UK Broadband Providers Show US What Real "Competition" Looks Like

Even our readers can’t agree on whether net neutrality is a good or a bad thing, so we thought we’d stoke the fire with a nice side-by-side comparison of sample broadband options for consumers in two “free markets,” the US and the UK. Art Brodsky of the Huffington Post (oops, we probably already lost half of you) writes that a British man he met while traveling showed him a spreadsheet he’d put together that compared 59 different broadband providers, so he’d know which one to do business with.

This fairytale-like story of consumer choice prompted Brodsky to look for comparison charts of services. What he found—a mag’s list of 25 common UK broadband companies versus what we presume to be his own local set of offerings—can’t be used for true side-by-side measurement, but it’s still a striking illustration of the stunted state of “innovation” and competition in the US market.

Click the links for more details on pricing and plan details, if you dare.

US Broadband Companies
(offerings available in Montgomery County, Maryland, from HuffingtonPost.com)

25 UK Broadband Companies
(most of which are available nationwide; from Which? magazine, August 2007)

Verizon
Comcast
AOL
Be
BT
Bulldog
Demon
Eclipse
Freedom2Surf
Global
Karoo Internet
Madasafish
MetroNet
Nildram
Orange (formerly Wanadoo)
Pipex
PlusNet
Sky
Supanet
TalkTalk
Tesco Telecoms
Tiscali
Toucan
UK Online
Utility Warehouse
Virgin Media (cable/DSL)
Waitrose
Zen Internet

“Our Internet Policy Is A Disgrace: Here’s The Proof” [HuffingtonPost via Yahoo! News]
(Photo: Getty)

Comments

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  1. ShadowFalls says:

    Well, for a comparison, dial-up is considered something to never consider. For this day and age, with so many websites using flash and pictures, dialup is unacceptable. Sure you can disable these, but that is just dull.

    I have between cable and dsl providers, 3 official choices, in one of the choices oddly enough I can choose 3 within those, so in total 5 ISP providers. Verizon and Knology are too slow, so is Earthlink, only choice left is Roadrunner. I’ve had good service for years, more especially so since Brighthouse took over from Time Warner.

    I don’t want the ISPs to go and make their own decision about whether to charge you for “special” things, or whether or not to cap the amount you transfer per month. What good are fast speeds if there is only so much I can send?

    I’d like to know that I will never need to worry about going over a certain amount a month or be charged, or pay an outrageous amount for unlimited. People pay enough as it is for sub-par services these days, now companies expect them to pay more for what they already get or more to do some small simple things.

    If you want to do something, do what Roadrunner has done. They have a Lite service, a Base service, then two bandwidth upgrades for additional cost. That way the ones who need it can get it, the ones who don’t, well don’t. There is no worry about using up a certain amount of GB a month, that is how I would like it to stay.

  2. EvilSquirrel says:

    I remember the trouble I had trying to get DSL through a company that used Covad as a CLEC. Before that I had DSL through a company that used Rhythms. The phone company at the time, Ameritech, said something like I was too far from the CO or some other BS. So I gave them a call and they then tried to sell me DSL through them. I never did get an explanation on why Covad couldn’t sell me DSL, but they could. At least I can say I have been happy with Bright House Cable ever since.

  3. darkclawsofchaos says:

    I got a choice of IO by Cablevision or FIOS by Verizon on Long Island. Decent, but FIOS is still new and not totally reliable yet, not to mention Verizon is one sneaky SOB

  4. Xkeeper says:

    You can usually tell a pattern for US services:

    One DSL (usually whoever put in the phone lines originally, years ago), one cable (same).

    No other ISPs can come about since you’d have to put more wiring to each house, so it’s a steep cost of entry.

    However, in other countres, the government usually owns the lines (or requires the owner of them to share with other companies), so other ISPs can flourish based simply on service level, price, etc, rather than ownership of a line.

    Keep in mind, I am not an economics expert, but thinking over it for the past hour, this seems to make a lot of sense. For example, here, we have only Cox (cable) and Sprint… er, Embarq (DSL/phone).

  5. hypnotik_jello says:

    That’s really inaccurate.

    Living near Montgomery County, I can tell you that there are more than 2 broadband providers:

    Comcast
    Verizon
    RCN
    Speakeasy
    Megapath
    Atlantech
    Earthlink

    there might be others…

  6. RandomITGuy says:

    Good luck running long-term file transfers on the majority of those “choices” – most “unlimited” traffic plans are kind of like the “lifetime” warranties you get on some electronics that are only for 2-3 years.

  7. stopNgoBeau says:

    Just remember folks, “Net Neutrality” isn’t neutral at all. Your off brand ISP would end up having to pay “tolls” to be able to use AT&T, SBC, COX, etc’s backbones to the internet.

  8. hoot550 says:

    @RandomITGuy:

    You’re just not up on this new corporate speak yet. I used to struggle with this myself from time to time.

    Unlimited plans are not limited until you reach the limit. Up to that possible point where limits would need to be imposed, there are no limits, hence the term “unlimited.”

    Just like lifetime warranties guarantee that a product will work until it breaks. Therefore, it is guaranteed for the “life” of the product.

    I hope that helps. ;-)

  9. 2Legit2Quit says:

    How about we compare size-wise the infrastructure necessary?

    UK (slightely small then Oregon) < US

    … it’s a little bit a stretch of land we need to cover

  10. hoo_foot says:

    Fallacious comparison, anyone? Comparing the broadband ISP options in one US *COUNTY* to the ISP options of the ENTIRE UK is ridiculous and unfair. The comparison would be just as lopsided if the options and service in Montogomery County, MD were compared to every broadband ISP in the entire US.

    What a terrible premise.

    P.S. My father lives in Montgomery County, MD and uses AOL broadband (I know, I know). Why was that not included on the list?

  11. PandemicSoul says:

    Yeah, I have to agree with both of the above: this post is bullshit.

