
ISPs Say They Don’t Make Enough Money - davegauer
https://www.eff.org/deeplinks/2018/05/big-lie-isps-are-spreading-state-legislatures-they-dont-make-enough-money
======
montasaurus
We have an ISP in San Francisco and it really is a great business. Lots of
long lasting recurring revenue and very low recurring costs--bandwidth is
actually one of our smallest expenses. The biggest hurdle is really tapping in
to the tribal knowledge on how to set up and run an ISP. You've got
networking, provisioning, how to buy bandwidth, even what type of power plugs
you need to have in your rack (spoiler: there are multiple and they are not
all compatible). Besides the cost of initial deployment and setting up new
customers, there's not a whole bunch you need to spend money on.

We really like the business, and more people really should start their own.
The numbers make sense in a bunch of different markets and scales. If you
deploy with fixed wireless, it brings the costs down to the 10's of thousands
of dollars range. Laying fiber is obviously a lot more expensive, but not
really necessary in most circumstances.

We're working on helping more people start ISPs-launching here on HN next
week, but TechCrunch wrote about the project just now:
[https://techcrunch.com/2018/05/10/necto-looks-to-help-
indivi...](https://techcrunch.com/2018/05/10/necto-looks-to-help-individuals-
get-their-own-local-isp-businesses-off-the-ground/)

~~~
Zarath
One thing I've never understood is how computers using one ISP connect with
computers using another ISP. Is there some sort of law that requires that one
ISP's cable must be able to interact with another ISP's cable? What incentive
does someone, like say Comcast, have in allowing their users to interact with
people using a smaller ISP like yours?

~~~
mcpherrinm
In general, every IP address is reachable from every other IP address on the
internet. This is possible because there's many BGP peering agreements between
ISPs, and generally traffic is not filtered between them. There's no law
saying you can reach everybody else: that's just how the Internet works,
because it's in everyone's business interests to make it work. Very few
websites are hosted using Comcast's internet service, so if Comcast didn't
peer with anyone else, you couldn't get to many websites at all.

Comcast mostly provides service to end-users. Comcast connects with larger
backbone providers, like Level 3, NTT, Sprint and Cogent. Those providers sell
access to other residential ISPs like Necto, but also to businesses, like
website hosting companies, cloud providers, etc. Comcast might directly
connect to some bigger businesses like Google, CDNs, etc, for performance and
cost-saving reasons.

The large ("Tier 1") providers all peer with each other, and you can pay one
of those ISPs to be able to reach the customers of all the others (this is
called "Transit"). So Comcast might connect to Level 3, and buy transit from
them. My ISP might connect to NTT, and buy transit from them.

When my computer sends a packet, it goes to my ISP. They consult their routing
table, and decide it's reachable over NTT. NTT gets the packet, routes it
through their network to a peering point with Level 3, who will then route
that packet to Comcast, and finally to the end user.

Then some other random home ISP which pays for connectivity with NTT is
reachable from my comcast connection. The business relationship is not between
Comcast and my ISP, but it's between Comcast and L3, L3 and NTT, and NTT and
my ISP.

Thus Comcast would have to go out of their way to block connectivity. Comcast
wants to reach everyone on Level 3's network, because that's where the
websites users want to connect to are.

This is largely simplified. There's a lot of billing, politics, and technology
issues involved here, and I'm not sure I understand them all.

~~~
montasaurus
The fact that you can reach almost any IP address is kind of a small miracle
when you start digging into it. There are a bunch of interesting examples of
addresses becoming unreachable or sent to the wrong destination, both
accidentally and intentionally.

The BGP protocol is how each network announces what IP addresses can be
reached through them. Those announcements can often be faked, in a process
called BGP Hijacking. This happened to EtherWallet:
[https://www.theverge.com/2018/4/24/17275982/myetherwallet-
ha...](https://www.theverge.com/2018/4/24/17275982/myetherwallet-hack-bgp-dns-
hijacking-stolen-ethereum)

Some address ranges are reserved for internal use within each network. If the
network is big enough, some network operators "borrow" other less-used public
IP addresses and re-purpose them for internal use. This means that traffic
inside that network or transiting through it can't reach those IP addresses.
Cloudflare's 1.1.1.1 DNS server (and 1.0.0.0/8 more generally) are affected by
that a lot: [https://blog.cloudflare.com/fixing-reachability-
to-1-1-1-1-g...](https://blog.cloudflare.com/fixing-reachability-
to-1-1-1-1-globally/)

Also, sometimes single point of failure connections just...break. It's not
guaranteed that every connection is redundant, and it's definitely possible
for chunks of the internet to just be "disconnected" from the rest.

