One reason we lack Internet competition: Starting an ISP is hard

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

by nols • 12 years ago

148 56 12 years ago

noname123• 12 years ago

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

JumpCrisscross• 12 years ago

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

icebraining2• 12 years ago

I've never seen email notifications, but they do have RSS, and there are some RSS-to-email services, like Blogtrottr and feedmyinbox.

thirdsun• 12 years ago

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

maxcan• 12 years ago

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

ceslami• 12 years ago

Is Webpass the SF ISP that is partnering with Artemis to deploy a test network of pCells. The idea of everyone who shares the connection clocking the speed of the undivided pipe sounds a lot like Artemis' technology.

djchen• 12 years ago

Sadly, fairly limited availability even in SF

rdl• 12 years ago

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

alxndr• 12 years ago

How about MonkeyBrains?

pseingatl• 12 years ago

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

toast0• 12 years ago

Is New York's Pipeline described here? http://en.wikipedia.org/wiki/The_Pipeline

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

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

greenyoda• 12 years ago

There were other small ISPs in NYC too. Panix.com started up in NYC in 1989 on a Mac running Unix (A/UX) with a handful of dialup modems, and grew quickly. They're still around today as an ISP (DSL/T1/T3) and hosting provider.

jlgaddis3• 12 years ago

Yes, when everyone already had phone lines in their homes and you could get any number of phone lines you wanted to any location you wanted to terminate the modem calls.

Nowadays you have to build out that "phone line" (a.k.a. "the last mile") to the customer which is sorta what this article talks about.

igl• 12 years ago

Its not tornados and overland lines?

command_line• 12 years ago

Relevant: The Cost to Connect - Internet Prices Around the World (http://valme.io/c/technology/vkqqs/the-cost-to-connect-inter...)

zxexz• 12 years ago

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

Taek• 12 years ago

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

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

Might this be a viable business strategy?

taterbase• 12 years ago

Checkout http://sudomesh.org and https://peoplesopen.net

gmazzotti• 12 years ago

Also https://fon.com

jlgaddis3• 12 years ago

One of the issues with that is you must have "the backbone" up and running before you can sign up any customers.

Many different projects have been centered around the idea of a "mesh" network and I don't know of any that have really been successful.

drdaeman• 12 years ago

Routers are pretty cheap, and nice routers can cover half of a city block.

Proper ones aren't really cheap. And to cover a reasonably large area with a big number of users (and I suspect everyone and their dog has some WiFi-capable device nowadays, even in poorer countries) one needs a reasonably large quantities of routers.

Oh, and if that was the idea, I would really warn against trying to provide public connectivity this with commodity out-of-shelf consumer-grade routers. Prototypes work, but it doesn't scale well. My company (a small ISP) had tried and I'd say, in my personal opinion, we mostly failed (i.e., I mean, commodity routers are not fit for such job), even though our setup was much simpler than mesh as we had every router connected to a backbone.

Short summary of issues others should be aware of, when dealing with consumer-grade devices:

- First of all, QoS is a must - and it's a bit tricky to implement. Without QoS just 3-5 torrenting users will completely take the AP down. Getting QoS to work (and perform well) on cheap routers is hard, especially considering it's mostly done in software and their CPUs are slow.

- Another problem is, routers seem practically limited in number of active peers they can handle, and putting too much of them too nearby had its own issues due to signal interference. Not that this is unavoidable, but it may add some headache.

- And another issue is hardware supply. Imagine you polish a firmware so it works acceptably fine and consumers are satisfied. Next year, those routers go out of stock and you can't really get them anymore - only newer revisions or even models are available. A hardware change even between same model revisions could be drastic, so the development struggle never ends.

jeza2• 12 years ago

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

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

another-one-off• 12 years ago

It is debatable whether the Australian government got that right.

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

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

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

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

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

hrrsn2• 12 years ago

We're following a similar setup here in New Zealand, except in lieu of NBN Co the government has outsourced network build and maintenance to different companies in different parts of the country. We've actually had FTTN to 80% of the population set up for about 5 years now (what the other alternative was in Australia) and as any geek will tell you, it's not sufficient. In addition, VDSL is now available nationwide if you're close enough to a cabinet which is a nice stopgap while FTTH is being built. All of this is ISP neutral, so a new comer offering DSL and fiber has significantly less required investment.

jeza2• 12 years ago

The 10-20 year monopoly idea would prove to be problematic if the cable provider is also your ISP. I can only imagine this leading to deterioration in quality of service and over pricing. Regulation might help to an extent. Having a large number of companies using a myriad of technologies could well negate market forces. Where as having a standardised set of technology nation wide could save a lot of money (think maintenance contractors who only have to learn a small set of technologies).

