My electric company gives rebates if you buy qualified new energy efficient appliances, or if you connect your smart thermostat to their API so they can throttle it down a bit to prevent brownouts during peak times.
That's a rebate if you provide proof of purchase though, and a rebate for general use. Neither of those discounts are something that relies on the electric company knowing what is plugged into your house at any given moment, because _they cant_ tell what's hooked up at any given moment.
If net neutrality goes away ISPs not only will be able to tell what you are doing, but they will charge you more for it too. You can always try to use a VPN but nothing is stopping ISPs from charging x100 times the normal rate for VPN traffic or telling your von provider that they need to cough up if they don't want their traffic slowed.
All of this might even be acceptable if ISPs were just in the internet business. Companies would bid up for use of the internet the same way that Google is pulling some of the best engineers by paying triple what a small business in the Midwest would pay even though they both need software engineers.
Unfortunately ISPs are also in other industries like content, and they are going to be incentivized to nuke their competitors. Since the US apparently has no concept of enforcing anti trust laws anymore, ISPs can just slowly chip their way into other internet based businesses. They can either get into industries themselves or they can blackmail industry leaders to stay faster than competitors. That will lead to both increased prices for consumers as companies pass on their costs, as well as a lack of any competition because there's now a giant wall of ISP fees to overcome for any startup to try and compete with.
> ...or if you connect your smart thermostat to their API
In a way, this sounds like a car insurance company lowering your rates for keeping their sensor device in your car.
Comcast is getting into the home automation/security/IoT business too - ISPs haven't been profitable for decades, which explains why they (1) keep squeezing their existing customer base for more money, and (2) keep expanding into new - possibly unrelated - markets like stadium ownership. Anything to avoid lowering the dividend price.
Wow. That would be nuts - Since when? this is America, where ARPU is measured in its native currency of the dollar without a conversion cost, in a nation where they have some of the worst competitive landscape, subsidized roll out, and yet incomplete roll out of infrastructure.
And they are still not profitable ?
Sorry, for the request for a source, since it may come across rude- but I’m damn surprised. I evens recall most telecom operators being positive about their growth and numbers overall.
Perhaps the parent poster is right and America would be much better off with nationalized internet infrastructure.
If you’re reliant on private capital to build and upgrade internet infrastructure, what matters is rates of return on other potential investments that are competing for the same sources of capital.
But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds.
So from the get to it’s not comparable to other industries.
A specific weakness of your argument - Your position holds for a certain kind of investor but has nothing to do with running a business of building a business- nothing to do with Operations.
The risk profiles and returns on telecom are known, and so investors in it know what they are getting.
So telcos can raise debt, with maturity and interest rates suitable for them.
And financiers spread risk. If black stone doesn’t want to invest in telecom, some other firm or telecom focused fund will invest.
At the end of the day, there are only so many above average or average returns you can get per billion of dollars - so people invest in multiple industries.
And when they invest - they examine (comp/compare) the firms against the others in their market.
> But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds.
Mostly not true. In rural areas, telcos receive subsidies. Those subsidies are paid for with taxes on telecom services. Telcos based primarily in urban/suburban areas bear a net tax, not a subsidy. Telcos pay for both spectrum and rights of way, such as rental charges on utility poles.
> The risk profiles and returns on telecom are known, and so investors in it know what they are getting.
We’re in an environment right now where a huge segment of telco revenues, for video, could evaporate due to cord cutting. The percentage of high income households which have cut wireline service entirely (in favor of wireless) has grown from 6% to 15%. People have been reluctant to switch from cable to faster technologies like fiber, with FiOS struggling to clear 40% uptake rates. Investing in a telco today (or a wireline project specifically) is not like investing in a electric or water utility (or the phone company back in the day)—there is real risk.
If you want to actually skip to the end and see the ARPU chart, feel free.
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>mostly not true
Mostly not true is 1 for a binary yes and no scenario. The question at play was the comparability of telecom to other industries.
The fact of subsidies, spectrum, and right of way make this is a non comp, which make the chart being shown irrelevant.
If you truly believe that a simple industry ROIC comparison makes a difference, explain how that makes an iota of impact to AT&T or Comcast in terms of their Capex decisions.
Are they going to pull up their wires tomorrow and go all in and become Google?
Will they Not invest in capex at all? Or Seek money from the markets?
They will - and the markets will ask a known set of questions:
Are The revenue streams for pharma, or movies, or insurance of the same periodicity as telecom? What are the running costs, manpower costs?
How cyclical or not is telecom? What are the operating margins? What is net profit or EBITDA?
How much return on capital can they expect for the next 4 years, or 10 or 20? Or forever?
