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Verizon: We Can't Become Dumb Pipes (mondaynote.com)
252 points by taylorbuley on Aug 2, 2016 | hide | past | web | favorite | 283 comments



Has Verizon actually had any happy content customers? Every time a carrier tries to go into content creation they try to do it on the cheap and force their monolithic soul-sucking corporate culture onto creative types and it never has worked.

People don't want to work for Verizon, or Comcast, or other such companies. They treat their employees like dirt, and are generally unconcerned with user experience, doing things the right way, and view customer service as a cost center.

All of their products have been developed in a centrifuge of "just good enough" with an eye toward minimizing effort and maximizing profits. Its entirely a cultural thing set by the leadership of these companies and will not change until there is a fundamental (albeit unlikely) shift in leadership at the top.


> had any happy content customers?

Not me. They got us a FIOS deal when we got our house. I used them for 2 years. Super fiber speed, except they would throttle youtube. So here I was paying to this supposedly superior quality and speed and getting throttled by them. So I dropped them and switched to a plain old cable provider (just for internet, we don't really watch tv anymore). Cut my costs more than half. On paper the speed is lower, however, the latency and lack of throttling for things like Youtube and other media is better.

Now since Verizon installed their equipment on our premises, they keep coming back every few months, in person -- as in they have someone drive out to our door, begging us to come back. They even offered to match the price we pay for cable currently (but it is always some stupid 2 year contract thing, that I know will go throught the roof when the time is passed).


Do you have cites for throttling YouTube? That seems entirely terrible for retaining users.


Other people apparently had (still have?) these issues:

https://productforums.google.com/forum/#!topic/youtube/CPW7r...

http://lifehacker.com/use-a-vpn-to-bypass-your-isps-throttli...

You can search for more. While it could be a coincidence that somehow after switching poviders Youtube fixed their servers at the same time and got faster, I'd have to believe it was because of Verizon.

Someone from a Verizon forum remember mentioned, defending them, it could have been Google not paying for peering with Verizon enough. But I consider that still Verizon's fault. I don't really care about the details, I was paying a hefty sum to Verizon for Internet connectivity and not getting it. However they setup their peering agreements is their problem, I pay to not have to know that.


Comcast and Verizion discovered they could use their monopoly position to sell both ends of the pipe.

Comcast I know went through and systematically shut down private interchanges with major content providers and also refused to upgrade public peering points. There were some peering points that we're seeing 10%+ packet loss. The result was terrible performance to any provider who didn't buy "internet access" from Comcast even when the only access that was needed was to Comcast's own customers.

A friend worked as a peering coordinator for a major content provider at the time and nobody had ever asked to be paid to deliver content to their own customers before. This created a standoff and I'm not sure how it ended but I believe the content providers caved.

Of course I'm pretty sure this is what was the spurred Google Fiber. One thing that Google seems really good at is to ensure that nobody can use their monopoly position to cut them off from the customer (Android, Chrome, Fiber).


Yeah, Google is very good at vertical integration. Make sure it's competing a little in all areas.

http://insidertestprep.com/wp-content/uploads/2013/05/Vertic...


Time Warner Cable in NC throttled it for me. I was only able to watch YouTube in HD through my school's VPN. How backwards is that?


I can watch YouTube in real time with little latency and no buffeting on 3G. Any landline not matching that is a scam.


Comcast throttled me. Basically in mid 2000's i paid about $60 for internet and no issues, then couple years ago i noticed severe throttling for youtube and other sites. Then I upgraded to their business class for about $110 a month for the same speeds and no throttling. They were playing games. It's BS.


Using a VPN is a much cheaper solution with the same results, with the added bonus of less tracking from Comcast.



Google "ISP throttle youtube"... it is not hard to imagine isp's doing this a few years ago. My perception of youtube buffering "all. the. time." wasn't that long ago. I am relatively certain Comcast was throttling at the time, but I don't think they are these days.


I've never noticed any throttling on YouTube (I've had FiOS in Baltimore and now in D.C.). I get a rock solid 140 mbps on Netflix's fast.com, even during primetime. 140/170 on speedtest.com.


150 meg connection in Philly here. 155 mbps steady from fast.com and speed test both directions over WiFi. Not a single outage in a year.


anecdotal but when I had fios they were doing some odd routing for youtube which made it appear that they were throttling, when in reality it was likely a bad peering agreement.


As a consumer you sort of pay to get access to YouTube, Netflix etc.

The money should flow from the carrier to the content providers, but they saw them initially as a nuisance and later as leechers, despite that they are essentially the product that the carriers are selling and getting paid for in the first place, and they are getting it for free.


I hate the "ISP X throttles Service Y" meme. It's not throttling, it's bad peering. Very different but the outcome is similar.


Verizon is one of the ISPs that engaged/engages in intentional removal of peering connections. Netflix is a signature example of this.


Since it seems like most responses misunderstood your question, I will say that I've never been entirely pleased with "startup" content creation. Netflix and Amazon do fine, but Yahoo's offerings outside of picking up Community were rather weak. Hulu's original offerings are not great. Comcast produces some things under the Universal label (or NBC) so it's hard for me to tell what "Comcast" is making versus the purchased entities. I guess AT&T has a whole network on DirecTV but I don't know the quality of their shows. I suspect that Verizon's offerings are going to be completely disposable given their usage model and rate of production, probably similar to Youtube Red's exclusive offerings - good if you already care for that sort of stuff.

Reality TV aside, my general view is that most companies that view original/exclusive streaming media as an "add-on" versus a core competency are more likely to buy in cheap and rebroadcast ideas that were already popular, chasing the trends, and delivering less enduring quality than typical TV/cable stations. For streaming media it's more about cramming as much (exclusive) garbage as you can, and having enough videos that someone can always find something to pass the time on your service. Traditional TV can only offer you one piece of content at a time, so they at least make some effort to put budget and thought behind the quality, even if they often miss.


My FiOS internet has been good to me. It's always able to achieve the BW specified by them, and there is no throttling/cap. I've even been running a web server for years without any issues (you aren't supposed to do that with a residential connection).

Comcast, on the other hand, has bandwidth caps at 250 GB, but I think they recently raised them to 1 TB. However, even 1 TB isn't huge by today's standards, especially with everything migrating towards the "cloud".

However, The FiOS TV service isn’t that great. The standard definition boxes are so slow that they are unusable and tend to simply break every year or so (gets stuck in a boot loop and flashes “FPGA” on the front display, which is kind of interesting). The HD boxes are much better, but I don’t want to spend the money. Also, it’s expensive, but I doubt Comcast is any better. They probably compete very tightly with each other in areas where both are available.


I've heard about the Comcast bandwidth cap and it's my opinion that is only for the "lowest tier" of service. I've got the "middle tier" (there are so many levels I don't know where I lie) and use way more than 250 every month. I've never received a notice - not even the one month where I was over 1 TB.

YMMV, Anecdote != data, etc.


> had any happy content customers?

Not me. Verizon upsold my elderly mother for a bunch of crap services she didn't need or have use for (a "bundle"). Their customer sales, like Comcast's, is nothing more than a slimy boiler-room operation.

Luckily, I was able to back her out of the plan with a solid hour on the phone and a careful appeal to the humanity of the customer service rep.


Fios and Verizon cdma/LTE are the best mass deployed communication networks compared to their domestic peers. They are expensive, but their service delivers. I'm very happy with fios. I pay 60 bucks for 75 up and down, and almost always get 80 up and down.


Well, it seems to me that you are overpaying. I'm paying 15 EUR for 250 down and 100 up for the FTTH service (GPON terminal in my cabinet), and the ISP (Orange) even has its own Youtube cache.


Is there some huge subsidy going on in your country? That's well below the cost for any feasible fiber deployment in Ameirca. You'd have to use slaves to get it for about 20 bucks.

Or is it 15 euro on top of your phone and tv?


No, without subsidy, without phone and TV, data only (non-shaped, non-filtered, public and dynamic IP if you have IPv4 service, /56 subnet and DS-Lite if you have IPv6 service).

However, this is not a price you would get when you walk in - the price list is 17 EUR for 250/15, upping upload to 100 is 5, upping upload to 250 (from 15, not 100) would be 15. Additional fees if you want TV or phone, or static IP.

This network has been in operation for years - I've been customer for 9 years already, hence the lower price. In the beginning, it was slower of course, about 40/10, but I imagine the network has already paid for itself.

The reason why it is was built in the first place were bad conditions for accessing DSLAMs operated by our ILEC at the time - T-Com. It was impossible for any ISP to offer flat-rate DSL, because the ILEC was asking for data-based charges, quite high at that. So Orange threw it the towel, built its own optical network, set the prices as another DSL providers, but with order of magnitude faster speeds with no data caps - and had a runaway success with it. The other big ISP were in shock, but to remain competitive they quickly built their own FTTH networks, or at least upgraded their HFC (UPC). So in the end we have a cheap Internet thanks to T-Com greed :).


I don't believe Orange is receiving any subsidy to build or operate its networks. It's more likely that this is in one of the Eastern European countries where the cost of living is lower and prices like these are the norm.


Those are some good prices. I am paying €40 for 50/50. I could get a lower price at a slightly worse ISP, but nothing in that range.


Yeah, welcome to the USA where you pay more for worse internet.


I'm on T-mobile now, but when I was at a previous job that had to work out of a ton of backwoods locations, everyone on the job used Verizon. The huge push they had to expand coverage everywhere combined with the 700Mhz LTE bands they got to ensure good quality through long distances and obstructions, a lot of the people who don't work in big cities love Verizon because it works. As much as I hate their shady practices, they aren't going to be beat in their core market until someone else offers better coverage and reliability.


Yep I'm on vacation in the backwoods. My personal T-Mobile phone doesn't get any coverage. Luckily my firm let me borrow a Verizon hotspot. Though tmo just deployed a 700mhz network, but my phone doesn't have the LTE band on the baseband chip.


it is a brave new world for them....but...they acknowledge their problems....unlike many carriers


I am reasonably okay with my FIOS service. But only really in comparison to the hell that Comcast put me through. I am sure at some point Verizon will fuck it up. Too bad I am out of providers to try.


I had FIOS with them for a while. It was really stable with constant bandwidth, much better than my experience with cable. But I never had any real interaction with them.