~~~
mirimir
In researching a report about using ping services to locate VPN servers, I
found a few examples where nearby ISPs only peer remotely. Iceland via
Germany. Zurich via Italy and Germany. Salt Lake City via Boulder, LA, etc.

~~~
solarkraft
"only" as in trying to avoid local peering? Do you have an idea why they might
do that?

~~~
mirimir
Yes, no local peering. I have no clue why.

The Iceland example: [https://keybase.pub/mirimir/IVPN-is1.gw.ivpn.net-All-
Probes-...](https://keybase.pub/mirimir/IVPN-is1.gw.ivpn.net-All-Probes-
under-4000-km.png)

From the IVPN article:

> Most notably, the lowest-rtt probe for IVPN server is1.gw.ivpn.net is in
> Amsterdam, NL. The data is somewhat “V” shaped, with the lowest minimum rtt
> at ~2,000 km. And indeed, the distance between Reykjavik, IS and Amsterdam,
> NL is 2013 km. However, given my long-term working relationship with IVPN,
> one of their network engineers verified that this server is indeed in
> Reykjavik, IS. It’s also unlikely that the maplatency.com probe “IS midlar
> ehf” is actually in Amsterdam, because that’s an AS in Iceland. It’s
> arguably most likely that the probe (in Iceland AS60300) and is1.gw.ivpn.net
> (in Iceland AS44515) just weren’t peering directly, but instead through an
> AS near Amsterdam.

~~~
collinmanderson
My guess is because it does cost some money to do local peering. My
understanding is you need to contact each individual company you want to peer
with, make sure you both have a Point of Presence in the same datacenter, sign
a contract, etc. So you both need to be renting space in that building and
both have an open port on your router, and then you need to pay the datacenter
to actually physically run the wire between the routers.

~~~
mirimir
Thanks. I hadn't thought it through so clearly.

But wait, how does traffic get to that remote peer?

~~~
collinmanderson
> how does traffic get to that remote peer?

Not sure what you mean. The two networks (say, a DSL and Cable provider in the
same area), need to physically connect at some location in the area (usually
at a "Carrier Hotel"). Once they're connected, traffic originating from a DSL
customer is routed through the DSL network to the Carrier Hotel, then across
the to the Cable provider's network, and then through that Cable network to
the Cable customer.

For example, I live in South Bend, IN, where we have Comcast Cable and AT&T
DSL. Although we have a few places in town where Comcast and AT&T _could_ each
have a point of presence, and then peer with each other, they don't think
that's worth it. Instead, traffic is routed to the nearest peering point,
which in my case is 350 E Cermak in Chicago, 100 miles away. Peering locally
would probably save about 10ms, but that's probably not really worth it.

~~~
mirimir
OK, I get it. In your example, AT&T and Comcast peer in Chicago. In my
example, the two Icelandic ASNs peered near Amsterdam. Likely through
international intermediaries.

------
cbhl
I wish that the EFF had actually taught people the math of running an ISP,
rather than just writing a puff piece.

Here's Comcast's Form 10-K for 2017: [https://www.cmcsa.com/static-
files/111ba611-eb85-4edc-9000-3...](https://www.cmcsa.com/static-
files/111ba611-eb85-4edc-9000-3907c84697d8)

Yes, the majority of the expense for Internet is definitely the upfront cost
of equipment (physically putting in the cables).

Cable companies borrow lots of money in order to do this -- Comcast's Form
10-K shows that they have 64 billion dollars of debt. In order to get bank
loans that big, you need to show that you can pay it back. But they only have
3.4 billion in cash; the way they keep their balance sheet from falling apart
is knowing you pay your monthly cable bill ("Receivables, net" of 8.4
billion).

Comcast had 41 billion dollars of "Residential" revenue last year, but only
14.7 billion dollars of that was for Internet.

The big expense line item is 13 billion on "Programming" (aka, TV stations
from the other conglomerates, for people who haven't cut the cord yet).
There's also 6.4 billion on tech support, and 2.5 billion on customer service.
If you keep looking further, you see they spent 3.4 billion on "customer
premise equipment" (which is probably cable modems and set-top boxes), and
another 2.4 billion on "scalable infrastructure", which is the actual "paying
money to make your internet better". The balance sheet shows ~38 billion on
property and equipment, so maybe Comcast is upgrading, say, 5-10% of their
network in a given year?