    While I’m a huge proponent of net neutrality, and have no love for any service providers in the U.S., you’re comparing apples and oranges. As in:

    U.K.:
    - Area: 94,526 sq mi
    - Density: 637 /sq mi
    - Population: 60,776,238
    – Population in London: 7,512,400 (12.4%)

    U.S.:
    - Area: 3,718,695 sq mi
    - Density: 80 /sq mi
    - Population: 302,401,000
    – Population in NYC: 8,214,426 (.027%)

    The U.K. has 20% of the population of the United States, consolidated in an area .025% the size of the U.S.. Their population density is 8x higher than ours.

    Point being: any given internet company can lay down a network with a much smaller investment and have a much higher yield in a smaller amount of time.

    Yes, the U.S. needs much more competition. And the telcos and everyone else have screwed us up the poop-chute on the deal they made with the gov’t to get us real broadband by, like three years ago. But there’s no comparison to the U.K. — the situations are simply not the same.

  12. dbeahn says:

    So they have a short and WAY incomplete list of the options available in that one county, comparted to a list of “ALL” the providers in the UK. Yeah, that’s good journalism.

    @PandemicSoul: You’re right on the nose about apples and oranges.

  13. Trai_Dep says:

    It’s not apples and oranges. Reread the part where is says, most of which are available nationwide. That is, comparing apples to apples, the 30-odd broadband vendors would be available in every town, including the above example.

    If the US took away the monopoly power of the telecoms and the cable companies – forced them to be common carriers, as long distance works – we, and Montgomery, AL would have the same loooong list of broadband suppliers.

  14. hypnotik_jello says:

    @PandemicSoul: don’t you mean 2.7% vs. 0.027%?

  15. dbeahn says:

    @ShadowFalls: “If you want to do something, do what Roadrunner has done. They have a Lite service, a Base service, then two bandwidth upgrades for additional cost. That way the ones who need it can get it, the ones who don’t, well don’t. There is no worry about using up a certain amount of GB a month, that is how I would like it to stay.”

    No, no, no! The WHOLE IDEA of net neutrality is that EVERYONE gets the ONE service! No one can pay more to get more! Everyone gets the same and pays the same. Heck, they may even throw in that bandwidth limit – it wouldn’t be very neutral if YOU got to get 50gb a month but since my mom only surfs the internet for e-mail, she only uses 1gb a month. She pays the same as you, so why is it neutral that you use more?!?!?! 1gb for EVERYONE!

    I’m amazed that so many otherwise intelligent people WANT what amounts to net communism.

  16. Trai_Dep says:

    Tee hee. Kind of adorable how you guys are defending Comcast and other evil, monopolistic providers though. In a “beat me harder because you love me”, humorous fashion. If any of you ever face a long prison term, don’t forget to bring lots of chocolates and you’ll do fine. You’ll be very popular!

  17. dbeahn says:

    @trai_dep: “It’s not apples and oranges. Reread the part where is says, most of which are available nationwide. That is, comparing apples to apples, the 30-odd broadband vendors would be available in every town, including the above example.”

    Wow. You totally missed his point. Go back and look at the land area stats and population density stats he posted. It costs astronomically more to wire up per person in the United States because we have an average of 80 people per square mile, and they have an average of 637 people per square mile. They also have over 12% of their population concentrated in one major city.

  18. TechnoDestructo says:

    @PandemicSoul:

    Most of the US is far more sparsely inhabited than that. Most of the US MARKET is far more dense than that. The population density of Maryland is comparable to that of the UK.

  19. mikecolione says:

    The term “unlimited” when it comes to phone/cable/wireless actually means “unlimited access”, not “unlimited usage”.

    Found this out the hard way when a customer of mine used to much internet on his pc card with a major wireless carrier…

  20. vonskippy says:

    Wow, I wish I had 59 providers of 512K down and 256K up (check out the spreadsheet) to chose from – NOT.

    I’m all for a good government sanctioned monopoly bashing, but lets not promote quantity over quality.

  21. kenblakely says:

    I live in the UK right now – I’m writing this from my house in Dorset. The kicker in the UK is that DSL is considered ‘broadband’, and it’s usually capped at 128kb/s, ie, not a whole lot better than dial-up. Secondly, the broadband access rates (just like everything else in the UK) are outrageously expensive. So, if you’re anywhere outside of a major metropolitan area (London, Manchester, Liverpool, etc), you’re screwed for genuine high-speed access. I know it’s fashionable to think that anything in Europe must be cooler-better-cheaper-etc, but it’s not. The only upside is that the ISPs will fight for your business – offering discounts and incentives, especially at the end of your contract. It’s like the long-distance wars in the early 90′s in the US, and that *is* nice….

  22. djhomeless says:

    @vonskippy: What on earth are you talking about? All UK ADSL providers offer at least a base of 2MB down now. Only the ultra budget packages offer 512k anymore.

    The biggest advantage over here is that when they forced competition on BT (the UK equiv. of the old AT&T) they forced them to allow competition on their own network. So not only do we have a wealth of ISP options, but also phone options as well. Some piggyback on the BT network and exchanges, and some via Cable.

    Just as a FYI, most mainstream broadband providers offer 8mb as standard, and there are already ISP’s offering ADSL2 with speeds up to 24meg. ADSL2 will be the the new standard here in a year will full rollout by 2011 ([tinyurl.com])

    How does that compare in the US?

  23. cliffb says:

    I think the consumerist should issue a recall or a retraction on this post.. Or perhaps even just a clarification.

    Given that the UK list includes ISPs that fundamentally are the same as our CLEC driven ISPs in the US this is nowhere near an even fair comparison. You’re not comparing apples and oranges, you’re comparing apples and lava lamps! They’re not even in the same category.

    Given the comments by HYPNOTIK_JELLO and HOO_FOOT, the consumerist royally screwed up and should own up to it they ask other companies to do!

  24. jamar0303 says:

    @dbeahn: But American providers *don’t* wire every person in America. Certainly over half of the US (possible 3/4ths in fact) isn’t covered by DSL *or* cable.

  25. Xkeeper says:

    @PandemicSoul:

    Las Vegas;

    - City: 552,539

    - City Density: 4,154/sq mi (1,604/km²)

    - Metro population: 1,777,539

    Yet, somehow, we have two providers, Cox and Embarq.

    Even if you assume that the reason there are so few providers here is because of the “sheer size of the US”, in a city like this there is no excuse to have only two providers.

