The article mentions that, "France has four major mobile and internet operators and nine low-cost offshoots. Britain has more than 50." I'd appreciate if somebody could explain something here because that doesn't seem to make any economic sense. Let's assume that France/Britain have absolutely rigid and perfectly enforced net neutrality. That means internet service providers can compete only on price/speed as everything else is supposed to be otherwise identical. 13 different companies, let alone 50? How? Users would simply pick the company with the lowest price for their desired speed. And the cheapest service is going to tend to be the largest due to economies of scale. The end result is a natural trend towards monopolization when companies are allowed to only compete on price/speed.
I mean you might decide to pass on a "low-cost" alternative in most industries as there is often an implied "low-quality" qualifier attached. But with strong net neutrality, this is not supposed to be the case. They state a speed, they state a price. Everything else is identical. So what gives? I find it disappointing that the NYT did not even bother to even consider this obvious question since it seems to cut to the core of this issue!
We don't have net neutrality, we have competition.
That is the key point, net nuetrality is a moot point because if an ISP were to do something like charge for iplayer (BBC catchup service) which was mooted a few years ago, they'd all move to a different ISP.
Because we have for the moment a roughly open market.
There are parts that are controlled by a monopoly, but thats the people who provide the last mile infrastructure. They have strict regulations saying that they must charge a fixed price for rental of the infrastructure with no obligations other than to pay for the last mile. (they can choose to be a pure virtual operator, just skinning the service, or almost entirely run its own infra, save the last bit of copper)
Also, the people that run the last mile monopoly are not the people providing backhaul. That is mostly an open market too. More open than the last mile copper at least. Linx/lonap are all coops, where you pay a membership fee, and the cost of powering your equipment, any interconnect arrangements are up to you and your peers.
In short, we have a much more open market, but with no net nuetrality.
what america needs is competition, and the seperation of last mile, ISPs and backhaul. None of which you are going to get in present times.
Excellent summary of the UK situation. It's worth noting that the reason we (arguably) don't need regulation in the form of net neutrality is because we have regulation in a form that promotes competition. So it's a question of where to regulate, not whether.
Some of Europe has tighter last mile regulation, but it’s not necessarily better. Take France, for example. France applies unbundling to copper telephone lines and fiber, but not cable. It subsidises fiber backhaul for DSL. Overall, it’s got similar fiber deployment to the US (about 10%) but overall much slower speeds (according to Akamai, 11 Mbps average in France versus 19 Mbps in the US). But there is lots of ISP competition in DSL, like there was in the US in the early 2000s. But most people don’t have access to faster cable alternatives, because subsidization of the DSL network killed competition.
> But most people don’t have access to faster cable alternatives, because subsidization of the DSL network killed competition.
> Is this better?
That's a red herring.
By your own admission this isn't caused by LLUB but by misguided subsidization. It's a deliberate choice of poor example in a pool of much better options.
It’s a direct byproduct of LLU. LLU eliminates market price signals over the most expensive part of the infrastructure.[1] That requires governments to exercise tremendous discipline in setting the wholesale price. It’s politically popular to set the price too low, but that kills investment. France tried to compensate for that through subsidies. But those, predictably, killed the unsubsidized competition.
[1] You obviously can’t let the monopoly that owns the loop freely set the wholesale price of the loop.
> Government rate setting is such a bad idea, that our oligopolies might be better. (The US has faster internet than all the big European countries: the UK, France, Germany, Spain, and Italy.)
And it's slower than Sweden, Norway, Finland, Denmark, and many others.
You can't blanket claim that LLU and rate setting is bad simply by ignoring examples where they work much better than the alternative.
Edit:
You might also want to include consumer prices with that comparison.
I installed fiber (from the street outside) in my house in Sweden and had a pick of 18 ISPs, of which I chose 100/100 Mbit/s for $38/month.