In my opinion, Comcast's real long-term business risk is the shifting revenue
mix from Cable to Home Internet means that Comcast gets smaller cash flows, so
there's less money to upgrade the equipment every year. That can't possibly
look great for shareholders.

~~~
electricEmu
The 10-K for 2017 is great. You pointed out some great reasons the
infrastructure and programming sides could be split.

> Cable companies borrow lots of money in order to do this -- Comcast's Form
> 10-K shows that they have 64 billion dollars of debt. In order to get bank
> loans that big, you need to show that you can pay it back. But they only
> have 3.4 billion in cash; the way they keep their balance sheet from falling
> apart is knowing you pay your monthly cable bill ("Receivables, net" of 8.4
> billion).

I wonder would these look like split out into "internet infrastructure", and
"media infrastructure". I bet it would be a stable business with low, but
expected, returns, and another with lots of volatility.

As a United States Citizen, I wouldn't mind providing subsidies and incentives
for an internet company to expand internet connectivity. I do take offense to
a media company taking subsidies to _also_ expand a media empire with those
funds.

> Comcast had 41 billion dollars of "Residential" revenue last year, but only
> 14.7 billion dollars of that was for Internet.

Yes, a split out company would have a smaller market cap. That's actually
larger than I expected!

> The big expense line item is 13 billion on "Programming"

Exactly. Get that shit out of my internet provider.

In my opinion, the American Public's real long-term business risk is the over
consolidation of businesses. That means that Comcast gets to continue posting
record breaking profits while offering shitter services, meanwhile expanding
their media empire.

~~~
Casseres
> As a United States Citizen, I wouldn't mind providing subsidies and
> incentives for an internet company to expand internet connectivity.

We already did, to the tune of somewhere between 100 to 400 billion dollars in
tax breaks in the 1990s for fiber that they never delivered.

Search terms: broadband scandal

~~~
__jal
Not to mention the seemingly endless series of subsidies at the city level, in
return for bupkis. Some examples having to do with one connectivity slumlord:

[https://www.techdirt.com/articles/20131012/02124724852/decad...](https://www.techdirt.com/articles/20131012/02124724852/decades-
failed-promises-verizon-it-promises-fiber-to-get-tax-breaks-then-never-
delivers.shtml)

------
makecheck
ISPs routinely invest in things that I didn’t ask for: “helpfully” trying to
resolve my web typos to their own ad servers, trying to inject pop-ups into
HTML streams, wanting to install unnecessary software to “use the Internet”,
expecting me to rent equipment that could be bought, etc.

Meanwhile, there is little evidence of investment in things I actually expect
an ISP to do. No upgrades to quality of service (except that fateful day when
Google Fiber came to town and “miraculously” everything improved practically
_the next day_ ). Not even an _option_ to have cheap, basic Internet, which
you _know damned well they CAN do_ ; instead, ridiculous things like “only if
bundled with a landline phone” (WHAT?!?). One mystery fee after another.
Absolute garbage service, everything from “we will arrive between 1 and 5”
meaning “we showed up at 11:30 and you weren’t there, reschedule”, to phone
calls about service outages that they seem to be utterly clueless about. A
single customer probably gives them at least $1000 a year, what the _hell_ do
these people do?

~~~
defterGoose
And then on top of those things they have the audacity to refer to things like
developing new pricing models as "innovation".

~~~
r00fus
I always read "innovation" as _rent seeking opportunities_ when a company says
it.

------
avgDev
They aren't only lying about not making enough money. They are "lobbying" to
keep up this charade.

Many European nations have much cheaper and faster access to the internet with
many more ISPs. I don't see a logical reason why US can't have the same.

~~~
gnicholas
How do these European nations compare on population density? I live in
suburban silicon valley and have been surprised to see how much cheaper
internet is for friends of mine who live in cities — even cities like NYC,
which are equally expensive otherwise. (i.e., they're not just jacking up the
price for folks in Silicon Valley because most people can afford it.) I pay
$30 for 12/3 Mbps service; my city friends pay roughly the same for 100/10
Mbps service. This leads me to believe that population density is a big factor
here.

~~~
monocasa
Sweden has lower population density than the US, but much better internet.

I think population density is a weak signal for competition in the US market,
and that's what you're seeing.