    There are many other isolated cases all over the US like this.

    Let me put it another way — your excuse is that, assuming a city of 1,000,000, if two people camped out way, way, way out of city bounds, in some deserted area, then those two people would be a perfectly valid excuse to not have more than one provider.

    Apply the appropriate scaling for cities and eventually the country and see where you get. UK is condensed into several small areas with a ton of people. The US is the same, just with more space between those super-condensed spots.

  26. Xkeeper says:

    As an addendum, there have, as far as I know, been no “small startups” here. Mostly because the entire city is already controlled by Cox.

    This city has a much higher density compared to the UK with a comparable population, so theoretically a good startup could make some good money. Care to explain the complete lack of them?

  27. mac-phisto says:

    i think some of us are assuming that the reason there is no competition relates to cost of implementation. that’s just not true in most cases. the franchise system that exists in most of the united states prevents open competition. that’s the whole problem. i have cablevision & i love it, but the only reason i have access to it is b/c of where i live. comcast, cox, twc – none of these providers have a right to sell their products to me under the laws as they are currently written.

    i said it before, i’ll say it again: cablevision: 15Mbps down, 5Mbps up for $50/month. 5 miles west is cox territory (charter): 3Mbps down, 256Kbps up for same price. “gold package” is 10Mbps down, (unknown-prob. 1.5Mbps) up for $80/month.

    how can we even have a discussion on whether it is ethical for a company to “tier” their services when service is arbitrarily decided by where you live?

    for the record, it seems fine to me that some companies tier bandwidth on price (except their prices are generally inflated by ~$30/month). i don’t think limiting usage is wise as most consumers don’t even know what bits or bytes are & i would absolutely abhor the restriction of certain bandwidth-intensive services (voip, streaming video, p2p sharing) by an isp. when an isp begins to manipulate available content is precisely when the hounds from hell should descend on their corporate headquarters & disembowel any executive that so much as received a memo on the topic.

  28. ShadowFalls says:

    @dbeahn:

    Did I say I was for or against one or the other? No I did not.

    What I am saying is that there should be an unlimited amount of data transfer. The only thing to pay extra for is how fast that data is being transferred.

    If someone doesn’t need all that speed, they can get the Lite version of service and save money, while a person who needs more than the base speed can pay a little extra for it. The logic of that is understandable.

    I am against any fees for certain data transfer types, or filtering them in any regard. “Net Neutrality” has its good and bad sides, the idea needs to be be adjusted till there are just good sides.

  29. Sockatume says:

    I should point out that many of those ISPs started out as simple BT ADSL resellers (BT owned the infrastructure until recently, so you can argue that it was all different brands of the same broadband). Now that LLU (the freedom for outside companies to install or buy infrastructure) has started, many of these old ADSL firms have begun to fold, although the better ones are flourishing – including BT’s own ISP.

    Outside of ADSL, there were only really two cable broadband companies until recently, and these have now been absorbed into the monolithic Virgin Media, a company with so much heft that even Sky is mildy concerned.

  30. lemur says:

    Those crying about the “sheer size of the US” probably ignore that Canada is much bigger than the US, has much lower population density and yet communication services there have a much better feature/price ratio than in the US.

    Anybody who thinks the state of communication services in the US is all fine and dandy is seriously deluded or seeking political office (or most likely both deluded and seeking office).

  31. calacak says:

    @dbeahn: “No, no, no! The WHOLE IDEA of net neutrality is that EVERYONE gets the ONE service!”

    No, no, no, NO! It’s that everyone gets the same service to whomever they are accessing. It has nothing to do with YOUR tiered service, it has to do with forcing someone else, who is not your customer, on a tiered plan.

    For example, if you paid for the 6GB plan with Time Warner and your mother has the 1GB plan with Comcast, your access too Google, Consumerist , etc is equal in regards to your capabilities. Time Warner shouldn’t slow down your access to Consumerist because Consumerist didn’t pay a fee to Time Warner so TW customers get faster connectivity to this site.

    Furthermore, net neutrality also has to do not limiting the applications that run over the network. It shouldn’t matter if it’s web surfing, email, VoIP or file sharing, they all get the same treatment. What Comcast is doing to Bitorrent seeds right now is an example of what net neutrality would prevent.

  32. 2Legit2Quit says:

    @Lemur,

    we’re not saying that our internet communication is fine and dandy. it’s not, it is clearly monopolistic. We know that. We’re just defending it against criticisms from a country we don’t regard as having superior communications.

    And btw, I have NEVER heard anything good about any Canadian broadband ISP. The comments range from ehh they’re expensive to aww man they’ve fucked me.

  33. Trai_Dep says:

    Since we’re focusing on the number of US customers that are in rural, out of reach places, I thought that I’d inject some facts into the discussion (there’s some slipperyness b/c different nations define “urban” differently, but its a decent benchmark (cite: [geography.about.com])

    Bottom line: 75% of the US population can easily be reached by the telecos. The other 25% the telecos agreed to reach, no gun to their heads, as part of the continued favoritism they get from the gov’t. They can’t really whine now that we suggest they live up to their word. Especially since they’ve had billions in profits these past years.

    Note that Australia, which has even worse costs to reach their rural, has their rural wired with voice and broadband. With no corporate whining. I guess their telecos are simply more butch than ours.

    Besides which, it’s all a smokescreen anyway. It’s a power grab – they want to sit on their throne, blithely picking winners (themselves and their strategic partners) and losers (Vonage, privacy, anyone criticizing politicians…)

    It IS about, do you want the next net technology to be strangled in its crib b/c it can’t give hundreds of millions to AT&T? The next Google? If so, why do you hate America so that you’d like these companies to rule the world from elsewhere?

    Country Urban Pop.

    Sweden 83%

    Denmark 85%

    South Africa 57%

    Australia 85%

    Canada 77%

    Israel 90%

    France 74%

    United States 75%

    Mexico 71%

    Belgium 97%

    Iran 58%

    Nigeria 16%

    Spain 64%

    Turkey 63%

    Japan 78%

  34. Trai_Dep says:

    Hey, any Canucks reading this? Someone just said your entire country relies on baling wire and tin cans (and pay $4,000/mo (Canadian dollars, sure, but STILL)) to get half of what we in the gods-blessed USofA get for a pittance. Because USA USA! USA!!!

