

One reason we lack Internet competition: Starting an ISP is hard - nols
http://arstechnica.com/business/2014/04/one-big-reason-we-lack-internet-competition-starting-an-isp-is-really-hard/

======
jeza
Installing infrastructure is never cheap nor easy. As such I'd categorise
fibre as a natural monopoly. You only really need to install it once to every
house hold and once it's there, terminal equipment can be upgraded to keep
abreast with technological changes. It's better if the fibre is owned by a
neutral entity, while internet services provided over the fibre can be
provided by competing companies.

The Australian government had this part right with the National Broadband
Network. The fibre and backhaul infrastructure would be owned by the
government, while retail companies would be allowed to sell internet
connections, telephony and pay TV services over this network . A change of
government has slowed things down a bit, but the same model appears to be in
tact, where the current proposal is that the government will take ownership
and upgrade coax cable (HFC) networks as an intermediate step.

~~~
another-one-off
It is debatable whether the Australian government got that right.

The Australian government has set up a single corporation to roll out a
broadband network to every house in Australia. This is something that the
government has no special knowledge of, and no demonstrated ability to do.
Governments have no business doing this thing. There is a very real risk that
ideological differences between the Liberal and Labor parties will see NBN Co.
mired in a similar situation to Telstra - a privatised monopoly with massive
and unrivaled infrastructure funded by taxpayers with terrible customer
service.

What should be done is for the government to maintain an inter-town and inter-
city fibre backbone, and cover the cost at taxpayer expense, then let local
council and small business wire up individual towns and suburbs. Then let
consumers hire an ISP who also handles maintenance of the fibre cables. Maybe
give the installer of the cable a 10- or 20-year monopoly on maintaining the
cable to allow them to recoup their cost.

Granted, technically the government would want to retain official 'ownership'
of the cables, and would still need some sort of administrative group to
oversee who was responsible for which cable, but this would be a big
improvement over how the rollout actually came together.

Creating new government-backed corporations to own the infrastructure is not a
winning formula. The entity building and maintaining the cables needs to be
exposed to market forces, and it isn't difficult to see how it could be done.

The government can handle the expensive parts like satellite connections for
rural Australia and the inter-town links, if the market isn't likely to
provide those things.

~~~
hartror
The intention is that Telstra and the NBN are apples and oranges when it comes
to the consumer. Telstra is (soon to be was?) both the network and the
retailer whereas the NBN is just a network wholesaler.

The argument of government vs private infrastructure projects is a whole other
kettle of fish.

------
noname123
I just listened to NPR's Planet Money latest episode about the lack of choices
in ISP in America. Very interesting indeed:
[http://www.npr.org/blogs/money/2014/04/04/299060527/episode-...](http://www.npr.org/blogs/money/2014/04/04/299060527/episode-529-the-
last-mile)

~~~
JumpCrisscross
I enjoy every Planet Money episode I've found linked to from HN. Does NPR have
an email notification for new episodes? Ideally, the email would contain a
transcript.

~~~
thirdsun
Why not just subscribe to the podcast with a podcast player of your choice?
You may have your reasons but I can't see how email would beat an established
concept like podcasts/rss feeds when it comes to being notified about new
episodes.

------
JunkDNA
I would actually really like to see a lengthy investigative journalism piece
that looks at all the factors that go into the costs of internet access around
the world. I hear lots of hand-wavey stuff all the time about how Japan or
Singapore have low population density so it's cheaper there relative to the
US. But that can't be the total picture. Major US cities also have high
population densities and that doesn't seem to be enough. Different countries
have also spent public funds to build out infrastructure which likely never
goes into the quoted prices of access. Japan's price for 2 gigabit (quoted
here: [http://valme.io/c/technology/vkqqs/the-cost-to-connect-
inter...](http://valme.io/c/technology/vkqqs/the-cost-to-connect-internet-
prices-around-the-world/)) is a good example. What's the hidden cost? How much
do taxpayers pay to maintain the parts of that infrastructure that are
government owned? There are lots of countries that have higher tax rates than
the US to subsidize public services. In some places, people are probably
paying a lot for this stuff, just parts of it are hidden because they are
indirect through taxation. However, I bet that's not totally the case in all
areas (perhaps in a place like Romania, given the comments elsewhere in this
thread).