~~~
MrFantastic
95% of Swedes live in the tip. I doubt upper Sweden has good coverage being
that it's a barren tundra.

~~~
stephengillie
This map is from Finland in 2016, and shows only a few regions have >90%
100mbps availability.

[https://m.imgur.com/wU5WXBV](https://m.imgur.com/wU5WXBV)

~~~
monocasa
To be fair, in the US (which is what we're comparing all of this to),
broadband is defined as 25Mbps up/3Mbps down.

~~~
tim333
Ah - by that definition much of central London doesn't have broadband as I get
8 down 0.5 up and can't get much better. Still I find the 8 it basically fine.
Maybe the vid is 720p rather than 1080p - whatever.

------
vuln
Aren't most if not all of Large ISPs public companies? They answer to the
shareholders... Their business model revolves around making their shareholders
the most amount of money possible. The company answers to the shareholders.

A Municipal ISP are mostly non/low profit, they have no share holders to pay
out. No one looking for their 'investment' back as capital, just people
looking for stable internet. The Muni ISP answers to the customers.

~~~
patricius
The money has got to come from somewhere. If you want the municipality to run
an ISP, then you either have to tax the citizens for the services or take
funds from somewhere else. Either way, can we be sure that good intentions
from democratically elected local politicians will be enough to somehow make
Internet service cheaper than what the private sector is able to provide?

~~~
Someone1234
The problem with a municipality is the same as the status quo: Too much
monopoly. If they're good, then great, if they're bad then too bad -- no other
choice. Same as dealing with Comcast.

A better idea is to have the municipality just manage the "last mile" physical
cable from the home to the exchange, then have various ISPs operate a backhaul
from the exchange outwards, along with customer support, billing, etc.

That way the customer has choice of ISPs (real choice) and you aren't running
five cables or more from the exchange to a home.

~~~
grahamburger
One problem with this is that a lot of the problems people experience with
their Internet service (slow speeds, latency) are due to problems
(overcrowding, poorly maintained infrastructure) in the last mile. Unless the
municipality is well incentived to fix problems this can be even worse for the
end user - the ISP blames the Muni and vice versa and nothing gets fixed.

Note that I actually agree that this is a good and maybe the best solution and
is actually what I have at home (10 GB fiber on a last mile access network
with multiple ISP options! In the U.S., even!) Just pointing out a risk.

~~~
Retric
I disagree. Last mile is just bandwidth and a router, what people complain
about is mostly between the last mile and the internet. Netflix slow even
though your have X0+Mbit connection on a speed test? That's what people want
to fix.

~~~
grahamburger
Respectfully, I've been building these networks for about 15 years. I assure
you that the last mile is often (but not always!) the problem.

~~~
Retric
In the last 10 years I have had last mile issues once if you include a
firmware update on a router taking a while. That may be an outlier, but last
mile networks should be stable consider the phone system used to just work? On
average less than 5 miles of wiring should almost never have issues.

Why is the website down when it's up for other people? Why is my BitTorrent
being disconnected? Why is the video stuttering? Where is this lagg coming
from? Why is Netflix look like crap?

Yea, those are not last mile problems.

~~~
grahamburger
> Why is the website down when it's up for other people? Why is my BitTorrent
> being disconnected? Why is the video stuttering? Where is this lagg coming
> from? Why is Netflix look like crap?

Literally all of these things are very commonly last mile problems. (but
again, not always.) Consider what happens when a connection on the last mile
network starts to get congested and/or underperform due to a physical problem
(like an old/degraded copper line.) The provider can either upgrade/fix the
network (expensive, time consuming, not profitable in the short term) or they
can implement traffic control on that segment. The traffic control could be a
high burstable rate with a much lower committed rate. In that situation
browsing will feel snappy and speed tests will be good, but downloads and
video streams will be slow and buffer. Problem solved from the provider's end
- they can point to the speed test as evidence that they're providing what
you're paying for and blame the streaming provider for the buffering, and they
don't need to spend anything to solve the over-congestion problem! And they're
not even breaking net neutrality! But experience for the customer is bad.

~~~
Retric
I think you're confused about what last miles means.

It's the part of the network that's not shared. In cable networks it stops at
[https://en.m.wikipedia.org/wiki/Service_drop](https://en.m.wikipedia.org/wiki/Service_drop).
It may in fact exist entirely inside an large apartment complex.

From a networking standpoint all networks look the same at that point as it's
before any form of routing. In no way can you get "Why is the website down
when it's up for other people?" from a last mile segment you can see
everything or nothing.

PS: HD Streaming video also qualifies as low bandwith now days. Even 4K is not
bad, you can run 40+ of them on a 1Gbit connection.