    (gawds please someone lay some smack down)

  35. U2_Rocks says:

    @trai_dep:
    I live in canada and we’re roughly in the same boat. I live in a city of 80k ppl and have the choice between 1, count ‘em 1 broadband isp. A second national broadband company offeres voip in my area, but cannot offer internet(due to laws I’m sure). I ‘ve read we get slightly better speed on a national level, but prices seem about the same(I pay $50/mo for 10 mbps down/640 kbps up) but could get cheaper rates to combine w/ phone/cable. Anyone who lives outside a city usually cannot get broadband at all and are stuck w/ dial up or satellite.

  36. mac-phisto says:

    @trai_dep: The other 25% the telecos agreed to reach, no gun to their heads, as part of the continued favoritism they get from the gov’t. They can’t really whine now that we suggest they live up to their word.

    they better not whine…not only did they agree to reach it, it’s a cash cow for them. they get payouts from the USF (that ~$1.50 charge that appears on the bottom of your monthly bill) every time they expand infrastructure in rural areas.

  37. Onouris says:

    @dbeahn

    There might be next to no room between people in the UK but no-one gets “wired up” here. All providers use pre-existing cables – the same cables – the same telephone exchanges etc, because it’s illegal to monopolise them.

    The only company that put any new cables in is NTL – now Virgin – because they’re Cable.

  38. Sockatume says:

    Onouris: you’re behind the times. Local Loop Unbundling started last year. It’s only moving in small steps so far, but it’s given us ADSL2+ providers at least.

  39. Sockatume says:

    Also, to say that “All providers use pre-existing cables [...] because it’s illegal to monopolise them” is woefully inaccurate. The reason everyone used the same equipment until recently is because BT had a monopoly on telephone infrastructure. Other phone companies, broadband providers and whatnot had to lease BT’s gear, and could not install any of their own equiment in exchanges (therefore, no ADSL2+ until 2006).

  40. digitalgimpus says:

    P.S. My father lives in Montgomery County, MD and uses AOL broadband (I know, I know). Why was that not included on the list?

    That’s not an ISP (and I think you knew that). It’s merely a cobranded partnership with a few broadband providers. AOL dialup is an ISP.

    It’s like HP, Dell, etc. all make their own OS. It’s all Windows, they just put their logo in the “System Properties” window.


    Want to see real broadband, check out France. For a small fraction of what we pay, they get much more bandwidth (including upload). Sadly, thanks to the monopolies in the US, there’s no need to offer that type of speed. As a result, people think $50 for 8Mbps/1Mbps is a decent price. Take a look here for a 30 second summary of some of the offers. 15Mb/month for 29.99 euro. Including digital TV and VoIP. Just like Comcast right?

  41. SamtheGeek says:

    Montgomery County, MD is the richest county, in the richest state, with the highest percentage of lawmakers and regulators. If we only have 2 providers, then something is wrong. Verizon worked for 5 years to be able to lay fiber-optics to the door in montgomery county, and comcast opposed them. They then worked 3 more years to be able to break comcast’s cable monopoly, and comcast objected to competition. They then ran ads that claimed “cable supports competition”. For all intents and purposes, comcast are the bad guys here.

  42. jamar0303 says:

    @raccettura: Well, if you want to see *real* broadband, you should actually be looking at Japan. $50 gets you 100Mb both ways there (and an additional $20 gets you unlimited usage of a mobile network card that gets 100-200Kb). That’s real service.

  43. JustAGuy2 says:

    @raccettura:

    Except that everybody with any familiarity with the French market knows those prices are suicidal. Lots of providers are going to go bankrupt, and then prices will return to more sustainable levels. It’s a price war, because a few smaller providers with nothing to lose (they’re failing anyway) are making a last stab at it.

  44. synergy says:

    I just wanted to point out that saying a company services an area nationwide might mean different things depending on the country.

    Assuming that this list is for the UK (that is, just Great Britain and Northern Ireland), then that covers a land area approximately the same as that of the U.S. state of Michigan. (Actually Michigan is a little bit larger that the UK.)

  45. synergy says:

    @Xkeeper: But without connecting the population densities you might as well be on AOL. You need more than one node to make up the internet.

  46. andrewsmash says:

    For a country that constantly talks about the “free market” and “open capitalism”, why the hell do we award more monopoly contracts than so-called socialist nations? We abandoned corporate Darwinism long ago, and companies no longer want actual competition. Innovation is dead, and all we see in the end is the waste products of the scavengers. I blame the current situation on shareholder protectionism, with laws passed to protect the interest of corporate investors that have a negative effect on inter-company competition, leading to the current oligopolies we see today. If we want real choice as consumers, we need to award service contracts that are independent of infrastructure contracts. IE, if a city wants to improve its fiber optic connectivity, it needs to pay a company to build it up that has nothing to with the service providers.

  47. Xkeeper says:

    @synergy: Of course. But there are many, many more urban areas like Las Vegas in the US.

    Even then, just plug LV into the backbone. Viola, nodes.

  48. JustAGuy2 says:

    @andrewsmash:

    Absolutely, and each town is free to build a muni network – taxpayers don’t likely actually paying for it, though.

    Think of it this way – for a city the size of Chicago, building a municipal fiber network like Verizon’s FiOS would cost somewhere upwards of $1.5 billion, or about 27% of the city’s TOTAL SPENDING in a given year. Do you want to be the mayor who raises taxes 25% for a year to build out a network?

  49. digitalgimpus says:

    @JUSTAGUY2: they have been beating the US since the beginning of the decade. Yes a few are suicidal, but you don’t go in the red for most of a decade and still survive. US ISP’s make a killing because they offer several year old technology at inflated prices.

  50. Sudonum says:

    @andrewsmash: @JustAGuy2:
    Here in a small city (125,000) in south Louisiana that’s exactly what we are doing. Finally after 5 years of prolonged court battles between the city and Cox, Bell South, et al, they are finally issuing bonds to install city owned fiber optic to each and every house. This should get real interesting.