I don't see why a government authority can't coordinate an infrastructure rollout like fibre, provided they have the right expertise. They seem to manage the same task fine with roads, etc. That's not to say it's the only model that can work.

hartror• 12 years ago

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

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

paulnechifor• 12 years ago

It's only expensive if you have high standards. Romania (and much of Eastern Europe) has good connections because there is a demand for cheap and fast connections (due to piracy). This resulted in neighborhood networks of 100-1000 people or more. And the cities started looking like this:

http://media.hotnews.ro/media_server1/image-2012-09-14-13222... http://storage0.dms.mpinteractiv.ro/media/1/1/1686/6527161/1... http://www.b365.ro/media/image/201107/w620/Cabluri-NetCity.j... http://www.b365.ro/media/image/201302/w620/netcity_romania_i... (I was unable to find some of the best pictures.)

Eventually big ISPs started offering higher speed and unlimited traffic plans and the cables are still being buried.

antimagic• 12 years ago

No. Firstly, maintenance on those do-it-yourself solutions is high. This is one of the reasons those types of installations are generally speaking not done by telcos - they know that lifecycle costs are actually cheaper if you suck up the upfront cost of installing the cables properly, which actually reduces the price of the system.

Secondly, population density has a huge impact on the cost of installing fibre. As such, comparing Eastern Europe to Australia is just ridiculous. Even when you're in a city in Australia, the vast majority of the population live in detached houses on what are huge blocks by European standards. Those cable nests in your photos just wouldn't exist in Australia for the simple reason that you can't run a cable more than say 50m (any longer and you start to run into engineering challenges such as dealing with cables stretching in the heat, the weight becoming to much to be easily attachable etc) without putting up another pole, and for most Australians you would be lucky to have more than 4 houses within 50m of any given pole.

This is why cabling is a much more expensive proposition in Australia, standards or not. You would actually have to install enough poles, or bury the cables, neither of which is particularly scalable, and hence not particularly cheap. Much of the US has a similar problem, which is part of the reason that bandwidth costs so much in the US (there are other reasons, but this is certainly a factor).

Moru• 12 years ago

Reminds me of Stockhom 1890: http://commons.wikimedia.org/wiki/File:Telefontornet_1890.jp...

beingpractical• 12 years ago

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

fredgrott• 12 years ago

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

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

dba7dba• 12 years ago

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

roma1n• 12 years ago

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

p1mrx2• 12 years ago

ARIN hasn't reached zero yet: http://www.potaroo.net/tools/ipv4/

But if you're going to start an ISP, you'd best do it in the next few months. Europe and Asia are already screwed.

hrrsn2• 12 years ago

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

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

p1mrx2• 12 years ago

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

tn13• 12 years ago

Than you Captain.

sixQuarks• 12 years ago

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

timthorn• 12 years ago

Is there no local loop wholesale in the USA?

Gusfoo_2• 12 years ago

Is there no local loop wholesale in the USA?

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

rhino369• 12 years ago

There is but only for the telecom's telephone wire system, which allows DSL by local loop wholesale.

The cable companies don't have to share their network, and I don't think their network is structured in a way that would make local loop even possible. I don't believe they have a dedicated local loop per customer.

Fiber installations by the telecoms don't either because they are in a competitive market. Also, only Verizon has laid out FTTH.

bigbugbag• 12 years ago

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

jlgaddis3• 12 years ago

"... and they report that it's not that hard"

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

NB: It's harder than it sounds.

davidw• 12 years ago

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

http://en.wikipedia.org/wiki/Porter_five_forces_analysis

JunkDNA• 12 years ago

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

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

kansface• 12 years ago

I don't think any in depth analysis is really needed for the US. Lack of density is certainly a problem, but not the main one. In nearly every major market, broadband is dominated wholly by a single company through municipally granted monopolies. Cities do this because they get kickbacks from the ISPs and other concessions like internet for unprofitable (poor) neighborhoods. In our system, ISPs offer an palatable municipal tax (by any other name) whereby the ISP becomes the hated party. Fortunately for them, ISPs aren't elected.

If you want faster internet in the US, start with your local government.

anon42• 12 years ago

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

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

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

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

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

xur17• 12 years ago

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

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

protomyth• 12 years ago

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

codgercoder2• 12 years ago

http://www.he.net/?a=39098199433&n=g&pos=1t1&p=&t=&m=e&k=hur...

codgercoder2• 12 years ago

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

One reason we lack Internet competition: Starting an ISP is hard

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