~~~
grahamburger
I am not confused, but I do think that we are working from different
definitions of last-mile. Your definition of last-mile is a fine and probably
more literal one, but I don't think it's very useful when talking about
municipal last-mile networks. If the municipal network only extended from the
service-drop to the home then each ISP would still need lines run all through
the city. In my case for example the 'last-mile' fiber access network has a
pedestal in the street every few blocks across several cities - it's a very
large network. The ISPs connect at the edges of that network and provide IP to
any home connected to it.

Also, fwiw it certainly is possible for a problem at the last mile even in
your definition to cause a site to be inaccessible for you and not others. A
bad route or a frame size problem for example can cause exactly that. Consider
for example the recent problems with AT&T and 1.1.1.1 - AT&T customers
couldn't use that site while others could and it was all because of a last-
mile problem.

~~~
Retric
> In my case for example the 'last-mile' fiber access network has a pedestal
> in the street every few blocks across several cities - it's a very large
> network. The ISPs connect at the edges of that network and provide IP to any
> home connected to it.

That network is effectively a full ISP excluding billing as it's connecting to
1000's of homes and then connecting to a few networks from that point.

I understand it seems like a reasonable alternative, but think of something
closer to this. Connecting to every single one of those pedestal's would take
~1-3% of the wire as going to every home. If say 10 networks did it then
that's not all that much overhead compared to 2 separate last mile networks.

The other approach would be to have say 2-5 networks that went to every box
and then each ISP would have a device in those locations which would connect
on one or more of those networks.

In either of those 2 cases the ISP's would have full control over how their
customers see the internet, without nearly the wiring of having N full
networks.

------
erikb
I feel that if you put this in front of a CEO of an ISP he will really not
understand it. It is so very, very common in business world that you find an
argument to ask for more money, which is why you will ask for more money. The
question for business people is not the truthfulness of the reason, but how
believable it sounds.

And if you try to counter that with truth and succeed you will really irritate
these business people. Because now they need to go and find another good-
sounding reason to ask for more money.

Truth or not, that is really invisible to them.

~~~
wiz21c
ahhh the difference between price and value....

------
juliangoldsmith
I agree with the EFF on a lot, but there was a dearth of numbers in this
article. Does anyone know of any numbers to actually back up, for instance,
the 80% claim that the writer makes regarding the cost of initial buildout?
Additionally, how would that apply to each individual ISP?

The article also asserts that, "a small handful of massive and extraordinarily
profitably Internet service providers (ISPs) are telling state legislatures
that network neutrality would hinder their ability to raise revenues to pay
for upgrades and thus force them to charge consumers higher bills for Internet
access". Does anyone have an actual example where this has happened? I'd
expect the author to at least throw in a link to a news article somewhere.
Almost every article the author has written for the EFF is related to Net
Neutrality, I'd think he'd have plenty of resources to show us.

Also, while I'm not entirely sure how EPB built their network out, Sonic is a
terrible example even by the information given in the article. First of all,
when almost the entire cost of starting your business is already paid for you,
you're doing to have lower costs than someone who actually has to build
conduit to lay fiber. On top of that, Sonic's service seems to be entirely
concentrated in an extremely small, very high population density area. When
you have 2000 customers on a single city block, you're going to have a lot
lower costs than a company that has one customer every quarter mile.

------
soreally
If ISPs are so profitable, and the current government is falling for their
lies, then ISPs are probably a great investment?

You could buy some Comcast stock (NASDAQ: CMCSA) - it's a bargain right now,
down 20% in the past year. Compare vs. the NASDAQ composite index, which is up
20% in a year.

Actually, the more I look at it, they might actually be a good investment
after this 2018 correction. I do not have any vested interest in Comcast, but
I might make a very small investment after reading this article.

------
shmerl
There were some profit margins of big ISPs published - they are insane, and
near monopoly situation makes it pretty bad, when ISPs rip off users left and
right.

------
kingludite
Imagine what it costs to build roads, have drinking water, sewage or
electricity. ISP = tiny boxes. The starting cost should be a lot higher.(could
be a lone) That way we don't have to rent forever. We don't hook up your house
to the sewage system for free either. After you sink many thousands into the
sewer it gets rather amazingly cheap.

