless you have a few billion to throw at the problem, address the source of the problem, regulations.
dmourati 12y ago
The upsetting thing to me is not that the networks make money. That's fine. It is that they have stymied growth of our economy in favor of milking as much money as they can. According to Ookla, US: 25.9 Mbps South Korea: 54 Mpbs Netherlands 46.3 Mbps Sweden: 46 Mbps Lithuania: 45.6 See also: http://www.wolframalpha.com/input/?i=internet+speeds+by+country http://www.wolframalpha.com/input/?i=internet+speeds+by+coun... Think about the tremendous power unleashed when MP3 sharing, YouTube video, and Netflix streaming all became possible thanks to sufficient bandwidth. Now think about what would happen if we ramped up speeds instead of letting them trickle.
rocky1138 12y ago
"ISPs are spending less on their networks as they make more money off them" Or, Capitalism.

156 points by markmassie 12y ago

Yep, welcome to capitalism. When you need to raise your profits to justify high prices for shareholders, it is a race to the bottom to see with how little you can spend for market competitive pricing.

jjoonathan 12y ago
Which would be fine so long as there's a reasonable amount of competition. Too little competition means price gouging. Too much competition means everyone focuses on cheating rather than creating value. It would be more productive to focus on figuring out how to enact regulation/deregulation to tune the level of competition rather than bashing capitalism.
- opendais 12y ago
  The underlying problem is the market economics of laying fiber basically means it doesn't make sense for more than 1-2 companies to do it in a given geographical area. :/ We need municipal public fiber that is leased to anyone who wants to operate an ISP.
  - hyperliner 12y ago
    But, once the municipality is done with the fiber, then running the service is "relatively easy." Since the primary asset you are selling is bandwidth, what would be left to let more than one competitor compete for/differentiate? Service? Possibly, maybe faster setup times, etc. But those are "one time" things only. I think bandwidth is becoming a necessity and local government can deliver it (for the record, I did not vote for Obama last time! ;-)
    - opendais 12y ago
      The ISPs would still need to pay for the interconnects b/t the municipal ISP and, say, Level 3. So performance, etc. as well. The way I envision it working is: FTTH is the municipal and they hook it up to a single interchange. From there, someone has to pay for the routing to the rest of the internet, etc. Its the FTTH that is screwed up.
    - xcrunner529 12y ago
      Ask Australia and the UK. Works great for them.
      - vertex-four 12y ago
        ISPs here (the UK) primarily use the same physical last mile (along with their own hardware in the exchanges), and often the same backbone infrastructure, but differentiate on pricing and service. There's also enough money caught up in the retail ISP business that if the infrastructure maintainers failed to do their jobs, the retail ISPs could reasonably compete with them, at least in key markets. This, combined with a strong telecoms regulator pressuring them into developing and maintaining infrastructure, generally works out reasonably well; much of the country, including a lot of small towns, now have 50-70Mbps unlimited unshapedc FTTC for a reasonable price.
        xcrunner529 12y ago
        This article goes into more detail of why it works and how the US should follow it (from a former brit): http://arstechnica.com/tech-policy/2014/06/we-dont-need-net-neutrality-we-need-competition/ http://arstechnica.com/tech-policy/2014/06/we-dont-need-net-...
    - toast0 12y ago
      If multiple providers were leasing the fiber, they could compete on how they handle the data on the other side of the last mile: how they're connected to other networks (peering and transit), price, oversubscription rates, acceptable use policy, willingness to install caching boxes provided by content providers, what services are included and their quality (dns/mail/vpn/homepage/news/shell).
  - PeterisP 12y ago
    Nope, in urban areas it definitely makes sense for 4, 5 or more companies to offer broadband in a single apartment building; in countries where this isn't artificially restricted this is the natural result of market competition. Suburbs are different, but USA lacks competition even in cities that have extremely dense population and huge demand.
- hyperliner 12y ago
  "Centralized planning"? I don't think you can "tune the level" because the thing is not algorithmic. Every town / situation is unique. That's why every project is managed at the local and state levels, gets political, some interest group wants discounts, etc. In the meantime, all a company wants to do is to recoup its billions. Maybe this is a problem where over time the government takes over and gives ok service for a while, then it sucks again (as many government initiatives do), then it gets privatized again, etc., all over a few decades (so irrelevant for today's consumers).
InclinedPlane 12y ago
This isn't capitalism, it's the opposite of capitalism. It's regulatory capture and government corruption. Most major ISPs are cable companies, and most ISPs/cable companies have a cozy legal arrangement with municipal areas to lock out competition. The free market is not in operation here.
- opendais 12y ago
  http://fiber.usinternet.com/coverage-areas/ http://fiber.usinternet.com/coverage-areas/ They must be a major ISP? Such coverage. Oh my.
- hyperliner 12y ago
  It's not necessarily "cozy." They needed that to deliver service to places that would otherwise not get it. Another POV: https://news.ycombinator.com/item?id=8064947 https://news.ycombinator.com/item?id=8064947 from Chattanooga TN.
