Comment by kevin_nisbet
3 years ago
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' :-)
It’s not even his millions.
> Jared Mauch gets $2.6 million from gov't to expand fiber ISP in rural Michigan
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.