Here's Akamai's list of countries with the fastest broadband:
1 South Korea 28.6
2 Norway 23.5
3 Sweden 22.5
4 Hong Kong 21.9
5 Switzerland 21.7
6 Finland 20.5
7 Singapore 20.3
8 Japan 20.2
9 Denmark 20.1
10 United States 18.7
Our presence on this list is remarkable. If you were listing countries with the best of some other kind of infrastructure, say subways, we wouldn't even be sniffing the top 10. Nobody would look at the fact that Sweden or Denmark managed to have good subways and say "well, obviously we can do that too!" And we already know we would do a bad job implementing LLU: it was in the 1996 telecom act, and the FCC set rates too low and killed DSL in the process.
60% of Danish subscribers are with TDC, the privitized former incumbent. TDC must offer DSL access over LLU, but the two companies that do that are Telenor (the Norwegian incumbent) and Telia (the Swedish incumbent). Those three account for 80% of all subscribers. Is this better than our system?
> I installed fiber (from the street outside) in my house in Sweden and had a pick of 18 ISPs, of which I chose 100/100 Mbit/s for $38/month.
Where I live, I only have two choices for fiber, but 100/100 is $40/month, gigabit is $70-80, and two-gigabit is $150/month. Also: did you or a previous homeowner pay a one-time fee to build the fiber to your house? In the U.S., the ISP usually eats the up-front cost and recovers it in the monthly charge. Finally, U.S. prices include implicit cross subsidies (to build fiber or cable in poorer neighborhoods) that Swedish prices do not.
> Besides, Sweden, Norway, Finland, and Denmark either don't impose unbundling of cable/fiber, or set very high prices for wholesale access: http://www.oecd.org/sti/broadband/2-7.pdf.
I'll go with Sweden as it's the one I know closest. It doesn't... anymore, but it did for maybe 10 years from late 90s, and if Telia (the previously state owned and now privatized incumbent) which has a lot of the FTTH market would start being anti-competitive you can bet regulation will return.
> 60% of Danish subscribers are with TDC, the privitized former incumbent. TDC must offer DSL access over LLU, but the two companies that do that are Telenor (the Norwegian incumbent) and Telia (the Swedish incumbent). Those three account for 80% of all subscribers. Is this better than our system?
Yes? As long as all three has access to all customers (in the US the big ISPs have local monopolies so it's deceiving to look at them as many providers), there's at least some market forces available. But I also think DSL is kind of backwards to look at to begin with.
NN laws are barking up the wrong tree, because your ISPs control not only the last mile, planning, backhaul _and_ exchanges, they can easily demand things not possible in the UK.
Take the netflix outage in LA.
Comcast basically said, You're pushing too much stuff, pay up or we'll throttle you, and throttle they did.
Now, in a normal open market, other ISPs would step in and say "look at us, we don't throttle" and customers would switch over, making it financially impossible to throttle popular services. But you can't do that in the US as all but the most dense markets are a one ISP town.
In the UK that sort of action is suicide, the ISP would either arrange for more peering at LINX or LONAP, or better yet arrange some edge caching (open connect in netflix parlance) nearer the customers to cut down on bandwidth sloshing around the backbone (which is expensive)
We don't have NN laws in the UK, which means that mobile providers like 3 (three.co.uk) can say that watching netflix doesn't use your metered bandwidth.
so sctually what the US doesn't need is NN laws, it needs those ISP monopolies broken up and competition injected into the market.
The only realistic suggestion I have ever heard for how to break that monopoly is essentially an even more restrictive version of network neutrality: last mile providers are required to lease network capacity to anyone who wants it at reasonable and non-discriminatory rates.
How I dispise this meme. If you have real competition you don't need or want NN regulation. Monopolies are the problem and NN is a sub-optimal solution precisely because it's permanently one pen stroke away from being eradicated. If you switched the UK from a it's current competitive landscape to a monopolistic one you'd be getting greif from customers and all the businesses that would be shut out. In the US, you're only getting greif from customers and since they're not funding your next campaign you can just ignore them.
> precisely because it's permanently one pen stroke away from being eradicated
So NN is not a problem, just a temporary fix. And it doesn't limit competition (it costs nearly zero to comply). The problem are _other_ regulations. So why are some people so obsessed with removing NN?