- icebraining 12y ago
  Capitalism doesn't require free markets. As long as the ISPs are privately owned and operated for profit, it's still capitalism.
  - InclinedPlane 12y ago
    You've created a unique definition of capitalism that applies even to state run industries.
    - audunw 12y ago
      No, actually that's roughly the original definition of the word. But then word definitions change over time, and it's now come to be equated with free market capitalism where the capital is privately held. So you're not entirely mistaken in pointed that out. Then again if we go by the common usage, communism is an entirely useless word, as it has come to mean "whatever china is doing".
- 12y ago
virtue3 12y ago
only it's not capitalism. It's crony capitalism / government enforced oligarchies where there _is_ no market rate...
- opendais 12y ago
  Microsoft was a government enforced ogliarchy too? :/
  - icebraining 12y ago
    Sure. Software patents are an obvious case of State enforced monopolism.
    - opendais 12y ago
      Software patents aren't what created Microsoft or its monopoly. Apple, Linux both survived just fine. They just didn't control a ridiculous percentage of the market.
      - perrylaj 12y ago
        It's a little disingenuous to claim that Apple and Linux 'survived just fine'. During Microsoft's height, Linux was in its infancy, and Apple would have likely died were it not for Microsoft's $150M investment in Apple mere weeks before it was to file bankruptcy. Though, I'll agree that software patents weren't what created the MS monopoly (though they are certainly using them now to try and hold on to their current market). There were many factors that led to MS's monopoly, some of which the government (and/or its negligence) was party to.
  - marcosdumay 12y ago
    MS Office is a government imposed monopoly on several places. But even where it's not government imposed, it's imposed by society, a real problem that should be fixed by governments.
    - 12y ago
bunderbunder 12y ago
Having been in the position of living in a city of over 1 million residents and therefore being able to choose my broadband provider from a generous selection of one option, I would really like to be welcomed to capitalism. Capitalism sounds lovely. Even if it doesn't promote higher quality service, market competitive pricing alone would be a huge improvement over what I'm used to.
- hyperliner 12y ago
  It's a tough one though. It takes a lot of resources to bring the service to you, regardless of how much it sucks. Imagine if it did not suck. We would have to pay more for that.
  - MagicWishMonkey 12y ago
    Tax dollars paid for a lot of the work done to install the basic infrastructure. The telecoms still have a lot of skin in the game, but they've had lots of help along the way. Consumers are getting screwed in both ends, regardless.
    - hyperliner 12y ago
      Yes, it was a joint project. Without those dollars, the project would not have gotten done. It's a JV. Everybody knew the terms going in, and changing them after the fact is like changing rules "after you are losing." (I did not understand what were the two ends).
      - rayiner 12y ago
        Everyone did know the terms going in. The premise of the 1996 deregulation was that the telcos would lose their legal monopolies, and competition would lead to higher investment and better service. The states torpedoed it, using universal service requirements to make competing with the incumbents unattractive in the very places (dense cities) where it would make the most sense. Who is changing the terms after the fact? The deal was that these networks would be built with private money and privately owned. There is very little public money in there, particularly in the cable network. Since deregulation in 1996 the cable companies have built massive fiber-coax networks mostly at their own expense. Its changing the terms to come in after the fact and try to treat it as public infrastructure.
pwarner 12y ago
The problem is these companies try to act as utilities, not technology companies. They borrow large sums of money (look at dept of AT&T or VZ), invest some of it in their network, but use big chunks to pass on to shareholders as dividends. They are financial companies, not technology companies. They are far more concerned with paying a few cents more in dividend per share than delivering a few more Mbps. I guess that it capitalism, but it is short sighted. I think the days may be numbered. It would require a good investment of capital, but Google fiber for example shows that from the technology side it would be trivial to disrupt them.
- deleted 12y ago
  [deleted]
hippiehippo 12y ago
Tell that to people of Eastern Europe, where 10 years ago it was a free-for-all build-your-network without any regulation or state intervention. At one time I had half a dozen ISPs at my door to choose from, from companies with 100 subscribers to corporations with half a million household customers. Thank you, Capitalism, for offering me a gigabit connection for $16.8 per month (btw, my ISP just reduced their price from $18 per month a couple of months ago). Seriously, how the hell do some people think that local authorities imposing restrictions/roadblocks on building of new last-mile alternatives is "capitalism"?
- opendais 12y ago
  The local authorities don't really provide roadblocks in many, many cities. Its FUD. I linked to a tiny ISP lower that provides gigabit to like 200 city blocks. The problem is lack of desire to invest because its expensive and incumbents exist. http://fiber.usinternet.com/coverage-areas/ http://fiber.usinternet.com/coverage-areas/ <- this company for instance