It would be great if there was a major telco that was excited about being dumb pipe and just crushing the others. That seems to be what Google Fiber is an attempt at creating but the capital required is so great that only a hundred year old company like Verizon or AT&T is really in a position to execute on that well.


There is - Sonic. Sonic is a dumb pipe company. No middle boxes, just bits. Sonic fiber is deployed in Santa Rosa and is slowly moving into San Francisco, but their management doesn't want to go into heavy debt, so it's slow. You can also get Sonic in many areas of California, but it's over leased AT&T lines.

The CEO of Sonic says that being a fiber provider is profitable without any additional services, and that their wholesale cost for upstream bandwidth keeps dropping.


I have Sonic FTTN 50Mbps service. I've used Sonic over the years and have always enjoyed their service and their mission as a business. I've lapsed a few times because their DSL in some places in SF is just crap, but that's because of AT&T and distance to the closest CO.

Where I'm at now (prob less than a mile from their fiber service, sigh..), when we first moved in, we got Comcast. Of course, the Comcast service was all over the place. Some days 1Mb, some 100Mb (which I never signed up for, but just received), some 45Mb (what I signed up for). As usual, I had man techs come out to try to fix things and of course, none did and all of them had a different excuse as to why things didn't work. So many support people promised me good service but I never got it.

Fed up, I saw I could get Sonic FTTN and it's been rock solid for over a year. It's never gone down and just works - as I would expect. It's too bad we don't have more ISPs like them because if we did, access would be a totally different experience.


As a (very anecdotal) counterpoint, I subscribed to Sonic for a year in an apartment in Mountain View near Latham and Rengstorff with absolutely abysmal results. It's been two years, so the exact details are hazy, but I believe the plan advertised a 20 Mbps down rate. What I received was a connection that tended towards 100 Kbps down and peaked at about 125 Kbps. There were frequent outages - around once a week - for minutes at a time, not to mention a three-week wait for installation (having already paid the sign up fees). Sonic was totally unhelpful in resolving any of these issues and made it extremely difficult to cancel my contract without incurring large fees (despite their deceptive advertising) to the point that I waited until moving out. I will never use them again for anything and actually prefer Comcast.


I don't think Sonic has ever advertised a guaranteed bandwidth for their DSL offering. It's always "up to", which greatly depends on a lot of things with DSL. It's too bad you had such a terrible experience with customer service, I've been with them for almost 10 years and all my experiences have been good.

But in your situation, it sounds like you were likely extremely far from the central office, and probably had lousy indoor wiring as well. 20Mbit/s is basically the "I can see the phone company office from my window" speeds (less than 1000 wire-feet, give or take).


A lot of it has to do with the AT&T copper that they are actually connecting over too. I had their paired DSL offering in Redwood City. One of the lines got something like 10Mb/s, but the other was an abysmal 2Mb/s. It just wasn't worth it to keep the second pair. Sonic was a great company to have as an ISP, but in most areas, they are only as good as the copper they get from AT&T.


Yep this is half my point, line quality is huge in DSL. Sonic (or any other DSL provider) couldn't reasonably give you a guarantee on speeds, even though they know how far you are from the CO (last time I checked they gave you this number when checking availability). I have paired lines and they are also unbalanced (approx 6.5 and 5.5 down), despite assuredly taking the same path from the CO.


My ADSL2+ here in Brisbane Australia runs at 20.1Mb/s -- which is because I live in the literal middle of the "tech area" of this city. Quite spoiled, but as new apartment buildings go up around me, the connection speed starts to struggle as more and more people come online...


Jealous, my line speed is set to 19.999.


I had a similar experience in San Francisco, where they refused to send AT&T out to actually fix the 100 year old copper they were trying to push DSL through. I ended up canceling after never getting more than 1 Mbps.


I had similar issues a few blocks away. Luckily I was able to cancel easily within the first 30 days.


You mean KBps as in kilobytes per second right?


> So many support people promised me good service but I never got it.

That was my experience with comcast as well. So many friendly people who promised so much and they all delivered nothing. It was maddening. Months after I cancelled, I got a check that returned all my money. I would have preferred internet service given that they were the only provider around, but that was not something their support people could provide.


Looks like you managed to dodge the Comcast annual 50% price hike "just because". Burn in hell Comcast. Burn in hell.


*until Comcast is allowed to acquire Level3. When you can't buy backbone traffic from anyone but competitors, you'll see just how hard monopolies can punish smaller competitors.

I expect Cogent will be the next company to be acquired by one of the last-mile providers after Level3.


Sonic is awesome. They have excellent customer support and actually care about and actively protect your privacy.

http://www.dailydot.com/layer8/sonic-isp-privacy/


Sonic is the best utility of any kind I have dealt with. It's like getting internet out of some guy's garage back in 1991, in a good way. The one time I had a technical problem, I called tech support and someone picked up the phone and actually fixed my problem. Amazing! I mean, that shouldn't be amazing, but it was.


i imagine upstream bandwidth is the cheapest part of the equation. inside our datacenters, 10 gig links are pennies per megabit.


It sure is. For Tier 1 providers its actually free. Settlement-free is largely what defines peering. It's an exclusive club. Even crazier is that you will never see a peering agreement contract, its all done on a hand shake. The whole "paid peering" concept is a somewhat recent phenomenon and not applied to members of the exclusive club.


Bandwidth isn't really free, even to the so called Tier 1 carriers. Transport, crossconnects and ports cost money regardless of if you have settlement free peering or not. More often than not the other costs are far larger than the actual bandwidth.

Even if the so called Tier 1 carriers are losing their prominence due to donut peering of smaller operators and large content providers building their own networks, getting settlement free peering with the big ones remains a challenge. Settlement free peering itself isn't an exclusive club, but being an operator with significant market power is.

While the majority of settlement free peering agreements are informal, studies show that about 10% are more formal with written contracts and conditions.


My comment was in response to price charged by one party to another to move bits, bandwidth as in opex. Of course nothing is free and gear is capex, albeit with heavy discounts and handsome depreciations on capital leases.

Even with public peering fabric which is what I think you are talking about and that I've used LINKS, NYIIX and AMS-IX etc,. you still have to backhaul that traffic yourself, its not making a significant dent in Tier dominance.

What studies have shown that there are contractual agreements for settlement free peering? Citation? Links? I would be interested in seeing that. My source was from experience working in the industry.


I'm not saying the cost is significant in the grand scheme of things, but unless you own the whole physical network, the co-lo facility and the IX then your transport, crossconnects and port costs are OPEX, not CAPEX.

Transport, crossconnects and port costs apply regardless if you use a public IX or do private interconnects.

Here's a link to the study about settlement free peering: https://www.pch.net/resources/Papers/peering-survey/PCH-Peer...

I had the percentage wrong, or then I may recall a more recent study. This one is from 2011. Of course it depends greatly upon who you peer with, as to whether a written contract is needed or not. As such the sampling may skew the results.


We (PCH) committed to performing that study every five years, and we're beginning the process again now, for a 2016 edition. Expect results in six to eight months. Based on what I've seen of the industry in the past five years, I'm guessing there won't be any huge change since the last one.

           -Bill


In my apartment, I could only get ADSL1. How is that even still a thing?

ADSL2+ would be close to Comcast's affordable cable internet plans, and thus interesting competition.

AT&T wouldn't offer anything better than ADSL1 either, so I guess nobody's investing in the copper plain old telephone system.


It's limited by the distance and quality of the copper connecting you to their system.

The only thing that can improve this limit is pulling a new wire. The other providers can't do anything different because their ADSL would be piggybacking of the exact same physical wire.

If someone's going to pull new wire, then there's no reason to not make it an optic wire and skip the copper, since you can provide all services (including landline phone) over that.

So yes, of course, in that sense nobody's investing in the copper plain old telephone system, and never ever will be.


what do they say about selling out? it all sounds too good to last. if they're profitable, some big company is going to try acquire them.


They give money to the EFF and FSF and have vocally supported net neutrality many times.

In Los Angeles, as a customer, I got a mailing from them FOR supporting title 2 and encouraging an open internet. Wild...

They might not be able be bought, they are feisty like Theo and for some people (myself included) throwing money in our face won't make us take action that will screw over society.

Preserving freedom is more important than the fanciest of homes and most luxurious car...


Well then, I'm a long way from CA, but I'm still rooting for them.


I think Google Fiber is a good demonstration of why no company is excited about being a dumb pipe; Google is NOT trying to become a nationwide fiber network, and their strategy with GF makes that clear. They are only doing it in a few cities, and their real goal is to pressure the existing providers to improve their offerings. They WANT everyone to have fast and reliable internet so they can utilize Google services, but they know they can't make money by being an ISP.


>their real goal is to pressure the existing providers to improve their offerings

They have denied this repeatedly, and seem really insistent that they do want to be an ISP.

ex: https://www.google.ca/search?q=google+fibre+is+a+real+busine...


You're talking past each other. Google Fiber may well be profitable, but that doesn't mean that Google wants to become a "nationwide fiber network." Google is playing a fundamentally different game: building in cities that don't force them to build-out to neighborhoods where people can't pay $70+ per month. That might fly in Atlanta or Kansas City, but it won't fly in San Francisco. Google has shown no interest in playing that game.


Google already is a nationwide fiber network, and has been for a decade. The question is how much of that network they want to use to carry customer traffic on. Reality is: it costs them next to nothing to add the additional traffic, so as long as last-mile is profitable I'm willing to bet they'll be happy to do it all day long.

The limited deployments at the moment are BECAUSE they want it self-sustaining/profitable to continue to justify roll-outs.


I'm talking about a nationwide last mile network, not a nationwide backbone network. Google can't build the former with its current rollout approach. It's not just a matter of time, but the very nature of Google Fiber as a business.

Fiber providers live and die by their uptake rate. Most of the investment is in passing a house, but only about a third of houses you pass will subscribe. The cost of passing all the other houses has to be recovered from those that do subscribe. Historically, a condition of entering a city has been wiring up the whole city, without regard to customer interest in different neighborhoods. Google refuses to play that game. It only builds to Fiberhoods with demonstrated interest. That changes the economics entirely. But it's highly unlikely that approach will work across the country.


>Fiber providers live and die by their uptake rate.

