Hacker News Reader

By that logic, wouldn't a large ISP want to maximize its profit by splitting itself into smaller regional divisions with smaller, less expensive networks?

I think what GP is also saying is the money maker divisions subsidize the 'loser' regional divisions. It would be interesting to see that data...

Absolutely. Modern ISPs are part of corporations which have other business interests that are very, very expensive. All corporations use all of their money-making ventures to help subsidize other parts of the business.

Just look at the old Bell system. They charged exorbitant rates for the long distance service and used this to subsidize local service. When Bell got broken up, local phone service got more expensive, but long distance got cheaper. Later on, a lot of the baby bells got absorbed by others because they were not efficient enough to generate profits as individual units without the "mothership" subsidizing them.

The way a giant corporate monolith works is completely different from a tiny local company.

Then they should kill the business units that are expensive to run, not jack up prices on the profitable services.

No, that would be a logistical nightmare, and the amount of waste and complexity added would just bog down the whole thing and profits would fall.

If you have 100 acres of land to farm, it does not get cheaper or easier to manage by buying 10 sets of tractors, 10 sets of farm hands, 10 grain silos, 10 of everything... you don't need all those things, and they all have implied costs which will all eat away at your profit by the time the grain gets to market.

Right, which is why I'm confused at the parent's claim that "Of course a tiny regional co-op ISP doesn't cost much. It's simpler!" They seem to be confusing absolute costs with the cost per customer, which is the number that's actually relevant for ISPs' users.

Since I wrote my comment, the above comment has been expanded and now seems to be arguing that the reason ISPs are so expensive is because they're paying costs associated with being a media conglomerate (which sounds plausible), and that this is somehow perfectly normal and consumers shouldn't be upset that the cost of their network access is higher (which makes no sense to me at all).

Sorry, I wrote both comments and expanded on them. It's multiple things. It's costs associated with other business interests, it's logistical and operational costs, it's a whole lot of things.

My main point is that it is naive to compare a tiny isp to a gigantic one, because the tiny one doesn't have remotely as many extra considerations or costs.

Of course consumers should be concerned about costs. I personally think they should lobby for municipal ISPs! But I'm also saying you can't say "oh my internet is too expensive compared to the tiny isp". Your internet is probably accurately priced considering who you're getting it from.

In other words: Everything is always accurately priced because there always is a reason for why the price is what it is. Not exactly a helpful way to think about things if you want to understand them, is it?

"The article states that net neutrality "prohibits [ISPs] from charging unjustified fees on Internet services". No, it doesn't. They can charge whatever they want for their services. They will increase the price of internet services whether or not net neutrality exists, because it is not getting any cheaper to run a giant ISP that is responsible to the shareholders of a media conglomerate."

Yes, it does. The 2015 rules prohibit an ISP from charging a site or service such as Airbnb to load for an ISPs' subscribers. This is a subset of the no blocking rule.

The 2015 rules don't regulate prices that ISPs charge their subscribers, though the FCC reserved the right to step in if an ISP's were egregious.

> Yes, it does. The 2015 rules prohibit…

…extortion, basically.

Well it's actually quite a bit cheaper to do data in volume, buying dark fiber or laying it your self will give a much better return if you can use it all.

Generally referred to as Economies of Scale. It goes for most businesses.

It's cheaper to do things in volume, but you still have to compare the scale. If the tiny ISP has 100 miles of fiber, they still look really good on a balance sheet because they haven't had to deal with infrastructure 1,450 times larger. Because it's a much smaller set of problems they can be much more efficient.

What are you on about? A single provider would have to pay literally 2x their current budget to increase their 100 mile capacity assuming it was a single link. A larger business can do that in stages by absorbing the risks.

Besides, internet isn't centralized, so you might as well manage each segment of the network as a sub-provider, only managing the financial risks at the higher level.

It makes it only easier.

I don't understand what the argument being made here is. They charge high fees because they can. They can because there's no competition to take customers from them. There's no competition because Large ISPs are greedy and lobby local/state/federal governing bodies to protect their interest to ensure they stay on top. They stay on top by not only lobbying but by merging and buying smaller regional companies and aggressively expanding their reach. They are greedy because, well any for-profit company is. That's why we have regulations to keep them in check.