sp332 12y ago

Where did the data come from? Is there info for any other ISPs?

noobermin 12y ago
I'd be interested to see data from other countries.

hyperliner 12y ago

I don't know why people get PO'd that companies make money. That's the way capitalism works. It's not like anybody can just invest billions of dollars in infrastructure and hope to make money on it. Then again, the town of Chattanooga TN may be on to something: https://news.ycombinator.com/item?id=8064947 https://news.ycombinator.com/item?id=8064947

finnn 12y ago
Unless you live in one of these states: http://broadbandnow.com/report/municipal-broadband-roadblocks/ http://broadbandnow.com/report/municipal-broadband-roadblock...
audunw 12y ago
There's a huge difference between "companies exist only to pay (short term) shareholder dividends" and "shareholders are one of the ways companies raise capital to accomplish its mission" It's two different cultural perceptions that have a big outcome on how companies are managed. I think it's OK for people to be PO'ed when companies are managed by the first mindset. Because healthy capitalism is as much about culture as it is the concrete laws and regulations. Unfortunately I think the US is struggling with a bad culture here, as evidenced by "corruption" being relabeled as "lobbying", which has become culturally accepted.

eli 12y ago

"Before you jump to any conclusions about these companies, though, remember that the turn of the millennium was precisely when a lot of modern Internet cabling was being rolled out." I feel like this is a very important point that is getting lost. Of course costs are going to be higher and profits lower (or even negative!) when you're laying lots of new fiber and deploying new equipment. Maintaining that equipment in subsequent years will cost much less and you'll make more money those years selling service on it. There's nothing inherently wrong here.