Are there any places that have vibrant commercial competition for broadband in
the absence of significant government intervention? Are there places where
because of government ownership of infrastructure in part of the market (e.g.
fiber backhaul) there is increased consumer choice in providers, such that the
fully-loaded costs are cheaper that the current US situation? We know from
numerous markets that lots of competition drives down prices and drives up
quality. The problem with broadband is it feels like a situation where you
have a natural monopoly, so what is the right policy mix to enable
competition? Or isn't there one?

~~~
anon4
Eastern Europe, Bulgaria in particular. I've always attributed it to lax
copyright laws (or at least lax application of said laws) and low average
income, but not so low that you can't afford to buy a PC and pay it off over a
few months, resulting in rampant file sharing driving high demand for fast,
unmetered internet access. For a while in the early 00s each ISP ran their own
file sharing site even.

It also helps that you can just string cables between buildings tying them to
lampposts and trees. "Can" meaning that it's against all regulations and kind
of unsafe in a thunderstorm (one friend had his NIC fried once, fun times),
but people don't complain - you can either have internet that you have to
unplug when it rains or no internet at all because running cables and obeying
the building code gets too pricey for lean ISP startups.

Today of course most cables are underground and smaller ISPs have merged or
were bought by larger telecommunications operators. Also if you want internet
access on your mobile phone, be prepared to get robbed in plain sight - GSM
operators here operate just like everywhere else.

In the end, the actual pushing of bits around doesn't really cost anything.
Just some small amount of electricity. The actual costs to an ISP are all
infrastructure and maintenance of the infrastructure. It's not hard to get
some money to buy routers and enough bandwidth to service a neighbourhood,
then work your ass off as a sysadmin keeping everything running. The hard part
is the cables. You have to run your own Ethernet and optics and anything that
gets in the way of you running it drives cost up and makes it ever so harder
to get into business.

In conclusion, lax building code laws and high consumer demand allowed our
ISPs to start out with a minimal investment and upgrade their infrastructure
as they went along to make it more and more reliable and safe. Today I'd say
the price for access is as low as it can go, the service is pretty solid, with
8-10megabit speeds at the lowest and everybody gets given a static non-NAT
IPv4 address for something like 15$/month.

~~~
xur17
I've always wondered why some of the larger apartment complexes don't buy a
fat pipe to the internet, and provide internet service to their residents
(either as a perk, or a competitively priced service to make money). For
example, the current complex I am in has hundreds of apartments - it seems
like the perfect place for them to do so.

Is it prohibitively difficult for them to find a fast enough pipe to the
internet, or is there something else stopping them that I am missing?

------
Taek
Routers are pretty cheap, and nice routers can cover half of a city block.
What if you had an ISP that created a mesh among its local users. You'd need
to capture large fractions of a neighborhood at once, but it would potentially
save you a lot of the expense associated with wiring a neighborhood.

If you can get a large enough local membership, you could have a mesh that
spans multiple backbones. Your costs are then limited to getting enough people
to join the network to actually form a mesh (and getting them all online at
the same time), and then paying the backbones directly for the traffic you
send them.

Might this be a viable business strategy?

~~~
taterbase
Checkout [http://sudomesh.org](http://sudomesh.org) and
[https://peoplesopen.net](https://peoplesopen.net)

~~~
gmazzotti
Also [https://fon.com](https://fon.com)

~~~
icebraining
That's not a mesh, each participant mush have another Internet connection
already, it's just a way of sharing it for when you're not at home.

------
sixQuarks
Why aren't phony lawsuits designed to deplete funds of an upstart considered a
crime, or at least anti-competitive behavior?

------
maxcan
if you're in SF - webpass. I have it in my building, about $40/mo. They claim
that its a 200mbps shared across my 100 unit building. In actual speedtest.net
testing I almost always get north of 200mbps up and down. I've seen it clock
over 300 now and then. also, no throttling, "real" downloads regularly come in
over 10 MB/sec or higher.

~~~
djchen
Sadly, fairly limited availability even in SF

~~~
rdl
When I was looking for a place to live in SF, I _started_ from the webpass
coverage list, and then looked for properties at those addresses. It does
restrict you to fairly large, fairly upscale condo/apartment buildings,
though.

------
pseingatl
Back in the day, didn't someone market a product called, "Provider in a Box"?
And didn't New York's Pipeline (before they were acquired) rather cheaply set
up ISP services?