------
refurb
A lot of ISPs are public companies, so not sure why EFF didn't just dig up
their 10-K filings?

Sonic.net is a pure broadband provider with pretty good introductory deals for
1Gbp internet in the Bay Area.[1]

2017 Revenue - $477M

2017 Net income - $64M

2017 Profit margin - 13%

13% isn't bad. It's more than low margin businesses, but doesn't seem
egregious to me.

[1][https://www.last10k.com/sec-
filings/sonc/0000868611-17-00005...](https://www.last10k.com/sec-
filings/sonc/0000868611-17-000050.htm#s25116AD284A52DF0AF7209AA5F359A14)

~~~
montasaurus
It looks like that 10-K is for Sonic the fast food chain. I believe Sonic the
ISP is still a private company.

------
sjg007
Nobody makes enough money... news at 11.

------
kexx
:DDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD joke
of the month. thank you

~~~
dang
Please don't do this here though.

------
camdenreslink
These guys operate as legal monopolies, have received huge tax breaks, and
provide bad service.

------
everybodyknows
WISP coverage map for the US:

[https://uwn.com](https://uwn.com)

------
slg
I am no fan of ISPs, but this is a silly argument to make. There is no
"enough" when it comes to capitalism. Your problem should be with either the
politicians for believing these arguments or with our entire economic system,
not with ISPs for lobbying on their own behalf in this manner.

~~~
avgDev
I don't have a problem with ISPs. They are doing what is legal, and it makes
logical sense. Spend $xx on lobbying save $xxx.

The problem is much bigger than ISPs in my opinion. There is anti-intellectual
movement in the US right now. Uneducated population does not understand the
difference between a fact and an opinion.

The government should be hiring educated people, some professors for example
that understand subjects related to laws. There should be 0 trust in lobbyist.

~~~
rukittenme
> Uneducated population does not understand the difference between a fact and
> an opinion.

Why stop at the "uneducated"? The educated population doesn't know the
difference between fact and opinion.

------
pishpash
What's this "enough"? No for-profit entity makes "enough" money. It's a
concept that doesn't exist.

Put in real competition and supply-and-demand takes care of "enough".

------
peterwwillis
Yikes, this article is so myopic. They treat large "ISPs" as if they are a
single independent entity. The largest ones are owned and operated by gigantic
corporate interests, and their sales figures are part of a broader plan, and
thus so is pricing. The profits of "EPB Fiber Optics" don't go towards paying
for content rights worth billions of dollars a year.

The larger the network, the more expensive it costs to maintain and upgrade.
Of course a tiny regional co-op ISP doesn't cost much to run. They don't have
25 million customers in 21 states, or 145,000 miles of fiber in 39 states.

I mean, jesus, this article goes all over the place. It's saying provisioning
isn't expensive, and suggests that deployment cost is lowered by changing
building codes to require conduit. How does that affect the 91 million homes
that already exist?

The article states that net neutrality _" prohibits [ISPs] from charging
unjustified fees on Internet services"_. No, it doesn't. They can charge
whatever they want for their services. They _will_ increase the price of
internet services whether or not net neutrality exists, because it is not
getting any cheaper to run a giant ISP that is responsible to the shareholders
of a media conglomerate.

If the author really thinks the _only_ reason big ISPs charge high fees is
because they're mean and greedy, they really are going to lose this fight,
mainly from a lack of critical thinking skills.

~~~
wolfgang42
By that logic, wouldn't a large ISP want to maximize its profit by splitting
itself into smaller regional divisions with smaller, less expensive networks?

~~~
ksk
I think what GP is also saying is the money maker divisions subsidize the
'loser' regional divisions. It would be interesting to see that data...

~~~
peterwwillis
Absolutely. Modern ISPs are part of corporations which have other business
interests that are very, very expensive. All corporations use all of their
money-making ventures to help subsidize other parts of the business.

Just look at the old Bell system. They charged exorbitant rates for the long
distance service and used this to subsidize local service. When Bell got
broken up, local phone service got more expensive, but long distance got
cheaper. Later on, a lot of the baby bells got absorbed by others because they
were not efficient enough to generate profits as individual units without the
"mothership" subsidizing them.

The way a giant corporate monolith works is completely different from a tiny
local company.

~~~
creeble
Then they should kill the business units that are expensive to run, not jack
up prices on the profitable services.

