
ISPs are spending less on their networks as they make more money off them - markmassie
http://washingtonpost.com/blogs/the-switch/wp/2014/07/24/isps-are-spending-less-on-their-networks-as-they-make-more-money-off-them/
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eli
" _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.

~~~
hrjet
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
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.

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cmapes
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.

~~~
drawkbox
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
" _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.

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opendais
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.

~~~
InclinedPlane
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.

~~~
icebraining
Capitalism doesn't require free markets. As long as the ISPs are privately
owned and operated for profit, it's still capitalism.

~~~
InclinedPlane
You've created a unique definition of capitalism that applies even to state
run industries.

~~~
audunw
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".

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dmourati
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+coun...](http://www.wolframalpha.com/input/?i=internet+speeds+by+country)

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.

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sp332
Where did the data come from? Is there info for any other ISPs?

~~~
noobermin
I'd be interested to see data from other countries.

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hyperliner
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)

~~~
audunw
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.

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Berobero
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
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.

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rocky1138
"ISPs are spending less on their networks as they make more money off them"

Or, Capitalism.