~~~
toast0
Is New York's Pipeline described here?
[http://en.wikipedia.org/wiki/The_Pipeline](http://en.wikipedia.org/wiki/The_Pipeline)

If so, yes, starting a dialup ISP is not too expensive, and not too difficult.
A local ISP I worked for in 1999 ended up using a wholesale provider for
dialup, we just ran a radius server for authentication, and mail and web
servers.

Unfortunately, the market for dialup ISPs is drying up, many more users want
broadband connections, and in the US, it's very hard to get access to the last
mile connections for broadband, unlike how easy it was to setup a bank of
modems.

------
protomyth
I wonder what would happen if an electric company or gas company decided to
start and ISP. Both businesses are familiar with selling a commodity and have
right of way.

~~~
codgercoder
[http://www.he.net/?a=39098199433&n=g&pos=1t1&p=&t=&m=e&k=hur...](http://www.he.net/?a=39098199433&n=g&pos=1t1&p=&t=&m=e&k=hurricane%20electric&gclid=CJvLxpzt070CFTMV7AodOScAPQ)

------
roma1n
Is it just hard, or downright impossible since IPv4 depletion?

~~~
hrrsn
Hard, not impossible. I presume the second market for IPv4 addresses is going
to go through the roof once we hit complete depletion.

I'm with a ~6 month old ISP here in New Zealand, by default everyone is behind
CG NAT, but you can request a public IP.

~~~
p1mrx
You at least give everyone a block of IPv6 without needing to ask, right?

~~~
dijit
yeah everyone gets a /64, however, since 90% of sites (even if they claim to
have AAAA records) do not actually support ipv6 yet.

I'm one of those people unfortunately, mostly because my DDoS mitigation and
countermeasures are not IPv6 ready- and I can't risk my companies business
since it's all public facing ecommerce. :\

although, yeah, you could put everyone behind a NAT for ipv4, but then you
have the same problem as with Quatar (or was it Saudi Arabia) where masses of
people are blocked because they all exit onto the internet from the same
place.

------
bigbugbag
I'm not sure you have to build and own your own fiber network to start an ISP,
actually there's a trend of people making their own ISP and they report that
it's not that hard: "Y U NO ISP, taking back the Net [30c3]"
[https://www.youtube.com/watch?v=IPIoO3Pkc5U](https://www.youtube.com/watch?v=IPIoO3Pkc5U)

~~~
jlgaddis
_> "... and they report that it's not that hard"_

Heh, I've heard my boss (the co-owner of an ISP) say those exact words I don't
know how many times.

NB: It's harder than it sounds.

------
codgercoder
Uh, no. There were once 15,000 ISPs! They were killed off when incumbents
flexed their monopoly power. Instead of disrupting telecom, the new ISPs were
forced into the old ways of state utility commissions. When the war was over,
the incumbents picked up infrastructure for cents on the dollar. The 1996
Telecom Deregulation Act totally failed.

------
command_line
Relevant: The Cost to Connect - Internet Prices Around the World
([http://valme.io/c/technology/vkqqs/the-cost-to-connect-
inter...](http://valme.io/c/technology/vkqqs/the-cost-to-connect-internet-
prices-around-the-world/))

~~~
zxexz
This is interesting, however they only pull 1 ISP per country. This is fine in
countries like the US, where 1 company is representative of the rest (for the
most part). But in countries like Lithuania, there is a massive discrepancy in
prices (in a good way; there is lots of healthy competition). Also this list
isn't very valuable without statistics on internet penetration.

------
fredgrott
What the article misses is that many ISPs started as startups during dialup
transitioned to fixed broadband..

One is in fact in my County near me. STarted as a startup in mid 1990s as a
dialup ISP in a garage even.

~~~
dba7dba
As soon as a startup starts getting bigger and bigger, they become more and
more like the established players.

------
timthorn
Is there no local loop wholesale in the USA?

~~~
Gusfoo_2
> Is there no local loop wholesale in the USA?

No, not in the USA. Unique for a western ISP market AFAIK.

------
beingpractical
As Data takes over voice, all Telcos will eventually be ISPs providing voice.

------
davidw
Lots of things are hard. If the margins are juicy enough though, competitors
will show up.

[http://en.wikipedia.org/wiki/Porter_five_forces_analysis](http://en.wikipedia.org/wiki/Porter_five_forces_analysis)

------
igl
Its not tornados and overland lines?

------
tn13
Than you Captain.