  51. Baltimore, Maryland. Baltimore County… Pikesville. Let me know when anything other than Comcast is available.

  52. dbeahn says:

    @mac-phisto: “i think some of us are assuming that the reason there is no competition relates to cost of implementation. that’s just not true in most cases. the franchise system that exists in most of the united states prevents open competition.”

    Apparently some of us are assuming that any franchise agreement gives an exclusive monopoly. Usually, that’s not the case. I’ve copied this from a different thread, because it was well written, it’s late, and I’m too lazy to type it all again:

    BY JUSTAGUY2 AT 09/08/07 03:49 PM
    “In the vast, vast majority of the US, if you want to start your own cable company, you certainly can. All you need to do is show the municipality that you have the financial backing required so that you don’t go broke halfway through your buildout, leaving torn-up streets in your wake, agree to pay the franchise fees (about 5% of revenue) agree to provide free service to schools and municipal buildings, and agree to provide some public access channels, and you’re all set. Problem is, the economics suck. RCN tried it, focusing on very high-income areas (the most attractive markets), and went bankrupt. Cable’s a great business if you can get 50% of the households in your footprint as customers. It’s a terrible business if you can only get 25%.

    Market forces keep alternative cable operators away, not cable monopolies.”

  53. dbeahn says:

    @calacak: “Furthermore, net neutrality also has to do not limiting the applications that run over the network. It shouldn’t matter if it’s web surfing, email, VoIP or file sharing, they all get the same treatment. What Comcast is doing to Bitorrent seeds right now is an example of what net neutrality would prevent.”

    Yeah, right. So you think the RIAA and MPAA lobbies aren’t powerful enough to get it written in that “suspected pirate activity may be blocked”? PUH-LEEEEEEZE.

    It’s a bad idea in the first place, but once the special interest groups are done with it it’s going to be a major shafting for consumers.

  54. aphexacid says:

    They have more options, yes. but it seems like a good number are not unlimited, and all the speeds suck. well, not out of this world anyway. i have at&t DSL at 6 Mbps down and 768 up, for $35 monthlym no contract. thats excellent if you ask me, just for the simple fact of not having to deal with the Devil which is Comcast.

    Verizon needs to step up their game and start bringing Fios to more parts of the country. im in chicago, and only a little sliver of us can get it.

  55. mac-phisto says:

    @dbeahn: but that’s a bullshit argument. the assumption that the franchised cable co. owns the lines is fallacious. they own the right to use & maintain the lines for the duration of the franchise agreement. should they fail to meet the terms of the contract, they will lose their franchise – & the lines. the lines are reverted to the franchising authority who then seeks a new company.

    you (& justaguy2) seem to think that it’s just as easy as laying new lines…uhh, no. here’s the fun part: you can have a franchise as soon as you connect every house in the franchise area with your lines – we’ve determined this already. sure, no problem. oh wait, there is a problem – you don’t have a right to lay the lines until the PUC authorizes you to do so. ok, how does that happen? easy – you just need to get a franchise. but i can’t have a franchise until i lay the lines! exactly. so how do i do that? easy, just get the PUC to award you a franchise. ok, can i have a franchise? no, you have to lay the lines first.

    comprende?

  56. dbeahn says:

    @mac-phisto: Wow, you really have no idea how any of this works. But I applaud your efforts to make it up as you go, ignoring facts that are inconvenient to your world view.

    What happens is that they issue a franchise agreement that specifies you will run X miles of line per year, and in specific areas. Then you go to work building your network. As an example,look at AT&T and the U-verse disaster. AT&T refused to sign franchise agreements locally, and municipalities had a huge issue with that (lost revenue). Yes, that’s right – even tho those cities HAD cable francise agreements already, they were expecting AT&T to sign one as well since AT&T was running coax for the “last mile”.

  57. acambras says:

    @Sudonum:
    I’m curious — what city is it? I lived in BR for many years, but I know BR and NO have a lot more than 125,000 people.

    In any case, that is very cool.

  58. mac-phisto says:

    @dbeahn: that’s very convenient how you dismiss someone’s argument without addressing the central point in it. the problem is your argument does not explain why virtually all of this country’s cable operators operate without any effective competition as defined by 47 U.S.C. § 543. there’s only two possible explanations: they don’t want to compete or they are not allowed to compete.

    there’s 24 franchises in connecticut & only 2 of them overlap (comcast/groton & thames valley communications in the groton, stonington, ledyard area). perhaps you can explain why a lack of competition exists better than i. it certainly is not b/c of cost. there are at least 6 highly profitable franchise districts where a new company could easily meet the 50% requirement laid forth by the telecom act (danbury/bethel/ridgefield being one such area – 93 sq. miles, 125,000 people, 44,000 households with median home price well above $400,000).

    yet no competition exists. hmm. tough nut to crack.

    u-verse is a horrible example of whatever you’re trying to portray & comically, does a pretty good job of backing up exactly what i said. at&t wasn’t sued by ct towns – it was sued by the state ag after the PUC refused to give them a cable operator license (stating that they didn’t need one). blumenthal sued & won & now the PUC refuses to give them a license (at least until the appeal goes thru…let’s see what their excuse is once the appeal denied). this has been going on for a year & something tells me the state regulators will do a pretty good job of stretching it out for a few more.

  59. mac-phisto says:

    @dbeahn: i see where i misspoke – connecting “every house”. the point wasn’t that a competing operator needs to hook everyone up (again). it was that the PUC upholds localized monopolies by refusing to grant franchises to new operators until they meet requirements that can only be met by a franchised operator.

  60. dbeahn says:

    @mac-phisto: That’s between you and your city council. If your councilmen and women think it’s OK to screw you like that, then I’d recommend electing new ones.

    Seriously, local governments are usually quite happy to sign new franchises, since it means money in their pockets without raising taxes. The franchise agreements aren’t some written in stone set of rules and laws – they’re negotiated in each area. If your city council (or county board or whoever handles it in your area) wants to set a 10 block build per year for a new operator, they can. If they REALLY want competition in badly (and there are likely financial incentives in place to keep competition out – again, if your city council is “on the take” and want the extra revenue from having a single operator, that’s a local problem) they’ll make the terms favorable.

