Comment by supernova87a
3 years ago
I greatly respect the initiative and scrappy-ness of someone doing this. And the legacy providers are clearly sitting on their monopoly position in a way that makes their pathetic alternative so starkly unattractive.
But isn't it also true that once his network grows above a certain customer base (and gets into the maintenance phase), he will start to see all the effects that eat into being able to do this cheaply?
Namely:
-- customers who don't behave as well or kindly as before
-- customers who need 24 hour customer service
-- maintenance that can't be done himself, and he has to employ people
-- customers and vendors who sue you for breach of contract, or other simply nuisance lawsuits
-- upgrading the network to the next technology requirement, or when he's unable to get 2nd-hand parts so cheaply, etc.
-- or a natural disaster that unexpectedly forces replacement of (and charging for) equipment that wasn't anticipated in the original subscriber price
Maybe none of this rises to the level of making it fundamentally different or unsustainable? But it seems to me the honeymoon phase doesn't last long, and it's got to hit some unavoidable realities soon. At least, if you think you can replicate this, it requires finding people and neighbors who are willing to do actual work and investment/concern to make something like this possible, and not simply pay a vendor a premium to phone it in. It must be treated like a neighbor-to-neighbor community project, not a faceless commercial transaction with its attendant obligations.
I'm going to skate past the fact that difficult customers and maintenance aren't why monopolies are expensive, in fact they're the things that are most amenable to economies of scale, so bigger gets cheaper.
The real question is: why does he have to get larger than the 600 homes in his nearby rural area, ever? Why does his goal have to be to defeat and replace Comcast rather than to supply internet service to his neighbors?
He doesn’t of course. Local/muni/coop last mile is a well worn path. It’s your local volunteer fire department, but for internet, and local self reliance is not a bad thing. It doesn’t have to grow, it doesn’t have to constantly evolve, it just has to work and be reliable. That is what infrastructure does, and when it does so, it’s mostly invisible (and I argue, that is its most beautiful form).
https://ilsr.org/broadband-2/
https://muninetworks.org/
Displacing Comcast in any degree us a major service to the species.
Exactly. There are tons of smaller businesses not focused on infinitely growing that get by just fine. Especially in rural areas like these
for every small business that "gets by", there are 2 (probably more) that go out of business due to not having grown sufficiently by the time they face some competition.
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the same reason one would file for patents without any intent of enforcing them. For defense and security.
I would say that to attempt to have zero growth/shrinkage is difficult in business. The market is always changing, people's preferences change, etc. If you try to stagnate you will likely find yourself shrinking, either because demand changes, or there are mixups in supply (competitors).
If shrinking is the only non-goal, then growth is likely the only prevention since stagnation is hard to ensure.
The reason he exists is because the competition is bad. If the competition is good, he has no reason to exist. The goal is to supply 600 rural households with broadband at a reasonable price, not to own 600 households.
Since we are asking why questions. Why does everyone else have to support them with tax money when it costs 30k to run a wire to a house? If there is no prospect of scaling it further to boost local infrastructure, then they should be footing the bill themselves or use Starlink.
Because we as a society are better when everyone has access to the Internet. Just as we ran electricity and running water to neighborhoods that could never pay back the investment. Just like we build roads, bridges, and tunnels that probably never be afforded by the people they serve.
Maybe the person that lives in that house in the next generation is the next great scientist that discovers how fusion can work reliably for us. If that is the case, then it was worth 30k to link that house to the Internet.
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I'm not convinced this is the case. The big thing that makes telco's such profit making machines is that wires in the ground are generally a large capital expense that doesn't really provide a great marketplace for competition. But once you've got that infrastructure, it's hard to duplicate. The rest of the equipment and employees relatively aren't that expensive.
So the power is on the provider here, there isn't really another choice for customers if the article is to be believed, no matter how good or bad the company is. Sure there might be disputes with vendors, but that's just part of any business.
The biggest threat IMO is probably some sort of competition. Maybe a big telco decides to wire up the area, although then they would be the second player in the market trying to steal customers who may not be interested in switching. Or if this really is a rural area, things like wireless last mile (basically LTE), Starlink, OneWeb, etc may start to be more compelling options if they get the capacity, latency, and price point to the right spot to be competitive.
Telcos aren't really that great of profit making machines. It's a capital intensive business that requires a lot of scale before making money.
Look at what this guy is doing. Many millions to get 600 customers paying <$100 a month.
As the old adage goes...it takes money to make money.
A couple mill up front to get 500k+/yr means ROI of 5 years.