I'm personally not obsessed with removing NN. I was just pointing out that you don't need to have it if you have proper competition. It's not the kind of thing that simply needs to be everywhere. If you already have it, fine.
I wouldn't mind a similar thing to MVNOs for mobile networks. There are a lot of attractive offerings that run on the big networks but have different plans.
Regarding France, you do end up with a ton of options. For instance, in Paris, you have multiple DSL providers, multiple fiber providers and typically one cable provider.
The French Government laid out ton of dark fiber in the past decades across the entire country and ISPs are using it (http://www.telcite.fr/?lang=en for instance).
For France, the four major operators compete primarily on antenna coverage for mobile, and for home internet they each provide different technologies, bundles of TV channels, telephone plans, and set-top boxes. They don't really compete on speed as nowadays almost every operator just provides the max that can be offered by the technology that connects the home.
The low-cost operators usually provide about the same thing as their parent major operator, but with very reduced support, no brick-and-mortar offices you can go to when you have a problem, and less bundled services.
Judging from the Wikipedia list of UK ISPs[1], providers use a variety of different technologies, have different coverage areas, lease lines to smaller ISPs, provide different bundles with other services that they provide, and so on. Maybe one service is known to optimize for throughput, while another offers slower speeds, but also lower latency for gaming, or something. There are a lot of services besides just the internet connection that ISPs could provide to their customers (or not provide, and market themselves as the more economical option).
All major ISPs in the UK are resellers of the same fibre infrastructure, run by OpenReach[0], a subsidiary of BT (formerly the national telco, now one of the larger ISPs).
OpenReach has to provide equal access to other ISPs by law, so the playing field between them is very even.
The only major outlier is Virgin Media, who own the cable (as in cable TV) network covering some built-up bits of the county; their fibre network is entirely separate.
Openreach sells products only to ISPs, it won't deal with consumers at all. The main products it sells to ISPs are:
* ADSL last mile to a customer (in most places ASDL2+ but in some places it's plain ADSL because they never upgraded) at the maximum speed the line will do
* VDSL capped at 40Mbps down / 10Mbps up over last mile to a customer [in most but not all places, unless line is too long]
* VDSL capped at 80Mbps down / 20Mbps up [ditto]
* FTTP at 330, 500 or 1000 Mbps to the customer's premises. [ Only if there is actually a fibre, most won't have one]
* Line rental to make a physical line work with any of the above.
* Backhaul from the customer's exchange to your preferred POP where you take over the Internet access
A small ISP buys the line rental, backhaul, and one of the actual last mile packages, bundles that up with maybe some webmail and telephone support, and sells that as an Internet service for a nice margin. They need a POP somewhere vaguely sensible, with enough bandwidth to service their customers, and that's them done.
Bigger ISPs might arrange to have their own fibre at some exchanges, they don't buy backhaul from those exchanges, they pick up customer traffic themselves, but they buy everything else.
One interesting thing that you can see as a result of Openreach was that the true "line rental" cost Openreach were charging to make the line work was falling slowly over the years. But the _advertised_ line rental price had been rising enormously, because ISPs hid it in their small print. They'd say "Superfast Broadband only £5" and then in tiny print "(plus £20 pcm line rental, offer expires after 12 months, normal price £28 per month)"
BT have just this week installed fibre to my house. While most of the last mile is copper it is wrong to say "Everything is copper" particularly when you consider in a vast majority of cases now the cable from exchange to the cabinet is fibre.
> Maybe one service is known to optimize for throughput, while another offers slower speeds, but also lower latency for gaming, or something.
This isn't just reserved to UK ISPs, afaik the situation in Germany is kinda similar. Fun tidbit about the monetization of features: When ADSL just became "a thing" it introduced higher latency compared to ISDN.
Quickly people figured out that certain ISPs could toggle something on called "fastpath", which would reduce the latency quite a bit if you called the support hotline and asked for it.
Took a couple of months until one of the major ISPs (Telekom) started charging 5€ monthly extra for it on the lower speed ADSL tariffs, luckily that stopped being a thing with VDSL.