When their sole source of income is selling broadband. Part of the profit for google fiber includes the ads served up. If you think they don't track ad serving to their own customers based on the IP addresses they're accessing google from, you're crazy.

While I don't think ANYONE outside of Google knows their end-game - it's entirely possible that the fiberhoods are just proving the business model out before further investment.


> Part of the profit for google fiber includes the ads served up.

The ad income is just peanuts compared to the monthly cost of Google Fiber. We are talking about a few bucks per month for ads versus $70 for fiber. Ads are just not going to move the needle in any meaningful way.


Are you sure they have the capacity? The reason why Google didn't offer cloud services earlier is because they were using up all of their cloud.


http://www.wired.com/2016/06/google-turns-giant-internet-cab...

I'm quite confident they have the capacity. They have more than pretty much everyone besides maybe the government.


> The reason why Google didn't offer cloud services earlier is because they were using up all of their cloud. [citation needed]

It was a (poor) business decision not to go for public cloud earlier, but not driven by datacenter capacity.


> don't force them to build-out to neighborhoods where people can't pay $70+ per month. That...won't fly in San Francisco.

https://fiber.google.com/cities/sanfrancisco/ Google Fiber is coming to parts of SF using existing fiber infrastructure.


And on the mobile front, consider Google's Project Fi: bundling Sprint, T-Mobile, US Cellular to sell voice and data for $20 per month + $10 per GB.

Similar mission to Google Fiber?


I think that's similar to Google Ride Finder[1][2] -- probably a blockbuster but ahead of its time by a decade.

[1] https://en.wikipedia.org/wiki/Google_Maps#Google_Ride_Finder

[2] https://googleblog.blogspot.ca/2005/03/need-ride.html


Are you using blockbuster in its' original sense (e.g. home run) or in reference to the video rental store that failed?


Original sense was a bomb big enough to blow up a city block.

See http://www.wordorigins.org/index.php/more/173/


A home-run.

Honestly I think Project Fi is amazing and it's the perfect counter to the issues mentioned in the article -- value-added bundling -- because it puts Google between you and your mobile internet provider.


I can't speak to Google Fiber but Project Fi is self-sustaining/profitable, according to what I have read.


The author's entire argument is that you cannot possibly be excited about being purely a "dumb pipe" company that just sells commodity internet/telecom access (unless you are a government-granted monopoly - then you are no longer a commodity and you have pricing power!).

Google is so successful at the OTT/services level that it could easily build out the fiber infrastructure underneath its internet empire if it wanted to. But it doesn't want to because there's no profit in that! And it's a messy, government-regulation-filled industry that is becoming less and less profitable YoY.

It boils down to: Dumb pipes are a cost center. OTT/services are a revenues center.

Why build your own roads when you can use others? As long as the government keeps those roads in good repair. And Google has a lot of friends in Washington D.C. ;)


I disagree.

Verizon makes $10 a gigabyte from mobile data. Multiple news articles lately have pointed out that Verizon makes orders of magnitude more money from running "dumb pipes" than does EVERYBODY else in the mobile advertising ecosystem put together, including the content companies.

In fact, if Verizon rebated 5% or so of the data charges back to mobile web sites, mobile web sites would have a much more lucrative business than they have with advertising today. (And if Verizon did that, they'd have the media in their pocket, just as Google does today -- between the ad revenue Google brings in and the fact they can make your traffic go away, even the New York Times is afraid to confront Google)

The mobile phone and internet business is also highly profitable. If you believe the advertising you see you might think it is competitive, but it is not. Just try using satellite internet and paying the high cost per GB.

Google does not want to get into VZ's business because it is a capital intensive business. The great thing about Google, Facebook and such is that they have tiny workforces and a small amount of hardware -- if you can get your users to make content for free you don't have to pay writers, actors, directors, makeup artists, etc.

Telecoms buy spectrum in auctions for the same reason why Google hires so many engineers -- to keep them away from competitors. Wireless as it is is the perfect rent-seeking industry as it has government barriers to entry.

Overbuilding any kind of wired internet infrastructure is a brutal business today because of the latent competition; where I live Frontier charges $95 a month for something that makes cable look like the Jetsons. They are paying huge dividends to the stockholders because they can do that with 0 investment. They could afford to offer the same for $45 or less a month and they would if you brought in anything better.

The other issue is that companies do not enter into mergers rationally. Time and time again you see that mergers destroy value.


> Google does not want to get into VZ's business because it is a capital intensive business.

Lolwat? Google builds multiple datacenters full of computers, sells access to them to other people, has bought a lot of dark fiber, and sells internet to home consumers in Kansas City. These are fairly capital intensive operations, but apparently Google execs have deemed them sufficiently valuable. It's kinda interesting how Verizon FiOS and other incumbant telco offerings are incredibly unpopular, while people are lining up for Google's Fiber service.

> The great thing about Google, Facebook and such is that they have tiny workforces and a small amount of hardware --

Verizon reports 177k employees, to Google's 51k. Google is smaller, but not as small as people might imagine, and if they continue rolling out Fiber and Fi, I can only imagine their footprint will grow.

> The mobile phone and internet business is also highly profitable. If you believe the advertising you see you might think it is competitive, but it is not. Just try using satellite internet and paying the high cost per GB.

It must be, because the only place I can think of where Google is buying not building is their cellular network offering, which multiplexes Sprint, T-Mobile, and US Cellular. MNOs have made it so easy to be a Virtual, Google would be foolish to bother rolling out their own infra until their subscriber base grows.


I believe the logic behind Google Fiber is to just push the competitors to a direction that is beneficial for Google.

A little bit like what they did with Chrome. To my understanding the point in Chrome was not to dominate the browser market, but affect the direction of browsers in general (fast Javascript execution, standards compliance, just a chrome for the content and not big-fat-portal-style experience).


> Multiple news articles lately have pointed out that Verizon makes orders of magnitude more money from running "dumb pipes" than does EVERYBODY else in the mobile advertising ecosystem put together, including the content companies.

Then what is the rationale for buying one of these failing content companies, Yahoo, for $4.8b?

> Google does not want to get into VZ's business because it is a capital intensive business

As is cloud computing, but Google is forging ahead with GCP. This also doesn't square with your previous point that the ISP business is seriously profitable - if it was, Google would be rolling fiber out nationwide, as it has the cash to spend on capital-intensive project if it sees a high NPV in doing so. But it doesn't, so it just rolls out fiber to support select Google endeavors and keep the major carriers somewhat in check.


I'm pretty sure that their data rate is less than $10/GB now.


yet publishers overall struggle because it is hard to predict what content will work tomorrow and get perfect loyalty always.

Man, that era wheen there was just 4 tv networks was something in comparison when thinking about this comment


Not to mention that existing companies get tons of "free money."

Every time the government talks about rolling out broadband to poorer neighborhoods they just shove more cash at AT&T/Verizon/CenturyLink/etc, who are then meant to run the wires and profit off of the new customers.

This is likely partly the result of strong lobbying at both state and national levels. But regardless of the reason, all this money could have been used for "dumb pipes" which are non-profit, or only profit enough to expand further.

That's what bugs me, not that the government uses money for broadband expansion, but that they just give it to for-profit companies to use as they please, and to make a profit.


What google is doing is reducing the cost of a complementary good (quality high speed internet access) to their products.

I'm lucky and have solid internet access even if it's not the fasted. It's very reliable and low latency. But I'd still love some google fiber.

However, I don't think it's fair to attribute altruism or happiness to be a dumb pipe to google.


Re: "reducing the cost of complementary good"

Ding ding ding!

Joel Spoksky wrote s great article on exactly this 14 years ago.

http://www.joelonsoftware.com/articles/StrategyLetterV.html


The two Big Telco (ATT, Verizon) companies are essentially the original ATT. The Telco companies are essentially monopolies and duopolies (Comcast, Time Warner, etc.). They have no incentive to compete. It doesn't make any economic sense to become dump pipes because they have no competition. 100 years from now which company is likely to be there Verizon, ATT, or Google? I would bet on ATT and Verizon since just building out a network going through all the legislation etc. would take 20-30 years to built out. Google doesn't have much competition right now, but with Tech incumbents get taken out pretty quickly.


I don't have a lot of time, but I'll say this.

The future of Telco is not in the ground, but through the air. This is the entire reason Google Fiber acquired WebPass.

It is relatively simple to transmit extremely high connection speeds through radio waves. I have a receiver on the top of my house that is a point to point signal, pumping 1 gig +, and soon to be much higher, speeds.

Google's strategy to expand GF will not longer include a massive ground infrastructure move, but use point to point to get to the neighborhoods. An entire zip code can be offered GF services at a fraction of the cost and a few months, as opposed to the old way...TOS of capital and years.

It will happen fast, and I imagine the giant Telcoms will have to follow suite to keep up.


The trees say no.

Folks have tried high-speed fixed wireless for almost 2 decades now, and the only places it has been a viable business are rural areas where hard lines are not an option. Once the housing density gets above a certain level, wires beat wireless for any fixed installation--higher speeds, better reliability.

At very high frequencies, basic physics is working against you. Nothing has changed that.

> I have a receiver on the top of my house that is a point to point signal, pumping 1 gig +, and soon to be much higher, speeds.

To get a point-to-point signal, I would need a ~20m mast on top of my house to clear neighborhood trees, and so would the central antenna, and so would all my neighbors.


Radio waves are shared with everyone. High frequency waves don't travel that far. That is physics. There is only so much bandwidth available in the Air. You can high frequency point to point communication, but you might have interference when some one blocks points. Fiber and copper are much better for signal transmission. They just transmit and receive much better than air.


60ghz, 80ghz, and higher frequencies (i.e. free space optics operating at or near the visible light spectrum) change the story considerably.

As frequency goes up and wavelengths get pencil thin, issues like "do I have clear line of sight" and "is there fog today" are more of a challenge than interference from others using the same frequencies/wavelengths.

There's plenty of bandwidth available in RF, but every option has it's tradeoffs. There's a limited amount of spectrum available at frequencies with convenient propagation properties for certain use cases.


Another option here is municipal fiber. The city or county installs the lines, then offers "dumb pipe" service or leases access to an ISP to offer consumer services. Roads, potable water, sewers, and electricity are offered to many communities through a managed monopoly structure, and are generally affordable. Why not bandwidth?