It's a sustainable model as long as you don't get greedy and I don't think this guys is doing this to be a 'gazillionare' :-)
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His millions were funded by the government.. and the legacy providers also could bid on the contracts. It’s not clear if he’s expected to pay off those funds or not (I assume not). As the saying goes, the best money is someone else’s.
It seems that the ISP motivation comes from lack of other options. Should a viable competitor emerge, that might be considered a "win" w.r.t rural customers having good broadband choices.
Not sure how Canada compares but these concerns haven't stopped the biggest telecoms in Canada from providing subpar service under very restrictive terms and conditions with no accountability. Namely, a 12 hour complete outage by Rogers to which the reply was basically a big shrug. If they can get away with that I am sure a small independant provider can get away with that as well.
> -- customers who don't behave as well or kindly as before
Easy. Refuse service. You aren't legally obligated to offer your service to assholes. Any business has the right to do or not do business with whoever they want, provided they’re not refusing service for a reason that violates local, state, or federal law.
> -- customers who need 24 hour customer service
Also easy. You are under no obligation to meet peoples unrealistic demands or needs.
> -- maintenance that can't be done himself, and he has to employ people
He already is familiar with third party contracting.
> -- customers and vendors who sue you for breach of contract, or other simply nuisance lawsuits
Frivolous lawsuits are a risk in any business in America.
> -- upgrading the network to the next technology requirement, or when he's unable to get 2nd-hand parts so cheaply, etc.
What is this "next technology requirement"? My area cable company still runs most their network on 30 year old lines.
> -- or a natural disaster that unexpectedly forces replacement of (and charging for) equipment that wasn't anticipated in the original subscriber price
Cost of doing business, doesn't matter the size.
I think people don't understand just how profitable municipal broadband can be. It's why big players spend so much lobbying and bribing so they can keep their established position running and keep the gravy train running, but really the economics of it are fantastic once you've done the initial digging and running the lines, which sounds like he has here.
At $55 /mo for 400 households he's bringing in $22,000 a month plus whatever federal and local government subsidies and grants. The odds of a disaster, or one of the other scenarios you mentioned happening anytime soon is low, so he will have runway to build a decent sized war-chest to be able to easily afford handling any of these scenarios with third party contractors. The more houses he brings on line, the better it gets.
Right, but that's OPs point. If he does what you say, he's no better than Comcast, ignoring customers and telling them to screw themselves at the first sign of trouble.
There’s still a country mile between what gp is suggesting and what Comcast gets away with because of their monopoly position.
Anecdotally, I replaced a router they gave me because it would randomly crap out (probably neighbors using the xfinity Wi-Fi feature I couldn’t turn off), and they kept trying to charge me a monthly rental fee for their router. Every time I would call with confirmation it had been returned, the charge would be removed for just that month and back again the next - this is just the most recent example of a long line of infuriating time wasting schemes I have dealt with from them.
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Yeah but at least they're getting gigabit from an asshole, instead of 1.5 Mbps from an asshole.
I'm with an ISP that is fairly well known for having poor support. I have never had an issue with them. They deal with problems on their end efficiently and without complaint. I would never expect them to deal with a problem on my end, so they never have an excuse to provide me with poor customer service. It all works fairly well, particularly since I am paying about the half the price compared to a major telecom company.
Compare that to a major telecom company. Even if I took the same approach, I would have more issues to deal with (typically issues over billing, rather than technical problems).
I seem to see this a lot especially with American business owners. You don't have to service every customer market. If you offer only certain speeds or certain hours of support, despite being able to support otherwise, that's fine. Not every customers fits your target market.
> Easy. Refuse service. You aren't legally obligated to offer your service to assholes. Any business has the right to do or not do business with whoever they want, provided they’re not refusing service for a reason that violates local, state, or federal law.
Then isn't this a point against the scalability / feasibility of this idea working broadly for others or becoming a model for replacing dumb telcos?
If part of the reason telcos are the way they are is because they have to serve everyone, and at some point if you run a service like this you will run into that requirement, then you will too become like a telco because of those obligations. And this is just one example of a factor that starts to matter.
I try to help out in my HOA of 25 people to manage the utilities, infrastructure, landscaping, and even with this small a group people are uncooperative and 1-2 people are constantly questioning and threatening to sue if we don't do what they say. Hundreds/thousands of people is even more a nightmare.
> threatening to sue if we don't do what they say.
I do love the occasional power trip. I'd look them straight in the face: "here's our lawyers number, have your lawyer give my lawyer a call. Since you seem to be so adamant about suing, you should have no further contact with me. I'll see you to the door." and if they don't go? Arrest them for trespassing.
Sounds like a great power trip.