fleitz 12y ago
Yup, the cables are usually the expensive part too. Routers are cheap compared to fibre (labour costs, access rights, etc, etc, etc).
- zanny 12y ago
  Yet with all this purported modern fiber, only like 5% of the US population at most have access to speeds over 100MB/s, and only at exorbitant prices that do not reflect the current low cost of maintenance of that infrastructure deployed a decade ago (when these companies were, note, still profitable).
deevus 12y ago
This felt like the main point of the article for me. Geographically it is very relevant to me (and fellow Australians, even if they are too stupid to see through our government's crap).
hrjet 12y ago
The graph I would like to see here is "integrated expense" and "integrated income" over the years. That would indicate when the point-of-break-even happened (or will happen).
- Fuxy 12y ago
  My guess is they were barely loosing any money in the years they upgraded their network and have recovered their investment within a few years while raising prices even more under the false pretense of needing/wanting to upgrading their network even further. It would be interesting to have a line on that graph showing when ISP's weren't required to abide by FCC rules because they were not classified under title 2.

deleted 12y ago

[deleted]

Berobero 12y ago

I'd be more interested to see how more regional expenditures on infrastructure do (or possibly don't) change in response to new, viable competition, such as Google Fiber.

delucain 12y ago
This is anecdotal and not the hard figures you're asking for, but I know in Austin both Grande and AT&T (two of the three ISPs in town) started offering gigabit packages. In almost all neighborhoods AT&T beat Google in getting fiber to people's doors. This went from being something they weren't even hinting at to being a reality within a year of Google announcing their intentions to provide fiber in Austin. And while Grande is still only offering fiber in high end neighborhoods, AT&T has pretty good coverage with it.

cmapes 12y ago

I don't see anything too surprising here. The big problem is the lack of disruption and innovation due to the government sponsored monopolies of internet/cable/network carriers over geographic regions. However, it's normal to spend a lot of money on CAPEX and make higher profits on the services after the financing for capital expenditures used to expand the services has paid off. The only people who might find this less than obvious are probably solely from the lean internet business space, and haven't had any real experience in manufacturing or other capital-heavy businesses.

_asciiker_ 12y ago
I agree. I live in a country where external connectivity is done by the cheapest possible nodes...
drawkbox 12y ago
This is the saddest part about it. Cable companies and broadband were once the tip of the spear of innovation in terms of internet speed. In '95 in Chandler, AZ I went from a 56k to a broadband connection up to 6 Mbps broadband connection (with so few on the nodes then) in one day. It was amazing innovation and almost magical. The sad part is that the same companies that brought that are the same companies keeping us from leaps like that now, no longer disrupting or innovating, bean counting instead while the US broadband and subsequent innovation possibilities / new markets burn. The best way to make more money and be more liked as a company if you are in broadband is to jump up a level and put your competitors on their heels by giving more speed/bandwidth, but there are no competitors worthy yet to challenge and shake up internet connections like cable companies did back when phone companies were lethargic.
- zo1 12y ago
  "jump up a level and put your competitors on their heels by giving more speed/bandwidth, but there are no competitors worthy yet to challenge and shake up internet connections like cable companies did back when phone companies were lethargic." That's not going to happen as long as you have a government-aided cartel. There is simply no way a competitor can come up and "shake up" the landscape because there are so many regulations and red-tape. Those regulations increase the cost and barrier to entry. So unless you have a few billion to throw at the problem, address the source of the problem, regulations.

dmourati 12y ago

The upsetting thing to me is not that the networks make money. That's fine. It is that they have stymied growth of our economy in favor of milking as much money as they can. According to Ookla, US: 25.9 Mbps South Korea: 54 Mpbs Netherlands 46.3 Mbps Sweden: 46 Mbps Lithuania: 45.6 See also: http://www.wolframalpha.com/input/?i=internet+speeds+by+country http://www.wolframalpha.com/input/?i=internet+speeds+by+coun... Think about the tremendous power unleashed when MP3 sharing, YouTube video, and Netflix streaming all became possible thanks to sufficient bandwidth. Now think about what would happen if we ramped up speeds instead of letting them trickle.

rocky1138 12y ago

"ISPs are spending less on their networks as they make more money off them" Or, Capitalism.