This is not an argument I am having with you. I am telling you, that industry comparisons are done within the same industry.
For the same reason that when buying microwaves, you don't look at refrigerators.
Each market has their own forms, issues, strengths and weaknesses.
ALL investors at the level where a capex influencing financial investment arises, are aware of this.
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As for the risk - its risk, not uncertainty.
Its pretty much a line item on multiple excel sheets all around wallstreet.
It will influence number of users by 10% over the next 15 years,
which will turn into an ARPU of X for these years.
This will in turn turn into revenue for that period, which will be then reduced down to an expected value of the firm today.
Hell, the expected rate of interest, could easily have a greater impact on the share price and risk of a telecom firm than cord cutters.
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Its very hard not to invest in such an industry which obviously has so many things going for it that it can persist in this manner.
Centurylink's CEO has been having to defend their dividend in the face of a slipping stock price and questionable profit.
Our local road infrastructure and our highway road infrastructure are both largely government-operated. Many local and municipal governments operate their own ISPs. Yet people illogically fear their government more than their ISP.
You just made an excellent argument for starting to enforce antitrust laws again. But not a very good argument for net neutrality. (And Title II actually exempts ISPs from FTC regulation.)
We need to fix antitrust. Of course, one of the biggest sponsors of every net neutrality-supporting website on the Internet (Google) doesn't want to fix antitrust. This is why net neutrality regulations are carefully designed not to apply to tech companies, and why things like the old ISP privacy rules that were repealed solely targeted ISPs. (When states tried to reimplement those privacy rules, but including tech companies, Google, obviously, came out strongly against them.)
Which is why Comcast slowing a competitor is a mortal sin, but Google's websites not working on Firefox (or them outright blocking Amazon devices) is no big deal, legislatively.
Let's get the FTC back to what it was built for: Breaking up companies like Ma Bell and El Goog.
I've heard this argument many times, but I have yet to find a convincing take on it.
What is the difference? If a company is using their monopoly, be it a network or a service or a platform, to do anticompetitive things that violate the law and hurt consumers, how are they different?
Why do ISPs need special regulations that DON'T apply to other types of monopolies?
I'm buying the infrastructure to communicate from one, and the other does, well, does anything.
Should anyone that uses the telephone to do business, even exclusively, be a Title I carrier? No, that would be absurd because they don't sell telecommunication.
> If a company is using their monopoly, be it a network or a service or a platform, to do anticompetitive things that violate the law and hurt consumers, how are they different?
I mean, I could ask you the same about standard oil and Microsoft. How are they different? They both abused their monopoly.
> Why do ISPs need special regulations that DON'T apply to other types of monopolies
The same reason we grant phone, electric, water, sewer, and natural gas companies the same types of monopolistic leeway in exchange for some additional regulations: infrastructure is expensive and takes up space. It's difficult to have multiple of any of these providers in the same geographic market. How many water lines can you run in a street? Sure, we can run many phone and isp lines, but it becomes extremely messy and leads to other issues that eventually led to the types of regulations in exchange for monopoly were discussing. This isn't a new problem.
Now, I'm not saying Google shouldn't be subject to antitrust law. I'm saying Google doesn't sell me telecommunication services and therefore it doesn't makes sense to regulate it as one. (Project Fi and Google Fiber both fall under their respective FCC regulations.)
Bear in mind, neutrality laws could be just as applicable to platforms as infrastructure. What's the difference between Comcast deciding to charge differently for different types of content on it's lines, and Google deciding to charge differently for different types of content on it's cloud services?
What's the difference between Comcast blocking say, video content it doesn't like, and YouTube doing the same?
> I mean, I could ask you the same about standard oil and Microsoft. How are they different? They both abused their monopoly.
This is my point: I don't see why we need specific laws carved out for ISPs, as opposed to laws that do equally apply to Standard Oil and Microsoft.
The regulations that are being repealed don't solve the problem. They're extremely narrowly designed to regulate a couple businesses by an agency who's job isn't policing business practices, but what those businesses are doing that needs to be regulated is already supposed to be regulated a different way: Anticompetitive practices are already illegal, and we need to enforce those rules. This is an FTC and DOJ problem, not an FCC problem.
> Bear in mind, neutrality laws could be just as applicable to platforms as infrastructure.
You had me here. No they cannot. Google is not selling telecommunication services. Should the Butterball turkey hotline be regulated as a telecommunication provider? No, no they shouldn't. Just because they use phones to do business does not mean they ate a telecommunication provider.
Now, there are a couple things leading to your confusion, I think.