I'm in a condo here, with an HOA / board, and it was a pain in the ass to get fiber brought in from the local telco. They wasted months sending out letters, waiting for people to give input, votes, etc. until they finally agreed it was a good idea. The telco pays for the whole install: trenching, digging, running fiber between the buildings, etc. That doesn't matter, because you still have people complaining about the utilities messing up their lawn.
It's been over a year now and the project still isn't done. The fiber is right on the street, not even 30 feet from my unit. I'd have paid a couple grand to get my own conduit brought in, if that was an option.
> Then isn't this a point against the scalability
The technical solution would be a QOS that deprioritizes/throttles these people first, with clear wording in the contract. The reality is that these people are a negligible fraction of the users.
>I think people don't understand just how profitable municipal broadband can be.
Operating the network might be profitable. Recouping installation costs are not, when Comcast and other coaxial cable internet providers are sitting there ready to undercut you the second you enter the market. Unfortunately, sufficient customers are not willing to pay more for a reliable symmetric fiber connection yet over whatever the cable company is offering with meager upload.
Also, I assume you mean fiber when you wrote “municipal broadband”. I thought municipal broadband refers to taxpayer funded internet networks, where there would be no profit required (and hence is the only alternative to getting a better internet connection than the cable company).
In Minneapolis there is a local fiber provider which charges about the same for the same level of fiber connectivity. I think it's pretty sustainable.
It looks like his revenue is going to be $50k/mo in not so long and that's more than enough to have a couple of people willing to work on an as-needed hourly rate and to cover whatever issues come up.
Not everything need to scale. A good way to handle this kind of project is keep it at a certain community size, and if people want in, beyond a certain threshold, they need to build their own. This is how federated internet providers work usually.
I, too, greatly respect the scrappy-ness of this individual. Kudos to him for sticking it to Comcast. That said, I'm not wild about the notion of dropping $30K of our collective money on running fiber to a single home out in the country.
I don't see anything wrong with "collectively" deciding that every American citizen should have access to high speed internet access and putting our money where our mouth is. Especially remote areas that are expanding and will become increasingly populated to take advantage of the infrastructure.
For most of us, it doesn't cost anywhere near that much to get access so we can handle the rare costs to build out to remote areas where it's more expensive. That's the benefit of collective money. No one person has to shoulder the burden alone and together we each only chip in a small amount to achieve a massive goal.
America should be heavily investing in building out select remote areas now because we're going to be getting much more crowded in the decades ahead. Climate change is going to force people inland, away from the western US, and cause hundreds of millions of climate refugees from around the planet to seek relocation. The US is going to have to do our part to help take many of them in. MI is a pretty good place to expand.
The United States is not crowded whatsoever. We have no dense cities other than New York. Nobody is forced to live out in such remote areas, not even refugees.
If you choose to live out in the middle of nowhere you’re going to have to pay for all kinds of expensive infrastructure or do without. Why do taxpayers have to cover this particular living expense?
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This was during covid lockdowns, right? It wouldn't be fair for the govt to enforce a lockdown and not provide funds/grants for internet infra.
Government money is still our collective money.
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At least our money is being spent in our country.
Rural electrification and rural landline were also subsidized, so there is some knowledge of how to build rural infra via subsidies.
He was getting that money regardless. He decided to drop it on that.
I have to presume his marketing costs will be close to zero. On tge other hand, in my area (central NJ) both Comcast and Verizon spend a ton on marketing.
He'll also have zero churn. So that's got to help the bottomline.
Finally, I'm willing to bet it helps raise local home prices as those who had to have proper broadband were effectively excluded from that market. The point being, some homes will be able and will to pay more.
Certainly the future will be different, the comparison to traditional ISPs might not be reliable either.
There are lots of ISPs that don’t suck
FblQ00Ho
That was my first ISP password assigned to me from San Jose based ix.netcom.com (Also the city I was grounded a month for running a $926 long distance bill calling into BBSs to play trade wars and the pit)
But the best ISP I ever had was a 56K dial-up in Seattle. To play Diablo.
I am looking to build an ISP.
It's like setting up a giant LAN party, but for grown-ups, doing serious grown-up stuff.
I feel old having to hear netcom.com explained.
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With a fiber based service he would be getting very few calls
Except, potentially, for locates. In my conversation with one of our local ISPs that for a while was doing fiber builds but then stopped, locates were quite a nuisance for them. This was in a less rural location though.
What's a "locate"?
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Are you saying that Comcast provides decent customer service? because I think it is probably the first or second reason everyone hates them... another one could be the doubling cost yearly unless you call them and are serious about cancelling.
Where I'm at Comcast is very reliable but I've had different experiences.
Hopefully with the government funding he can turn it into a real business.
I wouldn't be surprised to see his business pop up on HN's "Who wants to hire" thread.