I feel like this is a very important point that is getting lost.
Of course costs are going to be higher and profits lower (or even negative!) when you're laying lots of new fiber and deploying new equipment. Maintaining that equipment in subsequent years will cost much less and you'll make more money those years selling service on it. There's nothing inherently wrong here.
Yes, costs naturally will be lower after the initial large capital expenditure.
No, this so called modern cabling has not resulted in cheaper and faster access fees. Americans pay some of the highest fees for comparable speeds. 
Lastly, the flip side of the coin is that if the ISPs figure out they can still make $$$ from not having to invest in upgrading infrastructure, then there is very incentive to do so.
All the last mile ISPs were doing circa 2000 was hooking smarter silicon on their existing copper.
The first big last mile fiber builds started towards 2005 I think. (fios etc)
It would be interesting to have a line on that graph showing when ISP's weren't required to abide by FCC rules because they were not classified under title 2.
However, it's normal to spend a lot of money on CAPEX and make higher profits on the services after the financing for capital expenditures used to expand the services has paid off. The only people who might find this less than obvious are probably solely from the lean internet business space, and haven't had any real experience in manufacturing or other capital-heavy businesses.
In '95 in Chandler, AZ I went from a 56k to a broadband connection up to 6 Mbps broadband connection (with so few on the nodes then) in one day. It was amazing innovation and almost magical.
The sad part is that the same companies that brought that are the same companies keeping us from leaps like that now, no longer disrupting or innovating, bean counting instead while the US broadband and subsequent innovation possibilities / new markets burn.
The best way to make more money and be more liked as a company if you are in broadband is to jump up a level and put your competitors on their heels by giving more speed/bandwidth, but there are no competitors worthy yet to challenge and shake up internet connections like cable companies did back when phone companies were lethargic.
We need municipal fiber that gets leased to ISPs :/
It's the current battle down under right now.
We have 20 states here that passed laws banning the choice for cities, counties, etc.
And I'm not talking about National Broadband. I'm talking about city-level investment. I don't think we should have a whole Nationwide network built out. We already have that with plenty of competition. Its the FTTH that is the issue and that is something a city can do or ignore, at their option.
Consumers are getting screwed in both ends, regardless.
(I did not understand what were the two ends).
Who is changing the terms after the fact? The deal was that these networks would be built with private money and privately owned. There is very little public money in there, particularly in the cable network. Since deregulation in 1996 the cable companies have built massive fiber-coax networks mostly at their own expense. Its changing the terms to come in after the fact and try to treat it as public infrastructure.
We have rural coops delivering $70 gigabit service :/
As well, almost every successful muni fiber out there has been in an area with a muni electric provider, and little to no fiber providers outside of the muni, providing them an almost monopoly for commercial business. In major cities, commercial service is well served by multiple fiber providers, so the investment is mostly residential with no subsidizing by commercial. Many of these rural areas also have some of the cheapest electrical rates in the country as commercial user subsidize those.
Source: I grew up in Dalton GA that has muni fiber/elec 30 mins from Chattanooga who also has muni fiber/elec. I can't see this working in a major city like Atlanta.
Another big thing is that the interests of the business community and the residents are aligned in rural areas. There was no carrier hotel or POPs by any other providers in Dalton. Before muni fiber in both Dalton and Chattanooga if you wanted high speed internet you'd have to get a private loop backhaul all the way to Atlanta and then also pay for the internet access. No national or local providers had IP routers with gig-e or above ports locally that I'm aware of. Not like in Atlanta where you can get a local loop (from multiple national providers) to a carrier hotel and have your pick of 50+ IP transit providers.
Muni fiber was the only option for affordable internet access for both businesses and residents in these areas, and the utility was guaranteed an almost instant monopoly on high speed internet for business users. They electric cos also had all the rights of way and customer billing infrastructure, pre-built client base, and were running fiber anyway for their own use in managing the power network.
I think there's a reason why almost every successful muni fiber ISP is in a rural area with a muni electric company, and that's that local governments probably shouldn't be in the ISP game, but in some cases it's the only option by communities to obtain high speed internet, and in those cases necessity is the mother of invention.
In larger cities, I think the model would have to be different, and a muni fiber network would be a transport loop only service and you'd get to pick which ISP to connect to on the other end, like DSL in the CLEC days.
Then again if we go by the common usage, communism is an entirely useless word, as it has come to mean "whatever china is doing".
Another POV: https://news.ycombinator.com/item?id=8064947
from Chattanooga TN.
Been years now, no one's running a second set of lines, let alone third or fourth, even in the city core. It's capital intensive with a long time horizon to payoff.
People who keep blaming this on the government are fooling themselves.
They must be a major ISP?
Such coverage. Oh my.
At one time I had half a dozen ISPs at my door to choose from, from companies with 100 subscribers to corporations with half a million household customers. Thank you, Capitalism, for offering me a gigabit connection for $16.8 per month (btw, my ISP just reduced their price from $18 per month a couple of months ago).
Seriously, how the hell do some people think that local authorities imposing restrictions/roadblocks on building of new last-mile alternatives is "capitalism"?
The problem is lack of desire to invest because its expensive and incumbents exist.
http://fiber.usinternet.com/coverage-areas/ <- this company for instance
We need municipal public fiber that is leased to anyone who wants to operate an ISP.
I think bandwidth is becoming a necessity and local government can deliver it (for the record, I did not vote for Obama last time! ;-)
The way I envision it working is:
FTTH is the municipal and they hook it up to a single interchange. From there, someone has to pay for the routing to the rest of the internet, etc. Its the FTTH that is screwed up.
There's also enough money caught up in the retail ISP business that if the infrastructure maintainers failed to do their jobs, the retail ISPs could reasonably compete with them, at least in key markets. This, combined with a strong telecoms regulator pressuring them into developing and maintaining infrastructure, generally works out reasonably well; much of the country, including a lot of small towns, now have 50-70Mbps unlimited unshapedc FTTC for a reasonable price.
I don't think you can "tune the level" because the thing is not algorithmic. Every town / situation is unique. That's why every project is managed at the local and state levels, gets political, some interest group wants discounts, etc. In the meantime, all a company wants to do is to recoup its billions.
Maybe this is a problem where over time the government takes over and gives ok service for a while, then it sucks again (as many government initiatives do), then it gets privatized again, etc., all over a few decades (so irrelevant for today's consumers).
Though, I'll agree that software patents weren't what created the MS monopoly (though they are certainly using them now to try and hold on to their current market). There were many factors that led to MS's monopoly, some of which the government (and/or its negligence) was party to.
According to Ookla,
US: 25.9 Mbps
South Korea: 54 Mpbs
Netherlands 46.3 Mbps
Sweden: 46 Mbps
See also: http://www.wolframalpha.com/input/?i=internet+speeds+by+coun...
Think about the tremendous power unleashed when MP3 sharing, YouTube video, and Netflix streaming all became possible thanks to sufficient bandwidth. Now think about what would happen if we ramped up speeds instead of letting them trickle.
Then again, the town of Chattanooga TN may be on to something:
It's two different cultural perceptions that have a big outcome on how companies are managed.
I think it's OK for people to be PO'ed when companies are managed by the first mindset. Because healthy capitalism is as much about culture as it is the concrete laws and regulations. Unfortunately I think the US is struggling with a bad culture here, as evidenced by "corruption" being relabeled as "lobbying", which has become culturally accepted.