Stuff like that is pretty interesting to me too. It's also a nice real-world description of why there is little to no competition in the market.
The only reason Google accomplished it is by throwing money at the problem and laying new infrastructure, bypassing the existing in most cases. The barrier to entry of a competitor is so high from the infra cost alone.
It's said a lot that infrastructure cost is the barrier to entry but I don't think that's true. Tacking cable to telephone poles is not terribly expensive. There's no good reason a great many households couldn't have two or three different cables running past their homes. As I understand it the issue is the local governments that issue permits for such things are bought off by the providers. It's a problem of corruption, not infrastructure cost.
There may be corruption involved, but the infrastructure costs are not imaginary.
Modern cable infrastructure is not a big coaxial cable strung along telephone poles. It's often buried fiber with media conversion for a local loop. Either way it costs money to roll out, and where poles are involved there are ongoing leasing fees for those.
This is only part of the infrastructure anyway. You've still got all the routing, switching, media conversion, etc. to make that cable do something useful.
How many times can the same dollar of infrastructure costs be used to justify maintaining a monopoly where service is bad and never gets upgraded?
It is in the company's interest to flog that dollar for all it is worth, forever, as a justification to never upgrade and maintain a monopoly so that nobody can force them to reinvest in infrastructure and they can just sit around in maintenance mode, collecting the checks with the minimum possible outlay.
If the government owned the infrastructure outright, we could at least have the discussion about why service is shit, but with this reasoning, "it was expensive to build these cables" permanently shuts down any ability to get upgrades or break local monopolies.
Yeah but the right to use land they are building on was a granted Monopoly by the local governments. If you buy all the land, install all the poles and run all the cable, sure you should be able to do whatever you want with what you build. However, their system is built on billions of dollars of public infrastructure granted to them as a monopoly "in most cases".
>> This is only part of the infrastructure anyway. You've still got all the routing, switching, media conversion, etc. to make that cable do something useful.
Media conversion? Like taking HD signals, converting them to "standard definition" and putting those on the line too? So you can then charge more for higher quality "HD" signals which are still transcoded to lower bitrates? Yeah, we can do without that stuff.
That isn't what "media conversion" means at all. It is the conversion from one medium to another: for example, from fiber optic (light) to coaxial (electric).
>Like taking HD signals, converting them to "standard definition" and putting those on the line too? So you can then charge more for higher quality "HD" signals which are still transcoded to lower bitrates? Yeah, we can do without that stuff.
The cable company in my town does this. Ostensibly it was to maintain compatibility with CRT/low def. televisions as a convenience to people with obsolete equipment but the scheme persists. It seems to now serve the purpose of allowing them to advertise low prices for this subpar service and then upsell customers to much higher price tiers. Sure, that's a legal tactic, but it probably wouldn't work in a competitive market.
OK, so I got it wrong. Still, the cable in my neighborhood was laid before I got there 12 years ago. My bill has gone from $50 to over $100 and nobody has done anything locally - no digging. Sure they bumped me from 150kbps to 2meg many years ago, and I'm sure that was upgraded equipment somewhere. But even with 3 cables running down my street (yeah rare, wow, yippie) we still have relatively low data rates and high prices.
In some areas, that might be the case. But then there is routing, provisioning equipment, people to handle customer support, modems themselves, etc.
Not to mention all the old wiring in everyone's house, especially in the city.
Oh and if for some reason you actually do decide to invest in infrastructure, you get to fight local, city, county, AND state government for permits, taxes, etc.
Sometimes government good, sometimes government bad. Haha.
The point here is internet infrastructure is in no way a natural monopoly like sewage or water. The margins are plenty high and there's no physical problem having two or three competing physical networks most places. The only reason we don't have competing local networks is artificial entry barriers.
The only reason Google accomplished it is by throwing money at the problem and laying new infrastructure, bypassing the existing in most cases. The barrier to entry of a competitor is so high from the infra cost alone.