4 ms·

They do have some competition. Cable co. v. Telecom. Nothing in these new regulations will do anything to increase it. In fact, it probably decreased the chanc

They do have some competition. Cable co. v. Telecom. Nothing in these new regulations will do anything to increase it. In fact, it probably decreased the chances of increased competition. There is a meme on the internet that ISPs are insanely profitable. But even a cursory look at the facts shows differently. There is a reason why Verizon is selling off as much of its wireline network as it can. Why would they do that? If it is a monopoly that lays a golden egg? And they aren't even talking the money they are getting for their spin offs and reinvesting in their network. They are giving it back to shareholders. Clearly Verizon doesn't think wireline is profitable. Cable companies have a major competitive advantage. They don't have to build a fiber network. Coax will bring us well passed 1Gbps. All that is needed is their equipment upgrades. But even cable is facing an existential crisis. Cord cutting will destroy their business model.

AnthonyMouse 12y ago
> There is a meme on the internet that ISPs are insanely profitable. That's because they are, in fact, insanely profitable. > There is a reason why Verizon is selling off as much of its wireline network as it can. Why would they do that? If it is a monopoly that lays a golden egg? That's easy. Because it allows them to convert 50 years worth of future profits into an immediate payday. Which is only possible because their wireline network is worth billions of dollars, otherwise nobody would be willing to pay them that much for it. > But even cable is facing an existential crisis. Cord cutting will destroy their business model. Their business model is defective. The vast majority of their costs come from providing fast data service. The marginal cost of providing TV service on top of that is a small fraction of that. Which means they're significantly undercharging for internet service and overcharging for TV and phone service. Customers should be paying exactly the same for "triple play" packages as they do now but the "internet only" package should be most of that price because it constitutes most of the cost. At that point they can stop caring if you drop the TV package in favor of Netflix because they don't need it to be profitable -- and with any luck they'll eventually just stop offering it, because it makes no more sense for a physical infrastructure business to be offering TV streaming than for them to offer search or social networking. It just isn't their primary business anymore.
- rhino369 12y ago
  >That's because they are, in fact, insanely profitable. They are publicly traded companies, go look for yourself. They hover around average profitability. >That's easy. Because it allows them to convert 50 years worth of future profits into an immediate payday. Which is only possible because their wireline network is worth billions of dollars, otherwise nobody would be willing to pay them that much for it. Then why are they selling it for such a low amount? If it is insanely profitable, it would have an insane price. >Their business model is defective. The vast majority of their costs comes from providing fast data service. The marginal cost of providing TV service on top of that is a small fraction of that. Which means they're significantly undercharging for internet service and overcharging for TV and phone service. First, you negliect that there a licensing costs to provide TV service. But I do agree they are undercharging for internet service. But can they just raise their prices? Will the market support a 100 dollar Comcast internet only bill? I'm not sure it will.
  - AnthonyMouse 12y ago
    > They are publicly traded companies, go look for yourself. They hover around average profitability. What is "average" profitability supposed to mean? Comparing several ISPs and finding their profitability similar and therefore all "average"? You obviously can't reasonably compare them to tech startups or family owned restaurants or the like. But they're making billions of dollars. > Then why are they selling it for such a low amount? Still not sure how billions of dollars is possibly considered "a low amount." > First, you negliect that there a licensing costs to provide TV service. Netflix is also paying to license (or produce) its content and it delivers it with no commercials for $9/month. > But I do agree they are undercharging for internet service. But can they just raise their prices? Will the market support a 100 dollar Comcast internet only bill? I'm not sure it will. Hardly anybody even subscribes to internet-only service. All raising the price of something nobody subscribes to would do is discourage cord cutting. It gives people the choice between paying $120 for triple play as they do today or paying a total of $110 by paying $100 internet-only + $9 for Netflix + $1 for Magic Jack. And then maybe the second one becomes more popular because it's still less expensive, but not in a way that causes any kind of serious problem for the ISP.

AnthonyMouse 12y ago

> There is a meme on the internet that ISPs are insanely profitable. That's because they are, in fact, insanely profitable. > There is a reason why Verizon is selling off as much of its wireline network as it can. Why would they do that? If it is a monopoly that lays a golden egg? That's easy. Because it allows them to convert 50 years worth of future profits into an immediate payday. Which is only possible because their wireline network is worth billions of dollars, otherwise nobody would be willing to pay them that much for it. > But even cable is facing an existential crisis. Cord cutting will destroy their business model. Their business model is defective. The vast majority of their costs come from providing fast data service. The marginal cost of providing TV service on top of that is a small fraction of that. Which means they're significantly undercharging for internet service and overcharging for TV and phone service. Customers should be paying exactly the same for "triple play" packages as they do now but the "internet only" package should be most of that price because it constitutes most of the cost. At that point they can stop caring if you drop the TV package in favor of Netflix because they don't need it to be profitable -- and with any luck they'll eventually just stop offering it, because it makes no more sense for a physical infrastructure business to be offering TV streaming than for them to offer search or social networking. It just isn't their primary business anymore.

rhino369 12y ago
>That's because they are, in fact, insanely profitable. They are publicly traded companies, go look for yourself. They hover around average profitability. >That's easy. Because it allows them to convert 50 years worth of future profits into an immediate payday. Which is only possible because their wireline network is worth billions of dollars, otherwise nobody would be willing to pay them that much for it. Then why are they selling it for such a low amount? If it is insanely profitable, it would have an insane price. >Their business model is defective. The vast majority of their costs comes from providing fast data service. The marginal cost of providing TV service on top of that is a small fraction of that. Which means they're significantly undercharging for internet service and overcharging for TV and phone service. First, you negliect that there a licensing costs to provide TV service. But I do agree they are undercharging for internet service. But can they just raise their prices? Will the market support a 100 dollar Comcast internet only bill? I'm not sure it will.
- AnthonyMouse 12y ago
  > They are publicly traded companies, go look for yourself. They hover around average profitability. What is "average" profitability supposed to mean? Comparing several ISPs and finding their profitability similar and therefore all "average"? You obviously can't reasonably compare them to tech startups or family owned restaurants or the like. But they're making billions of dollars. > Then why are they selling it for such a low amount? Still not sure how billions of dollars is possibly considered "a low amount." > First, you negliect that there a licensing costs to provide TV service. Netflix is also paying to license (or produce) its content and it delivers it with no commercials for $9/month. > But I do agree they are undercharging for internet service. But can they just raise their prices? Will the market support a 100 dollar Comcast internet only bill? I'm not sure it will. Hardly anybody even subscribes to internet-only service. All raising the price of something nobody subscribes to would do is discourage cord cutting. It gives people the choice between paying $120 for triple play as they do today or paying a total of $110 by paying $100 internet-only + $9 for Netflix + $1 for Magic Jack. And then maybe the second one becomes more popular because it's still less expensive, but not in a way that causes any kind of serious problem for the ISP.