I have been worried about line-owning ISPs trying to become content providers, because it was obvious that they would try to find ways to privilege their content over non-wire companies like Netflix, Google, Apple, Hulu, Amazon, etc.

But with the net neutrality ruling, it might actually be a good thing. If Verizon doesn't want to be a dumb pipe, then the logical extension is: why own pipes at all?? I could see companies like Comcast or Verizon eventually leasing access on dumb cheap fiber like muni or Google, as a cost-saving measure vs. maintaining their own infrastructure. Comcast already outsources most of their installation and network maintenance to contractors.


Comcast and Verizon aren't into using other people's infrastructure. They want to own the customer by owning the infrastructure to the customer.

Comcast won't even take government subsidies to build out to unserved areas.


And they are spending big lobbying dollars on state legislatures to try to get them (sometimes successfully) to outlaw municipal broadban.


Not a telco company, but municipal Internet as is implemented in Chattanooga, TN [1] might be a model to consider.

[1] http://money.cnn.com/2014/05/20/technology/innovation/chatta...


In Europe, there is Tele2 doing exactly this. For instance, in The Netherlands, there was a Triopoly of Vodafone, KPN and T-Mobile. It started as a MVO (Mobile Virtual Operator) but later obtained a 4G license and is now building out it's national 4G network. Subscribers are now moved to 4G netowkr as much as possible.

Tele2 advertises to business users as a "flat data pipe". To consumers, it profiles itself as a cheap provider offering a lot more data in it's packages. It slowly looks like it started a data-war among the providers. The past year, there has been a lot of movement in the dat package offerings, while in the era of 2005-2015 about the only movement was "Unmetered access for €10" to data-packages.

I'm very curious to see Dutch subscriber numbers over the first half of 2016. I expect them to go up slowly but steadily.


While there is no such thing, what immediately comes to mind is Hurricane Electric (he.net).

They're a big, big network and getting bigger all the time and they run their business just like I like to run mine: provide simple, boring services that just work.[1]

They are the best dumb pipes around.

[1] rsync.net uses he.net in Fremont, Denver and Hong Kong and Oh By (0x.co) uses he.net in Fremont.


Off topic, but rsync.net won't let me scroll down without jumping me to the top of the page on iOS Safari


Has any entrepreneur or business ever been excited about becoming a commodity? It's a vicious market type with razor thin profit margins, high risk, and short lived success. See airlines and DRAM manufacturing.

As consumers we like it, but I don't think there's anything redeeming about it from the business's point of view. Heck, step #1 in the business playbook is "differentiate".


Market players in real commodity markets have a raft of financial instruments that squeeze out the risk. It's probably one of the least risky ways to make money there is.

The telcos already have the commodity aspect of their business handled. AT&T and Verizon aren't going anywhere. They just want to line their pockets. Demand is fixed in a commodity market. The world only needs so much wheat and there's not much you can do to make it need more. So you sell your wheat in a fancy new package. That's essentially what a cable network is. The label on your can of green beans.


> The world only needs so much wheat and there's not much you can do to make it need more.

People can eat wheat or meat. You can make meat from wheat. Lots of poor people are happy to eat more meat (or any meat at all), if the price comes down. Demand for wheat is elastic.


> Lots of poor people are happy to eat more meat (or any meat at all), if the price comes down.

Sure, but what makes the price come down? Industrial production is absolutely aimed at ensuring a solid, steady supply. Sharp fluctuations are rare, and are usually due to political upheaval. Prices might spike, but they rarely drop dramatically, because technological advances that lead to increased supply are usually already priced into the market.

It's like that with any commodity market. There are so many people's lives and pocketbooks relying on stability in production and pricing that checks are built right into the market at every level, from production to end-consumer purchasing.

Speculators lose their shirts in commodity markets because they aren't established players, they're gamblers. That gives the segment the illusion of being way more volatility than there really is. Everybody else is insulated very well from random shocks.


I was arguing against "The world only needs so much wheat and there's not much you can do to make it need more."

If there's more wheat (and the price drops), the economy will consume more---even if people won't eat more wheat directly.


Please stop the meme of airlines being unprofitable. Airlines are a shell game between companies, where the industry thrives but I individual companies buy and sell each other (notice none of these supposedly unprofitable airlines ever seem to fail, just get bought - odd, that). Also 2 of the fortune 100 are airlines. Airlines make everyone involved piles of cash. It just turns out they are able to screw over customers more and get more government cash of they complain relentlessly about their massive, global industry being just oh so hard to make any money in.


Of course, it is even worse if you can't, which is why for example I wonder what would have happened if Intel bought Compaq back in 1991.


Exxon's in a commodity business, and they're not in danger of going out of business for lack of investor interest.


Very much like what I was going to say.

Hey Verizon! Try being the bestest dumb pipe that anyone ever saw! Best value for the price. Best service. See what happens. It seems like a lot of successful business have been built that way instead of trying to be the most hated companies.


> That seems to be what Google Fiber is an attempt at creating but the capital required is so great that only a hundred year old company like Verizon or AT&T is really in a position to execute on that well.

If Google wanted to become AT&T or Verizon, nothing is stopping it. It has the capital, and even on the regulatory lobbying front--Google is winning. While Verizon is getting pilloried for not meeting buildout requirements in New York, Google won't even agree to buildout requirements in Fiber cities.

But Google doesn't want to build dumb pipes either: http://www.techpolicydaily.com/internet/whos-making-money-in....


I worked in mobile telecom in the 2000s when MVNOs (Mobile Virtual Network Operators - basically resellers) were the next big thing. Companies like Amp'd or Boost or Virgin Mobile would resell another carrier's network with their own branding and personality. One of the reasons there was a disappointing uptake in MVNOs were that the carriers were stubbornly refusing to become wholesale dumb pipes. The only one that seemed consistently cool with it (perhaps out of desperation) was Sprint, which is why most MVNOs that you've heard of use Sprint's network. So if any of the carriers took this route of differentiation, it seems like they would be the one.


Having worked closely with Sprint while building our MVNO at Charge (https://charge.co) I can tell you that there are enough systemic issues within their billing and activation systems that they won't be able to become a dumb pipe, even if they wanted to.

At this point I'd bet on a GSM carrier like T-Mobile to get there first.


I actually designed and built a decent chunk of Amp'd Mobile's backend integration with Verizon Wireless. I'd be pretty shocked if anyone were more difficult to integrate with.


what are said systemic issues? I'm actually curious


If you're in SF and buy me a beer I'll tell you all about it.


It need not be a major telco though. This awesome dumb pipe could and should come from municipal internet services. Chatanooga, TN was able to provide affordable gigabit internet to it citizens and make a small profit. In Los Angeles the Department of Water and Power has an extensive network - LADWP Fiber and L.A has floated the idea. The reason it doesn't succeed? Because AT&T and Verizon will sue and and get an injunction against it because they would be put at an unfair disadvantage they say. It's criminal but it's true:

http://arstechnica.com/tech-policy/2016/03/tennessee-kills-m...

https://www.fcc.gov/document/fcc-releases-order-preempting-t...

Those duopolies business models are contingent upon have access to public right-aways. The resources are owned by the general public/tax payers in the municipalities the operate in. There is technical reason we can't have near universal and affordable dumb pipes, just political.

I personally see this as going to be a success for either Verizon or its share holders, quite the opposite. It will be paid for by end users in the form of increased fees.


Chatanooga makes a small operating profit, but not enough to pay the interest on the bonds used to build the network: http://www.nyls.edu/advanced-communications-law-and-policy-i.... The system is only possible because the EPB is using its electricity monopoly to subsidize internet.


"Notwithstanding questions about its accounting practices and the extent to which the utility might be leveraging its monopoly electric service to support its telecom division, EPB continues to report relatively strong financial health of its fiber system.

In 2014, the GON increased its revenues from $80.7 million to $99.9 million.53

Revenue from Internet access sales in particular saw a net increase of about $17 million,54 much of which was due to residential customer growth.55 Overall, residential services accounted for two-thirds of EPB Fiber’s revenues in 2014.56 Expenses and transfers to the city of Chattanooga totaled $84.7 million.57"

This sounds OK to me, what am I missing?

Why is it important that their electricity monopoly subsidized anything? How is that any different than any other new enterprise that has gotten funding from a VC? You don't hear anybody criticize that some star up is only possible because they got money from an investor. How is the source of funding relevant?


It's not sustainable. They're making less than 4% return on a network they issued 4.5% bonds to build. Ratepayers who have no choice of electric company are subsidizing the internet service.


It is sustainable, they just need to boost their numbers and market penetration like every other venture that regularly gets discussed on HN whether it be a music streaming service or ride sharing app etc:

"Recent reports estimate that those numbers have risen to over 65,000 residential customers and about 5,500 commercial customers so far in 2015.48 This represents about a 45 percent share of the local residential market for broadband, video, and telephone service. 49 Despite being available to all potential customers, only about eight percent – or fewer than 5,500 – of residential customers that purchase Internet access subscribe to its signature gigabit service.5"

This venture is only 5 years old(2011) and the bond has a maturity length of 25 years! Lastly only 162 million out of the bond issue was used to build out the fiber network, the rest was used to build a smart grid.


Incorrect, EPB fiber is sustainable as they make a profit after debt service. There is no subsidy from the power side.


Why couldn't they raise prices by a bit?


No need. EPB fiber is already squarely in the black.


Presumably, they set prices to maximize revenue--raising prices would decrease revenue by losing subscribers.


Disregarding what amazon_not said about the facts on the ground, your objection is an interesting one in theory.

I think in such a situation I would perhaps try to play on people's pride and make an emotional appeal.

And/or sell equity to customers. Some are happy to hold part of an enterprise they believe in, and will accept submarket returns. Come to think of it, a cooperative wouldn't be too different.


Not necessarily. It's entirely plausble that they set the price lower in order to boost the number of subscribers and thus their political constituency.


You are not missing anything. EPB fiber made a profit after servicing it's debt. The electric monopoly is not subsidizing anything, they are receiving a subsidy from the fiber side!

The source of the funding is a bond, not a subsidy from the power company.


The above is incorrect.

EPB Fiber is profitable, is servicing it's debt in full and is not subsidized by electric ratepayers.

Not only are electric rate payers not subsidizing the fiber network, the fiber network is subsidizing the electric side!