- coverage, most important for mobile and in low density areas
- mobile data
- speed but not so much, ISPs often offer you the fastest speed available, even for low tiers
- service level
And because most landlines are triple-play, VoIP and TV service are also a deciding factor.
Some ISP also provide bundles with additional service, like subscriptions, subsidized phones and other stuff. It is fine with net neutrality as long as there is no preferential treatment when it comes to internet service, though there may be issues with product tying laws.
To counter monopolies, large ISPs are required to rent their infrastructure to other players at a reasonable price.
In the UK, there are only two or three providers actually providing last mile, and the majority of the 50 mentioned simply re-brand the BT/OpenReach product. All you need to become and ISP is a browser and some clients. Some of the larger ones have their own backbone, to an extent, but the majority simply re-brand
And it works, because OpenReach are heavily regulated by the government, in light of the fact that they have a monopoly when it comes to copper last mile infrastructure (ignoring KCOM for the sake of simplification, and they're only in Hull).
You do have LLU where internet companies put their own DSLAMs in an OpenReach exchange, once again, this is because of heavy regulation. That has become less common of late as more people move away from ADSL to VDSL, where once again OpenReach have a monopoly in the streetside DSLAMs.
The move to Fibre though is an interesting one, as we now have several options (Depending on where you live) such as GigaClear, Hyperoptic and some business only providers. There's also rural fibre in the case of B4RN and boutique wireless providers where OpenReach has failed to install a decent service.
There's also Virgin Media, who provide last mile triple play over cable, but they don't have 100% coverage.
Finally, the government has given out large block grants to local authorities to help pay for rollout of "Super" and "Ultra" fast broadband to places OpenReach initially deemed financially unviable.
The thing about competition, is it only works when any part of the equation that is a monopoly, or near monopoly, is regulated as a utility.
Nice comment, thanks. GigaClear etc are new to me. I left the UK 5 years ago, but was heavily involved in the telco business. Agree with your statement (and benefits) of heavily and fairly regulated monopolies.
>That means internet service providers can compete only on price/speed as everything else is supposed to be otherwise identical. 13 different companies, let alone 50? How? Users would simply pick the company with the lowest price for their desired speed. And the cheapest service is going to tend to be the largest due to economies of scale. The end result is a natural trend towards monopolization when companies are allowed to only compete on price/speed.
They won't be identical, because every ISP will have different peering and transit arrangements. And depending on those arrangements the access speeds for netflix/hulu/youtube will differ. Traffic that's internal to the ISP's network will always be the cheapest. Which is why an ISP can subsidize streaming services if they are hosted internally. I have had this debate with some NN supporters, and they do not seem to appreciate this basic commercial angle.
Economies of scale do not really happen for ISPs when there's strong regulation allowing for virtual operators. If you grow very large, you are expected to provide more user support, public relations, advertising, and other similar functions that just cost extra. Small virtual ISPs can operate close to the actual costs.
It's basically a two-tier market: a few expensive name brands, and lots of low-cost, low-support brands.
Back when DSL was regulated that way, it was pretty much the reverse; the big name brands wrode on being the obvious default choice with horrible user support, while the independent resellers often had stellar support (less slick advertising, but probably higher advertising cost per user, because of economies of scale.)
Well, "more user support" doesn't mean it's better, just that they need more of it. The big names have all the basic users who likely call much more even for basic things like Windows problems, while the small ones get to concentrate on relevant issues with more knowledgeable user base.
Well, here in spain the difference was that once the virtual providers came in, i could actually get technical support versus the big providers where it was next to impossible. The installation time also went from 90+ days to 5+ days, and the big providers had to improve as well.
I mean you might decide to pass on a "low-cost" alternative in most industries as there is often an implied "low-quality" qualifier attached. But with strong net neutrality, this is not supposed to be the case. They state a speed, they state a price. Everything else is identical. So what gives? I find it disappointing that the NYT did not even bother to even consider this obvious question since it seems to cut to the core of this issue!