Right now net neutrality is tied to Title II, which gives the isps some leeway in antitrust issues in exchange for more regulation. If you would like to discuss that issue, I'm all for it. However, Google is not a telecommunication provider and net neutrality doesn't need to be tied to Title II. (However, Congress would need to step in at that point.)
So, if your point is why are we granting ISPs any monopoly privileges via Title II (which doesn't happen in quite a direct way), I refer you to why telephones, electric, gas, water, and sewer are regulated as utilities, that is given a monopoly in exchange for tighter regulations.
Why does it matter if Google is a telecommunications service or not? Anticompetitive business practices are illegal, are they not? What makes telecommunications services special in your book?
Why not just let the FTC go after companies (telecommunications or otherwise) when they misbehave?
> Why does it matter if Google is a telecommunications service or not?
Because we're discussing regulations that only apply to telecommunication providers?
I have never said antitrust laws shouldn't be enforced. In fact, I believe net neutrality is important even if we had a bustling isp sector.
Net neutrality is also not an issue because of local monopolies, although they make the issue more visible.
So, until you convince me that Telecommunication regulations should apply to companies that aren't providing telecommunication, I don't understand your point. Specially that data cannot be modified or throttled based upon content or destination.
I'll continue to agree with you that antitrust laws. I'm not sure what your argument is.
Why are we discussing regulations that only apply to telecommunication providers? Why shouldn't Internet companies be subject to identical neutrality provisions?
Why should a platform like YouTube be permitted to make judgment calls on how to handle content on it's services, but ISPs can't make judgment calls on how to handle content on theirs?
You haven't given a single reason for why telecommunications companies are different.
For the same reason we prevent phone companies from doing the same. Until you're ok with phone companies not letting you call the Butterball hotline because they support another turkey company, I don't think you have a point.
Moreover, even without any antitrust issues, the number of ISPs, especially in rural areas will always be limited by start up costs. In cities it'll always be limited by space on lines poles or conduits underground.
I guess until you convince me phone operators shouldn't be regulated as common carriers, you won't convince me isps shouldn't.
It feels like you're actively avoiding the question. Let me show you:
If phone companies blocked you from the Butterball hotline because they support another turkey company, that would be what's known as an "anticompetitive business practice". Now, if you removed the special exemption telecoms get, the FTC would fine them for that, and tell them they can't do it.
In the same way, if ISPs were to prioritize their own video services or block a competitor's, that would also be against antitrust law, and the FTC could fine them for it. Hilariously, the common carrier designation actually prevents this from happening.
At the risk of aggravating the moderators, to ask this a third time what is so special about telecommunications companies, that, unlike other monopolies, need a whole different form of regulation?
> At the risk of aggravating the moderators, to ask this a third time what is so special about telecommunications companies, that, unlike other monopolies, need a whole different form of regulation?
I mean, you could ask the same thing about electric utilities. What's special is that as a society, we've decided that we don't want dozens and dozens of companies running infrastructure through public land. We grant some private companies space, for rent, but that also comes with the burdens of public process. In more space-constrained areas like telephone poles, streets, and conduits, it's often better to have a small number of companies utilize the space, but at the cost of additional regulations.
Electric, gas, phone, and water companies have captive audiences, but at the same time need the PUC to approve rate increases and are required to meet certain performance guidelines.
I'll also ask for the third time: Why should ISPs be different than the phone company?
ISPs shouldn't be different than the phone company: Both should be prohibited from anticompetitive actions via the Sherman Antitrust Act. It's time to do to both El Goog AND ISPs what was once done to a phone company: Breaking them up.
For the record, I didn't address your "space-constrained areas like telephone poles and conduits" before because neither is remotely space-constrained (especially in the fiber age), and this is a complete red herring.
Telecommunications are rolled out either on poles or underground, which incidentally is exactly where our other utilities like electricity, phone, and water/sewage are laid out. We used to have hundreds of wires overhead everywhere and roads being dug up all the time to add new pipes. Our society has decided that the benefits of competition are outweighed by all of destruction and blockage done to the limited space of our roads. Additionally we have decided that those industries are too important to deal with outages that would come from competition and having companies go out of business. Telecommunications have reached that stage in the US at least, and given this space constraint and need to keep the service running 24/7 they should be regulated as utilities. If we split the actual ownership of the wires off into a separate utility and had different companies selling the bandwidth and services like the UKs setup, then leaving the service up to normal regulations would be fine.
As long as they own the physical network they should be a utility
PG&E also has discounts if you install a device that would turn off your AC in peak times. And of course it also has time-dependent rates (opt in). Yup, no electrical neutrality - electricity at 2am is not same price as electricity at 2pm. And of course prices are usage-dependent - if you're a heavy user, you pay more per kwh.