The EPB fiber made $15M profit (FY14) is after debt service. EPB paid $19M in debt service (FY14).

Source: https://static.epb.com/annual-reports/2015/wp-content/upload...


Read page 14 of the article you linked in light of page 3 of the article I linked. The vast majority of the debt used to build the fiber system is ascribed to EBP, not the fiber division. So it doesn't appear in EBP fiber's profit calculation.

Your link shows less than $1 million of debt service on a network that cost $400m. Interest rates are low, but they're not that low!


> Your link shows less than $1 million of debt service on a network that cost $400m. Interest rates are low, but they're not that low!

I can't tell if you are joking or merely being frivolous, but of course municipal bond interest rates aren't that low. The base fallacy in your comment is that you are comparing the interest payment to the total network build cost and not the outstanding debt. These two are obviously not the same thing and only outstanding debt affects the size of the interest payment.

> Read page 14 of the article you linked in light of page 3 of the article I linked. The vast majority of the debt used to build the fiber system is ascribed to EBP, not the fiber division. So it doesn't appear in EBP fiber's profit calculation

You are correct in noting that the majority of the debt is ascribed to EBP and not directly to EBP fiber. This does not, however, mean that EPB fiber gets a free ride or receives a subsidy from the electric side. Quite the opposite in fact! As clearly noted also in the research paper you linked to, it is the electric side that receives a subsidy from the fiber side. So not only is the fiber side pulling its weight, it's also creating and sharing the wealth!

Normally how this is done in cases like these, is that the department that carries the debt gets an internal transfer from the department utilizing and profiting from the asset that was constructed with the debt financing. In other words, EPB fiber would pay EPB for the use of the fiber network and EPB would use the payment to service the debt.

Referring to the EPB financial report, EPB fiber certainly has the money to do so. In addition to their FY15 $17M profit, they have booked a $15M Provision of Depreciation. This $15M is a non-cash expense, so they are basically just sitting on $15M in cash on top of their profit. I'd expect this would be used for the internal transfer to EPB to service the debt.

Now for arguments sake, let's assume that EPB fiber was just sitting on that $15M in cash and not sharing with EPB, content in just collecting a mountain of cash. Even so, with EPB fiber making a profit of $17M FY15, that profit is more than enough to cover the debt service in full on EPB fiber's part of the debt (originally $162M). In fact that $17M is almost enough to cover the debt service in full for the whole of EPB, electric utility and all.

So, while you may reasonably and justifiably criticize Chattanooga's fiber project for a lot of things, being unprofitable and subsidized is not one of those things.


The source you linked doesn't show a transfer from EBP fiber to EBP. Moreover, it's not the debt outstanding that matters, but the original capital investment. A real company would be expected to generate a return on the original $390 million that exceeded the weighted average cost of capital. Having a big chunk of that money fronted internally without imputing an interest rate to it is a subsidy.

From the article:

> One unique and important advantage for EPB of such a close relationship between the electric division and its fiber-optic division is that investment in fiber by the utility for the ostensible purpose of bolstering its smart grid can be socialized amongst its captive electric ratepayers (i.e., every resident and business in its service territory). In practice, this means that at least some percentage of the GON is being subsidized by the parent utility.42 The benefits flow the other way as well. For example, EPB readily admits that “ “cover increases in operating costs.”44 Whether and how these increased rates might be used for the benefit of the utility’s broadband network remains to be seen. revenues from [its] Fiber Optics division have allowed the utility to defer rate increases that would have totaled 5 [percent] over the last four years.”43 Nevertheless, EPB recently raised its rates by 3.5 percent for customers to


> The source you linked doesn't show a transfer from EBP fiber to EBP.

You are correct that no such transfer is explicitly shown. I don't know if it's done or not behind the curtain, but you may recall that I explicitly accounted for this scenario in my fifth paragraph of my previous post.

So summarize, EPB fiber's profit in itself is enough to pay for debt service regardless of if an internal transfer is made or not. Furthermore the money doesn't simply disappear, just because it isn't transferred. The profit is still there, regardless of how it is accounted for and where it is kept.

EPB fiber is making money, EPG's debt is being paid off (in advance I might add), EPG fiber is not being subsidized (the power side is) and cash is being accumulated.

No matter how you look at it, EPB fiber is both profitable and sustainable.

> Moreover, it's not the debt outstanding that matters, but the original capital investment.

Oh, so we are moving the goal posts now, eh?

Not being able to claim that EPB fiber is unprofitable, you are now instead taking issue with it not being profitable enough.

But, to address your original point directly, no, the original capital investment does not matter. Only and only the debt outstanding matters if part of the original investment was funded by other means.

It's preposterous to claim that an expansion of a project would have to produce returns twice; once on the original project and again in full when the project is built upon via an expansion.

> A real company would be expected to generate a return on the original $390 million that exceeded the weighted average cost of capital.

This is provably false.

If a company built a national network to serve it's own internal communications needs, it would then not be expected to show (additional) returns on that national network, if it later decided to build out a local network in one of the markets in order to expand it's business.

The company would only be required to show returns on the additional investment it made in the local market. Doubly so, if the company received a federal grant to build out the original national network.

> Having a big chunk of that money fronted internally without imputing an interest rate to it is a subsidy.

No money was fronted internally without any interest. EPB made out a $50M loan to EPB fiber which EPB fiber later repaid in full with interest.

EPB did receive a $111M federal grant to build a smart grid, which it did. The grant was not used to build EPB fiber's network. That capital was raised separately through a bond.


EBP's profitability is only relevant to a discussion of fiber generally to the extent it is a concrete example of a municipality (or anyone) building fiber profitably. The question is--could Baltimore go out and do this? Or, what's stopping a private company from doing this in Baltimore? And what's relevant to that is the real capital expenditure to build the fiber network--not just extending a fiber network you had lying around.

I'm happy to concede that if you don't have to actually pay for much of your fiber network, you can indeed show a "profit."


> EBP's profitability is only relevant to a discussion of fiber generally to the extent it is a concrete example of a municipality (or anyone) building fiber profitably.

Very well then, but why did you start of this thread with provably false claims? EPB fiber is not subsidized by the electric side (refer to your own research paper if you don't believe me) and Chattanooga is most definitely servicing their debt in full (again check your paper).

> The question is--could Baltimore go out and do this?

Perhaps, I haven't looked into it, so I don't know. But, why Baltimore? Different state, different laws on municipal broadband, much larger metro area and a very different socioeconomic mix.

> Or, what's stopping a private company from doing this in Baltimore?

Nothing much if they have the money and inclination to do so, assuming they can get the appropriate permits and franchises. Apparently Verizon did consider doing it.

> And what's relevant to that is the real capital expenditure to build the fiber network--not just extending a fiber network you had lying around.

So if Verizon decides to build out FiOS in Baltimore, which part of their existing (national and local) fiber network should they according to you include in their network build budget and show an additional return on?

> I'm happy to concede that if you don't have to actually pay for much of your fiber network, you can indeed show a "profit."

Which parts of the EBP fiber network do you feel have not been paid for? And what do you mean by "profit"? Are you claiming that EPB is cooking the books and not really making a profit?


You keep insisting that no matter what evidence is presented, that the fiber infrastructure will not be able to pay for itself, even in other cities. I can't understand your resistance. Can you explain your position? Are you connected via lobbying, pr, or working for an organization that is opposed to municipal fiber?

Muni fiber could certainly be unprofitable or unworkable, there's no magic reason why it has to work in practice.


Google is doing the reverse. They want to create the best dumb pipe because they create the least dumb products, and are horrified by the way their customers experience them.

Outside of that, I think google cares less


Yeah, Zayo. Big dumb pipes ordered with a smart API. I worked for a company that was bought by them, not the type of work I am interested in, but they get the future. I suppose the electric companies were horrified by their future as a utility a hundred years ago, but I think it is just the ego of executives. There is no shame in being a utility, it is critical , albeit unexciting infrastructure.


I think the problem is that the return on investment isn't there: one ends up laying out a tremendous amount of capital, but not making much profit in return. That's not a fun game to be in. You gotta be subsidised by something else (ads in the case of Google, violence in the case of municipal broadband).


Leverage can boost returns, with current interest rates Broadband is risky but very profitable.


> Broadband is risky but very profitable.

All the reliable data I have seen shows the opposite.


The numbers I have seen look like this: Return on invested capital is ~7-12% across successful internet companies. Borrowing costs are in the range of 3.5-4%. That's an invitation to print money which some small company's are doing though masked by growth.

Note, returns very a lot by company the industry average is ~6%, but that includes a lot of poorly run lemons.

Also, there was a huge bubble that put in a lot of dark fiber, but that glut has passed.

PS: Yes, those returns look low compared to say MS. But, software company's have larger issues borrowing money at very low rates.


The top number is more like 6-7%: http://www.techpolicydaily.com/internet/whos-making-money-in.... That's including wireless. Weighted average cost of capital for VZN is about 5%; for companies like Frontier is about 6%.

The Chattanooga network is illustrative: http://www.nyls.edu/advanced-communications-law-and-policy-i....

Revenues are about $100 million, with operating expenses being $85 million. That's about $15 million profit, on about $400 million invested, or under 4% ROIC. The system was funded with bonds issued at 4.5%, meaning it would never break even without being subsidized by electric ratepayers.


13.1%, 8.4%, 7.8%, 7.2%, 3.4%, -7.4%. One of those numbers is really dragging your average down which is the thing. Telecom industry is filled with a lot of dead weight.

As to Chattanooga network, economy's of scale are huge in this business and those 4.5% bonds are well above the industry average right now. Still, a city breaking even is not bad if their debt is growing slower than inflation. It's a question of deprecation of assets not rate of loan repayment.

PS: They city may also not be trying to make much in the way of direct profit, it would be interesting to take a closer look at their books.


> Revenues are about $100 million, with operating expenses being $85 million. That's about $15 million profit, on about $400 million invested, or under 4% ROIC. The system was funded with bonds issued at 4.5%, meaning it would never break even without being subsidized by electric ratepayers.

Your is assertions are incorrect. EPB Fiber is profitable, is servicing it's debt in full, pays less than 4.5% in interest in their bonds, is not subsidized by electric ratepayers and would have broke even even without the grants it has received.