    The problem is very simple – it’s EXPENSIVE to lay new cable, buy new equipment, hire people to run the place, etc etc etc. And when you’re talking about cable, you’re talking a LOT of money, and you aren’t going to even begin to see a return for a decade.

    Add to that the fact that you’ll have to cut prices to the bone to even have a chance to lure away your competitor’s customers (and your competitor has already paid off the debt from building their network, so they can cut their prices even lower than you can afford to).

    All of this adds up to 2 very simple words that have been said numerous times in the past in this and other threads: “Market Forces”.

    The problem isn’t that “they aren’t allowed”, the problem is “It just isn’t worth it”.

    Here’s a perfect example I’m aware of: Shrevesport, LA. – the franchise agreement there is expired. Anyone can come in and build a cable network anytime they want to. It’s been that way for years. No one does. Why? Market Forces.

    U-verse was sued because they stated they didn’t NEED a franchise. They went to local areas, said “We’ll agree to this and if you don’t like it, too damn bad.”. Then they went ahead and did it anyway, without the agreements. There may have been isolated areas that “refused”, but that’s 100% that local area’s right to refuse them. These are you local elected officials saying “no”. There was news story after news story of AT&T going to local governments, offering craptastic terms they KNEW would get turned down, and then building out anyway. Here’s an example: [www.multichannel.com]

    The most damning part?: “In December, city officials offered to negotiate for temporary authority for AT&T to operate in the community, where it will compete with Time Warner Cable. But AT&T stressed that it would not apply for a cable franchise unless a court ordered it to do so.”

    THEY DIDN’T EVEN TRY! They said “Uh, no. We don’t care what you think, unless there’s a court order, piss off.”.

    More examples of how AT&T never applied for a franchise agreement *anywhere* (because if they had, even once, they wouldn’t have been able to pretend in court that their service isn’t cable and isn’t subject to franchise agreements):

    [www.dslreports.com]

    [arstechnica.com]

    All of these articles say the same thing – AT&T didn’t want to do a LOT of the things almost all franchise agreements require: they wouldn’t notify the city of construction plans. They don’t want to build out the entire community, just the areas they can make the most money, they don’t want to get the impact studies done. Lots of things.

    If you can provide even ONE link to a news story saying that AT&T applied for and was denied a franchise agreement, I’d like to see it.

  61. JustAGuy2 says:

    @mac-phisto:

    The thing is, people have tried to launch competitive cable offerings – they went bankrupt. RCN is the best example – they deployed competitive networks in very attractive markets (rich East Coast suburbs), and crashed and burned. They’re back in business, having basically defaulted on all the debt they undertook to build out the networks.

    Cable deployment costs, ballpark, $1k for each home you pass, just for the network (no headend equipment, no set top boxes, just the physical outside plant), and that’ll last _about 10-12 years before it needs to be replaced. If you get 50% penetration (as the incumbents have), that’s $2k per customer in equipment costs. If you get 25% penetration or less (which is what a new entrant would be looking at, at best), it’s $4k/customer in network costs, plus, if they take all three services, about $800-1000 in equipment costs (set top boxes, voice switches, cable modems, etc). The average cable customer who takes all three services generates about $40-50 in cash flow per month (after paying the programmers, the staff, etc.), or $500-600/year. To get that $5k it’ll cost you per customer to start up, you’ll need to pay about $400-450/year in interest, leaving you with, at most, $200 in cash flow per year. Over 10 years, you pull in $2k. Then, you have to rebuild the network, only you’ve only gotten back about 40% ($2k out of $5k) of what you put into the network, so you’re $3k/subscriber in the hole.

    As I said, being a second cable operator in a given market is a lousy business, unless you go bankrupt and essentially get your equipment for free.

  62. Sudonum says:

    @acambras:
    Lafayette. [www.lus.org]

  63. mac-phisto says:

    @dbeahn: town selectmen & board of selectmen don’t negotiate cable contracts in connecticut. the department of public utility control is the franchising authority for the entire state. cable franchises span multiple towns. you can access franchise info here:
    [www.dpuc.state.ct.us]

    now, whether or not the dpuc is crooked…i think that goes w/o saying.

    i stand by my original argument that new cable operators are not allowed by nature of the law. at&t is taking advantage of their current status as the state’s primary telco to disseminate their technology, but a cable operator would not be granted the rights needed to build an infrastructure without a franchise & the dpuc would not grant those rights without proof that the required infrastructure exists.

    it is only b/c at&t is already regulated as a public utility that they have the ability to build infrastructure needed to comply with franchise requirements before obtaining the franchise.

    the “market force” causing this government-mandated localized monopoly.

  64. dbeahn says:

    @mac-phisto: “i stand by my original argument that new cable operators are not allowed by nature of the law.”

    Except that you’ve provided no evidence to support your argument. Quite the contrary, if you read some of the agreements listed on the link you sent, I bet none of them promise exclusivity. I checked 4 at random, including Comcast Norwich, and they don’t say anything about exclusivity.

    Since the link you provided proves you were 100% wrong about your first point (that AT&T applied for and was denied a franchise in CT.) and also directly contradicts your statement “new cable operators are not allowed by nature of the law.”, can you post a link to the section of law that says this? Either State of Federal would be fine.

    Or, you could just admit that you don’t know anything about any of this, and take this as a learning opportunity.

    “it is only b/c at&t is already regulated as a public utility that they have the ability to build infrastructure needed to comply with franchise requirements before obtaining the franchise.”

    Um, no. By law, they do NOT have the right to build a cable system just because they’re a telco company. No more than you’d allow a water company to suddenly start running electrical lines without permission. What AT&T did was (and is) illegal, and that fact is being time and again decided in courts across the country. I have the “ability” to shoot someone with a gun. That doesn’t mean if I do I won’t be arrested, charged, tried and likely convicted. Just because you have the “ability” doesn’t mean you can go do whatever it is. File this under “duh”.

    While we’re going over things you have made false statements about, intentionally or not, a random sampling (Cox Enfield, Comcast Norwich, and Cablevision of CT.) reveals there isn’t a “you have to have all houses hooked up before you have a franchise granted” clause. That’s just one more thing you made up because, I’m guessing here, if it DID work that way, your conspiracy theory might at least make SOME sense. All of those agreements have some clauses in common, but there are others that are unique to each one, which pretty much proves that the agreements are negotiated individually, and therefore there is no bar to a company applying to build a new system.

