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Comment by evo_9 | Hacker News Reader

Given that reality one wonder why the incumbents don't raise all their speeds to dissuade google from entering there various markets. Perhaps the shear magnitude of their collective greed obscures their reasoning?

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Others have stated it well - and I understand the point you are making - but they are at the mercy of the market and their stock price... if they spend $10mm upgrading city infrastructure for an area they have a total monopoly in (that no one could leave them anyway) at a high level, that wouldn't be money "well spent"

-- as opposed to winning 1,000s of subscribers in a highly competitive city through marketing and new product/speed offerings.

I'm not TOTALLY discarding the 'all cable companies are evil' element here, just that if I was sitting at the head of that table and my stock price was all that mattered to my board and the exec team, I'd probably make very similar decisions to ignore monopolized markets unless I absolutely had to (i.e. bad publicity)

Because you're talking about a few cities affected, while the incumbents have a very large number of them in their markets. Waiting to get the names, and changing only those, allow them to keep milking cities where google fiber is not coming (which is most of their market).

Google doesn't need to add its service to every city. If you nail the top ~50 cities, then the rest must compete regardless. It adds massive pressure at a national level when you're talking about tens of millions of people having access to 1gbps, it becomes a cultural talking point, average people start applying pressure to politicians over it.

If you put a 1gbps service in Cincinnati, that forces Cleveland to have to compete with the economic gravity that generates. And they will either respond through attempting to build their own muni broadband or enticing eg Google fiber, or they will suffer and Cincinnati will draw people, capital and talent away from Cleveland.

There's no money in building "dumb pipes" to the internet. Verizon's wireline margin over the last couple of quarters has been under 5% (http://arstechnica.com/business/2015/01/verizon-nears-the-en...). Note Google has never revealed how much profit Fiber actually makes.

The existing networks are fast enough to service what makes the money: video services. The cable companies will only upgrade the pipes to the extent that it threatens usage of their video service.

Walmart has 3% net income margins; Costco has 2% net income margins; Target has 3% net income margins; BestBuy in its best days had 4% net income margins. By that premise, nobody should have ever built grocery stores or most retail outlets.

Retail is far less capital intensive. WalMart generates almost 6x the revenue per dollar of invested capital as Verizon.

"There's no money in building "dumb pipes" to the internet."

Not for Verizon, maybe -- but Google never struck me as a bunch of chumps or wild philanthropists. I'm betting they're getting more eyeballs in front of Adsense and YouTube ads...

Which is why I'm attracted to the idea of municipal systems or regulated monopolies.

There's no money in building dumb electric lines or dumb sewer lines or dumb phones lines either, so the solution there was to guarantee customers in return for regulating the service.

This would create a common platform upon which video service providers could compete equally. As it stands now, integrated companies like Comcast have no incentive to make sure Netflix, Hulu, HBO Go, Sling TV, etc. work well for their customers. Quite the opposite, actually.

And, for most purposes, modest (e.g. 25 Mbps) is all that most people have any need for. Admittedly, I don't have a house full of people using high bandwidth services, but my home 25 Mbps and my work connection are subjectively pretty much equivalent. Maybe if I'm loading big files from somewhere that isn't throttling me, but I'm certainly unconvinced I should pay Comcast more for something faster than my current connection (which I could if I wanted to).

In my building we have FiOS and Comcast. In Baltimore, Verizon doesn't have a video license, just internet. But it's 50/15 for $50/month, and I always get 50/20.

One day, the ONT on my floor went out and nobody noticed but me. Apparently, I was the only person on the floor (of dozens of apartments) to subscribe since the building was built 5 years ago. People on HN like to believe that what the market really wants is a fast dumb pipe for watching Netflix/Youtube, but it's a fantasy world.

The reality is that there's little money in the dumb pipes. The money is in content: in Comcast's case video content, and in Google's case, web apps and ads. Existing cable networks are plenty fast enough for video, so Comcast doesn't bother upgrading. They're not fast enough to enable the future Google envisions, where you store all your content "in the cloud" (and they datamine it to sell you ads), so they're building fiber. It's that easy to understand.

Fighting back isn't free. They have to upgrade infrastructure, and send out new modems. This means they are only going to fight if they have to.

And other than in a few neighborhoods, they don't have to.

10 minutes north of Durham, ya, I'm sure Time Warner will feel the need to 'fight' there, let alone all the neighborhoods in Durham that won't get Google Fiber.

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