Not only are electric rate payers not subsidizing the fiber network, the fiber network is subsidizing the electric side!

Looking at the finances, about $400M was invested, but EPB fiber only has ~$260M in debt left due to a $111M grant for smart meters. Furthermore the $15M profit is after debt service. EPB paid $19M in debt service (FY14).

Source: https://static.epb.com/annual-reports/2015/wp-content/upload...


Maybe Google Fiber is attempting to be a dumb pipe in a tactical play, but their overall strategy trends in the opposite direction. For instance Google's Project Fi is anything but dumb when it comes to your mobile data, needing more access to your data than a normal phone setup.


Fiber will be a dumb pipe company until it serves Alphabet's interests that it not be. Right now market adoption and growth is more important than trying to capitalize on their users in creative ways. Look at Chrome for example, adoption was the name of the game for years and then suddenly your browser now has an, arguably opt-in, superpower where it can send analytics back itself on sites you visit. It's not crazy to think that could happen to fiber sometime down the line.

I feel the municipal internet infrastructure should be publicly owned, like streets, but service on those pipes is carried by competing companies. These turf wars are getting old.


It's already happened: look at Alphabet's LinkNYC fiber-to-wifi advertising-supported IoT kiosks in NYC, where terms of service permit analytics of data and pedestrian traffic.


You mean these kiosks?

10K Google Wi-Fi kiosks are collecting millions of faces and MAC addresses http://massprivatei.blogspot.com/2016/07/10k-google-wi-fi-ki...


I think that "dumb pipe" is the right answer, with regional monopolies for certain classes of service or public/private partnerships. We achieve a lot of advancement with the death of AT&T, but the modern regulatory regime allowed for the rebirth of something that looks a lot like the old AT&T.

The issue with this sort of infrastructure is that it is very capital intensive to build and maintain, and require that the companies invest in real estate rights (telephone poles, utility trenches) that are powerful bargaining chips.


> It would be great if there was a major telco that was excited about being dumb pipe and just crushing the others.

The return of Ma Bell?


Not really. Ma Bell used to own everything connected to the phone system, right down to the phone on your wall. They actually tried to keep early modems off their system, IIRC with some success.

The modern version of Ma Bell would be if Verizon owned or licensed every iPhone, computer, and server connected to their network.


I think you mean"The exact opposite of Ma Bell."


Its like companies using Windows or Andorid plus installing their own "added value" software, which usually does anything but add value.


Hope for mandatory and price controlled telco line sharing. I don't really see other way realistically achieving this.


Ting (a cellular MVNO) is doing that successfully (so far).

As a customer and an investor, I'm a fan.


I subscribe to Ting and I'm happy with it. But, while very good, it's far from unique. I came in from another Sprint MVNO that was very good but slipping in value proposition. An MVNO is almost by nature a precarious thing. Major telecom? It's a subsidiary of Tucows, which will to me be forever be linked to '90s shareware downloads, its listing is basically an accident of the dotcom bubble, and it has a market cap of < $300 million. I'm guessing their domain name line easily rivals Ting in value. Healthy in its niche, but no major force. By comparison, Frontier, a smaller RBOC, is worth $5.6B, frigging T-Mobile is worth $9.5B.


Sprint is losing $2 billion a year. No Sprint MVNO is sustainable.


T-mobile offers data-only plans starting at $20/month. I pay cash, and generally only make calls over Wi-fi. But it's nice to be able to receive text messages and access Google Maps etc while on the go.


Meh. Nevermind.


It takes 4-6 years to break even after what part of the investment? A USA size national network will take +20 years to implement - to say 95%, more like 30 years for 100% When does the money start rolling in (7 years for 50%, 10 years for 75%, 15 years for 90% - numbers just for fun, but you get my point).

All the sum's I've ever seen (or done) end with 20 year+ paybacks, followed by lots and lots of money.

This breeds real shareholder fear - everyone who ever built this kind of network (rail, phones...) was either the government or went bust and then watched someone else (banks) cash in on the distressed asset at 0 risk.

So - agree, the red tape is a big issue.

But while modern organisations and investment structures can do 50 years of work for you, the capital is an issue. It can, and will, be done, but it will be quite some doing.


ISPs have royally screwed over my company. When we moved into our office a few years ago the only option for Internet was a local phone company. They charged us $500 per month for 2mb/2mb, forced us into a two year contract, and of course bundled that service with the usual unreliability and crap customer support. I couldn't believe it.

Eventually after the contract expired and much searching and begging we had a glimmer of hope. TimeWarner offered to drop fiber to us for something like $300 a month, 100/100. Couple months later they bailed out. AT&T later stepped up and actually went through and dropped the fiber, still 100/100, but at $1500 per month.

So yup, we're paying almost a full-time, minimum wage employee's salary just for 100/100. I get 100/20 at home for $50. I cannot think of the words to express how I feel about this...


I check for my preferred ISP before I even consider moving to a new location - and that's for my personal residence. It blows my mind that anyone would install themselves in an office without first evaluating internet connectivity. Where in a first world urban environment does anyone, whether individual or business, only have access to 2 Mbps? That speed is absolutely unusable. I couldn't operate a two-employee company on that.

100 Mbps for $1500? You should be seeing gigabit fibre for that price!


Why would your company move to a new office without checking the available internet options first? This seems incredibly careless. Fast internet and limitless bandwidth isn't everywhere and that's not exactly a secret.


Because the Telco/Cableco lies to you.

If you move to a location that doesn't have service already the answer you receive from the provider is near useless. They will tell you they are able to service the location, doesn't matter if they can or not.


If you rely on the answer to that question you better make sure the provider can be held accountable to that. Particularly as a business you'd probably want that in writing instead of talking to a random customer support person.


"Business class" translates roughly to "fuck you money for shitty internet".


> We don’t need your Internet. There is no way we can make money on it. We don’t want to be just dumb pipes!

Is the whole argument (from the telecoms) here that they can't differentiate the service as dumb pipes? Like offering decent speeds (1 Gbps … please? Heck, even 100 Mbps for not an insane price), decent service (customer support that knows what "ping" or "latency" means? Not requiring weeks of back-and-forth with customer support to debug issues?), IPv6 support[1], a router that routes corner cases[2], optionally paying for a static IPv4 address[3], being able to reverse DNS my IP to a name of my choosing, no "no servers" BS in the agreement, not MitM'ing data[4], not selling my data[5]?

Some of this is perhaps them not being dumb pipes: I could purchase my own modem; the "no servers" and MitM'ing are directly not being a dumb pipe.

[1]: I finally have this as a Comcast customer. My parents (also Comcast) are still waiting.

[2]: My router fails at correctly routing packets bound for its public IP if they originate inside the private LAN and are bound for a destination under port forwarding. Comcast considers a router not exhibiting this bug a "feature" called "NAT loopback" … which they don't support.)

[3]: my understanding is that Comcast does not offer this to residential; they do to business class, but this hampers people like me that love experimenting, but aren't businesses.

[4]: Most ISPs intercept at least DNS queries and respond with forged results (to serve ads); this can cause software to fail with error codes different from the actual problem (because the ads mask the underlying issue).

[5]: http://www.huffingtonpost.com/2013/07/08/att-selling-data_n_...


Intercepting DNS queries would be news. Generally they just push their own DNS servers via DHCP, and it's up to you to override them with ones that don't serve as portals in place of NXDOMAIN.


Ah, okay; I suppose that's a fair characterization of it. (I do now override their DNS settings, and I don't think I've seen one since I've done so.)

I still find the ISP one questionable, though I suppose there is a difference between running your own (as the default that most people will not know how to opt out of) and outright intercepting.


> Carriers’ fear of commoditization is alive and bad; how else to explain Verizon’s necrophiliac acquisitions of AOL and now Yahoo?

Sentence of the week.


Tech trivia: This was written by the inimitable industry veteran Jean-Louis Gassée, former top exec at Apple, founder of BeOS, chairman of PalmSource.

Some of his attributed quotes are real gems: https://en.wikiquote.org/wiki/Jean-Louis_Gass%C3%A9e

I would love to have some wine with this guy and talk tech!


The future of Telco is not in the ground, but through the air. This is the entire reason Google Fiber acquired WebPass.

It is relatively simple to transmit extremely high connection speeds through radio waves. I have a receiver on the top of my house that is a point to point signal, pumping 1 gig +, and soon to be much higher, speeds.

Google's strategy to expand GF will not longer include a massive ground infrastructure move, but use point to point to get to the neighborhoods. An entire zip code can be offered GF services at a fraction of the cost and a few months of labor. Google, along with many other broadband startups will hit the big telco's very hard. I'm not even sure if they see it coming yet. I'd imagine they would, but after dealing with AT&T for the last two months on something, I'm not very confident in there being any single person in the entire organization who has a clue about what they are doing.


You aren't getting gigabit class service to "an entire zip code" using only wireless. There are hard physical limits to how radio waves propagate and how many bits you can squeeze into a given amount of spectrum [0]. Radio links can provide high bandwidth or long-distance and reasonable obstruction penetration but the former doesn't really come with the latter. Range and obstacle penetration come in the sub-GHz class radios, but there isn't much bandwidth available.

[0] https://en.wikipedia.org/wiki/Shannon%E2%80%93Hartley_theore...


I'll clarify, sorry. To provide 1 gig+ service to an entire zip code, it would be one transmitter and one receiver, point to point. The receiver would then have a distribution box and run cables and/or other smaller wireless to surrounding neighborhood's/houses. The cost of doing it this way is significantly less expensive and quicker to bring service to many more houses. This will be Google Fiber's model as they expand into many more cities. The entire reason they bought WebPass.


Microwave seems promising.


Microwave, as a radio term, isn't very useful. It covers 300 MHz to 30 GHz [0], which is nearly the entire usable radio spectrum. In industry terminology, microwave generally refers to >GHz radios, which have real problems in terms of obstacle penetration and range. In the >GHz range, you more or less require line of sight for transmissions over a kilometer or so, which often isnt practical. Free space path loss [1] is also an issue on long links, as signal loss is proportional to the square of frequency.

A good practical example is to compare 2.4GHz WiFi to 5GHz WiFi. At the same power level (both are restricted to 1W in the US for unlicensed operation), 2.4GHz will cover approximately four times the distance ~(5/2.4)^2. However, much more spectrum is available in the 5GHz range, and signals cant travel as far which leads to less interference given an equal number of transmitters. Those factors give higher throughput, but free space path loss constrains coverage on 5 vs 2.4 GHz WiFi.