    As far as the corruption in the government of CT – that’s a problem that it is the responsibility of the voters in your State to fix. It is not, however, a reflection of the laws of your State.

  65. JustAGuy2 says:

    @mac-phisto:

    This is just wrong, I don’t know why this is hard.

    There’s no catch-22. To begin your buildout, you need a franchise. To get that franchise, you need to (a) make commitments as to speed of buildout, public access offerings, etc., and (b) show financial viability. Get those two, and you can get a franchise, and THEN start to build.

  66. mac-phisto says:

    @JustAGuy2: i’m not sure where your figures come from, but we’ll assume they’re pretty accurate. i could see where a startup might have trouble. but what about an existing operator in a border franchise? the ridgefield, danbury, bethel franchise i spoke of here is currently awarded to comcast & is bordered by cablevision to the south & charter (cox) to the north & east. either could easily meet the subscriber requirements for minimal deployment cost (both already have head-ends in place in connecticut). they are both large companies, so we can assume that they will be amortizing the capital development instead of taking loans out (which eliminates the interest cost). the entire deployment by comcast is 760 miles, 48000 households passed, 36000 subscribers (75% penetration). that works out to ~60 possible (~48 actual) customers/mile of cable run. conversely, charter (western) has 2700 miles, 90000 households & 70000 subscribers (78% penetration). their market has only ~34 possible (~25 actual) customers/mile of cable. by running the extra 760 miles, their # of potential customers/mile of cable rises to 40.

    by running lines to just the homes in the danbury & bethel part of the franchise area (which complies with the “effective competition” clause of the telecom act), the numbers are even higher. i can’t break them down b/c i don’t have access to exact data on cable miles/town, but i can tell you that danbury & bethel have a higher concentration of houses/sq mile (600 households/sq. mile vs. ~253/sq. mile of total land area). ridgefield comprises 37% of the total franchise area, so one could assume that by eliminating ridgefield, 80% of the households could be reached by running 20-30% less cable. 38000 households @ 1K = $38 million investment cost. 25% (9500 households) of that would generate $4.75-5.7 million/year = $47.5-57 million over 10 years for a net profit of $9.5-19 million (using your numbers).

    seems like a pretty good investment to me. so if it’s not a monopoly, what market force exactly would be causing charter not to invest in a border franchise? collusion?

  67. mac-phisto says:

    @dbeahn: i can’t find evidence that at&t applied for an application. but the dpuc originally determined that they didn’t need a franchise (05-06-12), so it stands to reason that they wouldn’t apply for one.

    at&t does have a right to lay “cable” (fiber optic) in connecticut, which is what they have been doing & they can continue to build as much as they want. u-verse travels over their existing dsl setup – it just requires a beef up to handle the greater throughput. they just can’t court subscribers until whether or not they need a franchise agreement is resolved. i don’t know what you shooting people has to do with the argument, but please don’t. that’s not an effective way to resolve anything.

    the law doesn’t inherently state that cable operators are granted a monopoly, but the renewal reviews repeatedly refer to the state granting a “near-monopoly”. obviously how near a cable franchise approaches the definition of monopoly is up for debate. the fact that competition does not exist in 22 of the 24 franchises in the state speaks for itself.

    furthermore, i cannot find a single application by a company that does not currently have a franchise (except the transfers caused by acquisitions). interesting. is the cable business really that unprofitable? if so, why are comcast, cablevision & cox so damned rich?

    As far as the corruption in the government of CT – that’s a problem that it is the responsibility of the voters in your State to fix. It is not, however, a reflection of the laws of your State.

    thanks for the chuckle.

  68. acambras says:

    @Sudonum:

    Cool — I always liked Lafayette. Great people, great music, great food. And they often did things before BR or NO got around to doing them (like curbside recycling, IIRC).

  69. dbeahn says:

    @mac-phisto: See [www.dpuc.state.ct.us]

    It was resolved. CT. isn’t one of the places AT&T proceeded without an agreement, but they also never applied for a franchise in CT. They proceeded based on the decision that came about as a result of Verison etc. In other places where it was determined they needed a franchise agreement, they proceeded anyway. The “shooting” comparison is an example of taking an argument based on logic to an extreme situation to see if it still holds up. I don’t remember what the principal is called, but it’s an old one. So I took the statement you made about “Because AT&T has the ability to do it, they can ignore the law” to the extreme, and even though your statement didn’t hold up as it was, I thought maybe you’d see the error if I brought it to the “shooting people” side of the street.

    “furthermore, i cannot find a single application by a company that does not currently have a franchise (except the transfers caused by acquisitions). interesting. is the cable business really that unprofitable? if so, why are comcast, cablevision & cox so damned rich?”

    This is the statement that makes me throw my hands up and decide you just can’t be taught anything. I have explained it a few times, and Justaguy2 has explained it at least twice. With actual estimated numbers. I’ll say it one last time:

    YES YES YES YES!!!!! Being a second company coming into an established market is NOT profitable. JustAGuy2 gave you the real example of RCN – trying to “break into” an established market drives companies into bankruptcy. Comcast, Cox et al are rich because they DON’T EVER GO INTO A MARKET AS A SECONDARY CABLE COMPANY – they know there isn’t any money in it.

    In other words, it ISN’T “interesting”, it’s OBVIOUS.

  70. JustAGuy2 says:

    @mac-phisto:

    Cable companies aren’t actually that damned rich. Their share returns are pretty uninspiring, actually.

    Also, you can’t just say “it eliminates the interest cost.” They still need to raise capital to do those buildouts – if they fund it from internal cash flow, that means that there’s debt they’re unable to pay down, so they’re effectively paying higher interest anyway.

    Even if your numbers are right, a $19MM profit over 10 years from a $38MM investment is a lousy business. Generally, a company’s cost of capital is in the range of 10%. For that cost of capital, the company would need to generate $3.8MM/year on that $38MM investment (or $38MM over 10 years) to make an investment vaguely worthwhile. A $19MM return over 10 years on a $38MM investment is value-destroying.