Another example would be cellular: low frequency towers are used to expand coverage and improve building penetration, high density high frequency towers are used to improve speeds.

Feel free to email me at my profile address -- I work in the sub-GHz narrowband radio industry.

[0] https://en.wikipedia.org/wiki/Microwave [1] https://en.wikipedia.org/wiki/Free-space_path_loss


I'm talking about site to site.


We're using microwave-based internet in SJ, with Ridge Wireless. Our experience has been that speeds are slow and whenever a cloud passes between our transceiver and the remote transceiver, or if it's a rainy day, etc, speeds suffer really badly.

I don't know much about WebPass, but I'm not sure that the future is in the air. I'm not convinced that companies have yet built up the infrastructure to e.g. monitor customer link quality, and deal with issues like weather, antenna orientation, etc proactively. The beauty of a cable in the ground is that it pretty much stays the same over time, at least relative to antennas.

I would really love to hear more about how WebPass manages these things.


I'm a current WebPass subscriber and I'm dreading the move to another ISP when I change apartments. May I inquire what it takes to set up and maintain the transmitter?


I believe the transmitters are pretty expensive. In the $10,000 range, depending on the frequency and power required.

So there's cost if you want to own one. Plus you need to convince someone (Webpass I guess?) to point one of theirs at you to complete the link.

It's probably easiest to convince the owner of your new apartment to pay Webpass's setup fee, where they own the equipment and wire the building. Although having tried that a couple of times, it's a pain in the ass.

Perhaps because of this: https://backchannel.com/the-new-payola-deals-landlords-cut-w...


The receivers themselves for a consumer you can get for < ~$1,000 for one that will be able to handle a couple of hundred Mbps easy. Getting someone else to point directly at you would cost a lot. Or doing both ends yourself. The business model for ie. WebPass is not to point to every customer, but to point to one point in say a neighborhood and then run cables from that to every house in the neighborhood. Which is a fraction of the cost of running cables all over cities.

At Least, that will be the business model under Google Fiber.


The biggest requirement is to have line of sight to the headend or some other already connected building.


This is simply ignorant of physics.


Please explain?

I currently have this set up and operating. Infact, we have one transmitter transmitting to 3 separate, close proximity buildings. To call it ignorant when this is what we are already doing is odd.


Meanwhile in the poorest country of Europe I have 100/100 mbps speed for 8$, and not a much worse 4G connection with a 5 gb limit for anothef 8$. America...


Telecom companies should be regulated like electric and gas utilities


If we did that then we'd all still be stuck with DSL. Electric and gas utilities aren't expected to drastically improve performance year over year, but we want that from our telecom providers.


US broadband is a horrible. 50mb up down is DSL with today's tech. It's 5% the speed of what many company's roll out for ~60$ / month.

As to density arguments, you don't need to cover every square foot of the US with fiber only where people actually live. We build Roads to just about every house which cost 50+ times what broadband does. (2-3 million per mile in rural areas per mile vs ~50k per mile for fiber.)


>Electric and gas utilities aren't expected to drastically improve performance year over year

There's a reason for that. We have enough electricity to power our things. We have enough gas pressure to create a flame. Delivery, price, performance, etc are all pretty good. They're solved problems.

Not too long ago Edison was running filthy coal plants in downtown city centers and running thick-gauge DC wires to businesses. That's where we are today with the mish-mash of cable and copper for last-mile internet. Half-assed, but profitable, efforts by players incentivized by the wrong things.

The last mile problem is largely solved via municipal fiber. The real question is do we have the political will to socialize/monopolize these things like we did in the past. It seems that we don't. We have the innovations and we know how to fix this. Its getting there politically that is the problem.


How about municipal fiber runs? Stuff it into the ground, and then offer any service provider access.


Because city governments are really great at investing appropriately in infrastructure!

https://en.wikipedia.org/wiki/Flint_water_crisis


> Because city governments are really great at investing appropriately in infrastructure!

> https://en.wikipedia.org/wiki/Flint_water_crisis

This sketch of a sketch of an argument that you have laid out it a total non sequitur. It seems to me that you're pointing to the Flint water crisis as proof either that all municipal infrastructure efforts are disastrous, or that enough of them are that the public utility alternative is essentially dead. If that is the "argument," then the easiest way to defeat this is just to say, "Flint was news because it represented a rare and egregious failure."

That's it. That's all we need to say to rebut that in its entirety.

If we stop there, however, we miss the opportunity to point out the converse: It's not news when customers get gouged for sub-par service, because corrupt and monopolistic practices are rampant within capitalist institutions, especially around lock-in. Cable companies. Phone companies. Privatized utilities. Airlines after deregulation. Military suppliers. It's just not news.

We'd also miss the opportunity to point out that the tactic of pointing to one criminal failure of a civic organization as proof positive that private industry is universally better is a favorite tactic of a certain obnoxious kind of 20-something free-market fanboy set.

HN is better off when that set either stays home or ups its game.


Our public infrastructure spending is trillions of dollars behind: https://next.ft.com/content/6aa759f8-16c0-11e6-b197-a4af20d5....

Flint is an extreme example, but almost all municipal water systems are a disaster. In Atlanta, the sewer system dumps raw sewage in the Chattahoochee when it rains. In Chicago, old lead pipes are poisoning kids. It happens because rates are set by elected boards, not by markets, and because municipalities are not forced to bear the external costs of poor infrastructure.


Most large cities in the world use combined sewer systems, so that's definitely not a US infrastructure thing.

In Chicago, old lead pipes are actually becoming an issue due to the city replacing the pipes themselves. Can't win 'em all.


U.S. broadband speed and cost lag other industrialized nations too. The only general lesson here is that the U.S. is big and infrastructure is expensive.


Does speed lag? Akamai says otherwise.


Your comment made me go look it up. Q1 2016 Akamai report ranks the U.S. 16th for average download speed. ZDnet currently ranks the U.S. 41st for average speed on their broadband speed test though. Both are obviously non-random samples, but Akamai probably has a less skewed distribution.

I thought it was interesting that for the % of homes with at least 4mbps service, Akamai ranked the U.S. 44th globally at 88%. That's another way to look at infrastructure: how many folks have broadband at all?

Whether these numbers count as "lagging" is in the eye of the beholder, obviously. We're not top ten in any category.


See my post to the other reply. We're ahead of Canada, Australia, and the other big, economically diverse European countries. I don't think that counts as lagging.


Doesn't it? I thought it's common knowledge the US has the worst Internet infrastructure out of all first world countries. The prices I see mentioned here for residential connections seem to confirm that. It also seems that download caps for residential connections are a thing there, which is a practice I personally consider barbaric.


Akamai's State of the Internet always shows average connection speeds in the US being faster than the UK, France, Spain, and Germany. The dense northeastern states are as fast as the Netherlands, Switzerland, etc. 5 US states have more than half of connections above 15 Mbps, while only one European country does ( Norway ). It is more expensive, though.

DSL is still the primary broadband technology in the UK, Germany, France, and Spain, while cable is in the US: http://www.cnet.com/uk/news/fast-fiber-optic-broadband-sprea...


Flint is an extreme example, but underinvestment in infrastructure is not rare. It's endemic. Governments across the country are underinvesting in infrastructure at all levels. It's not just me who's saying this. It's been a major talking point of the democratic party for years.

And that's for infrastructure like roads and water delivery where technology is largely static. The problem would likely only be worse for more dynamic infrastructure like broadband.


In large part because the wealthy, and corporations, have entirely shirked their taxpaying obligations. That is: paying for the services which enabled them to become wealthy in the first place.


Where municipal fiber is available, it is better than the commercial alternatives.


It is for now; come back in 10 years and lets see. Keeping fibre in the ground working in the face of storms, other people digging it up and tech churn (ok, what is after 10Gbe ? How are you going to run that round the mainstreet?) isn't rocket science, but it is a technical maintenance task and new build infrastructures have a great upfront advantage. For a while.


Buried fiber works just fine regardless of storms. Aerial fiber is a different matter. Patching up fiber cables after a cut is no big deal. Tech churn, i.e. what active equipment to use, is just run of the mill stuff. You can upgrade the optics to 100G if you need it, but if you don't nobody is forcing you to move past 10G.

I've built and ran fiber networks for over 10 years and operations and maintenance is no big issue.


Super interesting: what fault rate (per 1000 per week) do you see and what kind of geography are you in (urban?)

On the past 10Gbe point : contention is the killer, there is a rise of "super users" for example video editors shipping to and from the cloud, which drives the need for > backhaul - are you not seeing that?

Also on the bigger points; small providers have to peer, like everyone, but do they get good deals? How about prices on kit? Strategic deals with Huweii / Cisco are hard enough for tier one, do you not think that you'll get squeezed ?


Buried fiber doesn't really develop faults once it's put in the ground and doesn't really require any maintenance either.

The deeper you put it the safer it is and when we put in fiber we put it in deep. The rate faults that occur are fiber cuts and these fiber cuts are usually the result of some contractor not using call before you dig or being sloppy about it.

Bandwidth usage is always growing, but then again the cost of IP transit is constantly going down too. Heavy users aren't really an issue and end user 10G connections are rather rare. Those that really need dedicated 10G connections buy leased lines or wavelengths and pay accordingly. More bandwidth usage isn't a problem, it's a good thing that drives more business.

Peering is easy and cheap to small and large providers alike. Transit is also so cheap that it often is cheaper to buy more IP transit than to build out more peering capacity.

Access to networking hardware is not a problem and there are products for every need and price point. The largest issues are access to capital, barriers to entry and competition.


If city governments are so incompetent, why are ISPs lobbying to prevent municipal networks?


Because the incompetence of municipal governments (in most of the US) is in overbuilding infrastructure to serve unproductive areas so that maintenance obligations come to consume ever larger portions of the budget unless they can achieve the Ponzi scheme of paying for it with the taxes from new growth. That would be terrifying to compete with.


There's no need for gas/electricity to drastically improve year over year. But when there is a need, as there is with electric cars, the government steps in and offers tax credits and covers the installation fees for things like home car chargers.


Well private monopolies aren't doing any better so I doubt the government could be worse.

The government should lay fiber just like they lay water pipes and pave roads. Anyone can connect on either end of the fiber, providing a nice competitive market for ISPs... just like the original days of dialup ISPs.


> Telecom companies should be regulated like electric and gas utilities

Well, played out to the full extent of electric and gas utilities, I doubt few of us actually want telecom to go the same way.

With the utility companies - you often get zero choice of which company services your home. Usually these are government sanctioned monopolies, without competition.

Yes, the government may set the maximum rates, but they can't force a utility company to actually be a "good" company. Customer service, willingness to problem solve, be flexible for customers, provide better service at the same price - let alone reduce rates, etc.

With a telco acting as a utility, over the long term, there's little incentive to provide better service... which essentially is the core issue of the Net Neutrality movement.

What we need instead, is to foster an environment in which every city has 5-6+ telco's capable of servicing every home. We need to get out of the 1-2 telco company system, and create a competitive environment in which consumers have massive choice.

The ability to leave a company and take your business elsewhere is what keeps companies performing and doing better by their customers. They offer cheaper rates, along with better service, etc.

We've seen this working to great effect in the wild. Every city Google Fiber has encroached on, suddenly saw the incumbent telco's massively upgrade service offerings at cheaper rates.

We need more competition - not government sanctioned monopolies.


What I'd like to see is the 'utility' part being a connection between my house and a POP/CO, specified as being capable of 1 or 10Gbps (symmetric). The municipality is responsible for ensuring this exists in the same way they do for hydro, water, sewer and gas.

I can then choose my actual provider who will hook up at the CO (either virtually or physically), and connect me to the internet (or their service) at whatever speed we agree on. The utility part is nothing more than a long cable between me and the provider.

The provider could give me nothing more than a public IP and route to the internet, or they could give something 'value-added' like an e-mail account and content filtering. It could even be a closed non-internet service like Facebook Free Basics[0] or maybe Verizon wants to dust off the old AOL service. The thing is, as a consumer I get the choice.

[0] https://en.wikipedia.org/wiki/Internet.org


Well right now we get the bad parts of a regulated utility company (zero choice about what company services your home) without the good parts (regulation on price and service).


That's a great point - and really does describe the situation for many of us. However, that doesn't imply we should head down the regulatory path - because once we do, we can't come back (at least history indicates this).


Are you familiar with the many examples of the privatisation of public utilities and deregulation?


Many a nations telco has been privatized. So there is always away back.


> The ability to leave a company and take your business elsewhere is what keeps companies performing and doing better by their customers. They offer cheaper rates, along with better service, etc.

That works well in theory; in practice, a lot of industries - telcom being a prime example - hacked their way around this. You can't "take your business elsewhere" when a private company owns the last-mile infrastructure your apartment is connected with. Or when your landlord decided to sign an exclusive agreement with one.

When I see residential electric/gas utilities, I see a service that pretty much always works as advertised. A service that does what it's supposed to and nothing more. No deep electromagnetic inspection to offer me "zero charge" electricity for my ACME appliances. No "smell packets" injected into the gas line the way ISP inject ads and bullshit into HTTP connections now. I don't even care much which company logo is present on my monthly bill; the total monthly savings I could make by switching providers are worth around two or three standard Starbucks lattes, at best.

The core issue is that Internet access should be a commodity. Telcos are doing everything in their power to avoid that. Like so many other companies, they forgot about the concept of "honest business", in which a customer pays them money in exchange for a valuable service, no bullshit attached.


My local electric, gas, and water company provide great service. Their stuff Just Works, it's cheap, and on the very rare occasions I have to interact with them, they handle it well. I'd have no qualms signing up for internet service from any of them, if somehow they offered it.

To be fair, Verizon is pretty good to me as well, but that's probably because I'm paying $$$ for a high-end business account.


"With a telco acting as a utility, over the long term, there's little incentive to provide better service."

With a telco acting as part of an entrenched duopoly there is also no incentive for the provide better service or better pricing either.


You can get better pricing if you research how their pricing games work and then fight to win them. My Verizon bill is a fourth of what it used to be on the triple play and about half what it was when I killed the triple play and went Internet only from using the trick of going to the cable company and then returning for prewired new customer pricing.

Getting it without many of the tricks advertising uses to extract more money out of customers than the advertised pricing is a struggle though.


Dear Verizon -

Yes, yes you can.

Love, The Internet

P.S. It would be cool if you stopped tracking us, while you're at it.


As someone who works for a company that is (partially) an ISP: we want nothing more than to be a dumb pipe. Traffic shaping and dynamic content acceleration are hard as hell, they barely work, and 90% of us engineers would rather not do them if we didn't have to. But the edict from on high says "optimize bandwidth for content!" and "Buzzword buzzword buzzword profits!" and the technical staff suffers.


...tell me more.


Truthfully there's not much more I can tell you without getting into proprietary infos, but here's what I can say: because of "value-added content delivery" or something, we have to work harder. And it's kind of a giant clusterfuck most of the time.


"Value-added", modifier noun, meaning "something utterly useless and often harmful to the customer that adds value for company by fucking said customer over".


I never hear anyone from the ISP side explain why being a "dumb pipe" would be such a bad thing, other than "they wouldn't be making enough money". For the outside it would seem that the ISP are wasting money coming in from the "pipe" business on the media side of things.

It seems like it would be a simpler business to be in, rather than trying to be a media company.


Probably it's because internet service is a commodity, and commodities tend to compete primarily on price. Also, consider the context: these are companies that are accustomed to not having a lot of direction competition.


commodities can be graded. See, for example, crude. Brent black sweet is considered the black gold standard, but you can get other kinds of crude, and you adjust from there


A classic from 1997: http://www.isen.com/stupid.html [original release May 1997, by David S. Isenberg of AT&T Labs Research that explains several dumb network concepts]


As my dad would always say: "Can't, or won't?"


This is more or less what the CEO of the mobile operator I was working for told me, circa 2002. Obviously they are almost only a dump pipe now because it's very difficult to compete alone against all the world of content providers.

By the way somebody made it, starting from the device and not from the network. Look at this:

> You, the entrepreneur, provide a Minitel service: e-commerce, banking, entertainment. The French phone monopoly does the billing and collecting for you by adding a few items to the end of François Dupont’s monthly phone bill. For this service, France Telecom takes a 25% vig.

s/Minitel service/app/

s/French phone monopoly/Apple and others/

s/25%/30%/

Best bets about who's going to snatch those money from them in the same way they eventually snatched them from France Telecom?


"...The Minitel business model was a thing of beauty, a well-tended garden that didn’t admit outsiders. In this world, the Internet was the unwashed enemy... To paraphrase one of my past collaborators, the Minitel did less, but it cost more"

Replace Minitel with iPhone and call me in 10 years.


I don't think this is a fair comparison. From the perspective of most consumers, the iPhone does just as much as its competitors. (This is even true for me, an engineer: I neither need nor want my smartphone to be a generic computing device.)

The iPhone certainly costs more than its competitors (even, perhaps, its technically superior competitors), but it's a mistake to think that this cost isn't purchasing value. An iPhone customer is buying the ease of use and universal compatibility of the iPhone -- and I invite anyone who thinks that this is overvalued to contemplate the phrase "Linux on the desktop." (Thinking about Linux also highlights a basic principle of the technical market that techie types often miss: "power" tends to inversely correlate with ease of use, and the majority of people would much rather have their device work than have their device be receptive to hacking that they'll never even contemplate.)

The purchase of an iPhone is also a very explicit investment in social capital. Sneer all you want at status symbols -- they're an effective form of social currency, and dismissing them is highly irrational.


I think it is a fair comparison because that is the goal.

Apple wants to become AOL/minitel, just like everyone else (desperately) wants to become AOL/minitel. That's the goal - it's the end-game.

Provided nobody gets in their way, and they don't screw it up, that's what they will try to become.

It's all laid out very clearly with more than a century of research and backup data in the book _The Master Switch_ by Tim Wu.


Here we go again, claiming that the reason Linux is not on the consumer desktop is technical. Nope, it is squarely economical (and quite a bit political). when the OEM contract with Microsoft makes it expensive to do non-Windows PCs, the OEM opts not to.

Ever since KDE 2.x Linux has been just as good as Windows from a technical standpoint (and likely easier to fix once the inevitable error comes up, as there are few to none opaque binaries involved).

Ease of use is a smokescreen, as there is no "tabula rasa" users running around any longer.


I used Linux on the desktop for years. I ultimately switched to Macintosh because I was sick of battling my operating system to fulfill basic consumer needs. To be fair, this was five years ago, and I'm sure that Linux has made usability strides since then. But it's hard for me to believe that the ethos of Linux -- a platform by developers, for developers, that is additionally hindered by the FOSS orthodoxy of certain camps -- has been fundamentally altered in that time.


This - I loved it, but I couldn't afford the random time sinks doing things like making my notebook talk to a projector or give me a keyboard mapping that worked for every key.


Source code is just as opaque as a binary for the overwhelming majority of people. Actually, if you tell someone to consult the source code, they'll probably see it as far more opaque than a binary.


Are you saying Linux is the same as Windows? Can I play Overwatch on my Linux home desktop?


> it is squarely economical (and quite a bit political)


Minitel was a completely separate system. iPhones have a walled garden for apps, but they interoperate just fine with the rest of the world. My iPhone can call or text anybody with a phone number, and it browses the same web as everybody else.


You forgot imessage.... oh wait. Don't defend it, just accept it.


You might have had a point if SMS wasn't a first-class citizen on iOS and you can also easily use Hangouts, Facebook Messenger, WhatsApp, Signal, Telegram, LINE, WeChat, KakaoTalk and whatever else is out there


My whole point is that the existence of areas which don't interoperate doesn't harm the areas that do. iMessage is proprietary, but SMS isn't, and iPhones support both pretty seamlessly.


Remind me, does Bluetooth work with non-Apple devices again?


Of course. I regularly use it to play music in my car, for example.


Minitel, AOL, same diff?


I am on fiber, my ISP is actually the dumb pipe and they love being it. I chose them for this very reason - a business ISP turning B2C as soon as fiber got rolled out where I live. Unfiltered, unmetered symmetric 1 Gbps.

I need an ISP who does not touch the dumb pipe.


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