  71. mac-phisto says:

    @dbeahn: you’re right. i can’t be taught anything. despite your repeated attempts to beat the concept of market forces into my thick skull, i am still perplexed at the idea that a market anomaly (localized non-competitive cable franchising) can be “easily explained” by lack of interest. especially when real-world examples of cable competition exist. i’m just supposed to take the idea that cable cos. don’t want more customers at your word. the market for CATV exists. a demand for competition exists. market forces dictate that competition would exist. yet it doesn’t.

    @JustAGuy2: Cable companies aren’t actually that damned rich. Their share returns are pretty uninspiring, actually.

    share returns =/= corporate wealth. all 3 companies hold places on the fortune 500. that makes them pretty damned rich:
    84. comcast
    380. cablevision
    409. charter

    but i also assumed a stagnant 25% of available market share. the investment cost gives them growth opportunity to ~$200 million & increases their available households by 40%. personally, if i had a choice between comcast & charter, i’d choose a bullet, but comcast’s declining market share in the region* points to an opportunity for investment.

    *i noticed after i posted the hypo that the numbers i lifted were from a 2003 report of franchise companies. most of the numbers are close enough that the equation will be roughly the same. what was striking is that market penetration for comcast dropped to 69% in 4 years (2003-2007), a decline of 2000 households. that decline is most likely attributed to at&t’s bundled service (echostar, dsl & telephone), but charter can easily compete with this service at their current price point with short-term sign-on incentives.

  72. mac-phisto says:

    @dbeahn: you know, i’m wondering at what point i became the dumbass student being taught by the dumbass teacher. i read back thru the posts & i can’t find wherever it was that i stated that at&t applied for & was denied a franchise. i think i just stated that it was denied franchise rights (which is evident in 05-06-12 decision that we both referenced).

    i also don’t remember stating that “because at&t has the ability to do it, they can ignore the law”. i believe i stated that they used their existing license as a telco to run cable that they were legally allowed to run.

    finally, competition exists in some markets – primarily from cable overbuilders, which tells me that collusion exists in the marketplace. the fact that cable overbuilders haven’t reached connecticut – a wealthy, highly-populated state – tells me that regulatory authority perpetuates the status quo.

    you & justaguy2 use the example of RCN to prove that competition is not profitable. here’s a link to WOW! – the 12th largest cable provider in the country & a cable overbuilder. evidently, competition is profitable for them.

  73. dbeahn says:

    @mac-phisto: Dood, that “decision” you referenced wasn’t even a decision. It was a request to establish a new docket, and it had nothing to DO with AT&T. Zero, zilch nada.

    If you go read the decision (referenced in the docket request you mentioned) you’ll find that a decision was made that said IPTV didn’t require a franchise.

    NO WHERE does it ever say AT&T applied for a franchise, nor does it say AT&T was denied a franchise. You referenced that earlier in this thread, saying that AT&T had been denied a franchise because they didn’t need one.

    In answer to your first question, it seems you showed up here a dumbass, and despite 2 people trying to explain very, very basic economic theory to you, you remain a dumbass. If the cable industry was so profitable, we’d be seeing competition like in the wireless industry. We don’t. The capital investment up front is too high and the ROI too low.

    I’m not even sure what your point is with the WOW link. Are they in areas as a secondary cable provider? Because if they are, it certainly proves you’re wrong about “the law prohibiting”. Which does make you look like a dumbass, since this whole discussion started when you asserted that the law would keep WOW from doing what you’re now using them as an example of.

  74. mac-phisto says:

    @dbeahn: you aren’t very familiar with the regulatory process are you? docket #05-06-12 is entitled, “DPUC Investigation of the Terms and Conditions under Which Video Products May Be Offered by Connecticut’s Incumbent Local Exchange Companies”. here’s a key paragraph to understand what this is about:

    “The Department commenced this proceeding pursuant to Conn. Gen. Stat. §§ 4-176 and 16-11 to investigate the terms and conditions under which proposed video products may be offered by two incumbent local exchange companies (this means IPTV), namely SBC (now known as at&t…OMFG, it does have to do with at&t!) and Verizon. (this next part’s important so pay attention!) The declaratory ruling statute was invoked as a procedural matter normally used to determine issues of law as herein presented such as whether the rules and regulations related to the provision of CATV services are applicable to the Telco and Verizon offerings. It is a well-established rule of statutory construction that an agency must be given the opportunity to decide a question of its own jurisdiction, particularly where the issue of the agency’s authority or jurisdiction over a matter may be aided by its expertise and interpretation of its governing statutes.”

    here’s what i said: “PUC refused to give them a cable operator license (stating that they didn’t need one)”. now let’s go thru the painful process of connecting the dots: 05-06-12 was a statutory ruling by the dpuc that the video programming offered by at&t (f/k/a sbc) & verizon did not fall under the scope of the dpuc catv division. hence, they stated that at&t didn’t need a cable operator license to commence IPTV service.

    i’m sure i could have worded it better, i didn’t realize you…err…it was that obtuse.

    wow does not market in my area, but since you seem completely steadfast in the ridiculous idea that monopolies are naturally occurring economic forces, i felt the need to try a different method for persuasion. it is a cable overbuilder in the midwest, disproving the theory that competitive cable is not profitable. btw, in case it wasn’t crystal clear, an “overbuilder” builds over existing cable franchise areas. imagine that!

    basic economic theory doesn’t explain this. & even if it did, you certainly did a horrible job of explaining how that happens. justaguy2 has at least provided some figures & informational analysis. your argument is simply market forces, market forces, market forces, MARKET FORCES!!!!11! laced with insults. it’s really not an effective argument at all.

  75. JustAGuy2 says:

    @mac-phisto:

    Just an an FYI, WOW acquired the bulk of their assets from bankrupt providers, so again, they’re not bearing the full cost of buildout.

  76. TechnoDestructo says:

    @vonskippy:

    Look at the PDF.

  77. dbeahn says:

    @mac-phisto: You’re right. Your conspiracy theory, in spite of having zero facts, evidence or even sound reasoning to support it, is much more likely to be the REAL reason.