Broadband Market Failure Keeps Forcing Americans To Build Their Own ISPs

from the do-not-pass-go,-do-not-collect-$200 dept

For decades now a growing number of US towns and cities have been forced into the broadband business thanks to US telecom market failure. Frustrated by high prices, lack of competition, spotty coverage, and terrible customer service, some 750 US towns and cities have explored some kind of community broadband option. And while the telecom industry routinely likes to insist these efforts always end in disaster, that's never actually been true. While there certainly are bad business plans and bad leaders, studies routinely show that such services not only see the kind of customer satisfaction scores that are alien to large private ISPs, they frequently offer better service at lower, more transparent pricing than many private providers.

The latest case in point: Ars Technica profiles one Michigan resident who had to build his own ISP from scratch after "the market" couldn't be bothered to service his address with anything even close to current generation broadband speeds:

"I had to start a telephone company to get [high-speed] Internet access at my house," Mauch explained in a recent presentation about his new ISP that serves his own home in Scio Township, which is next to Ann Arbor, as well as a few dozen other homes in Washtenaw County."

If you take a gander at a map, it's not like we're talking about the middle of the desert. It's just one of a long line of communities that were deemed not profitable enough, quickly enough by major US ISPs. Granted the price tag of the endeavor was well out of range of most Americans, especially lower income Americans who were already stuck on the wrong side of the digital divide before COVID came to town:

"Mauch said he has spent about $145,000, of which $95,000 went to the contractor that installed most of the fiber conduits. The fiber lines are generally about six feet underground and in some cases 10 or 20 feet underground to avoid gas pipes and other obstacles."

His plight is far from unique. US phone companies have effectively given up on fixed residential broadband to focus on wireless advertising, leaving companies like Comcast with a growing monopoly across countless US markets. Despite billions upon billions in subsidies, tax breaks, and dubious regulatory favors thrown at the nation's telecom monopolies, an estimated 83 million Americans only have the choice of one provider, while 43 million have zero options. This is obvious market failure, yet there's an entire cottage industry of industry allies whose entire function is to pretend that none of this is actually happening.

This obvious market failure, and our complete twenty-plus year failure to tackle it is bad enough (keep in mind Trump FCC and its associated industry BFFs can't even admit the market isn't competitive or that monopolization is a problem). But when desperate and angry communities decide to build their own networks, that's when the fun really starts.

First, such efforts quickly run into lawsuits by ISPs that didn't want to service these areas, but don't want anybody else doing so either. Then, they face a wave of bullshit disinformation (extra heavy if there's an ordinance being voted on), almost always covertly funded by industry, that tries to demonize these kinds of desperate efforts as socialism or even an affront to free speech. If that's not enough, they'll also run into bullshit protectionist laws, passed in more than 20 states and ghost written by industry lobbyists, that make these creative, local efforts as difficult as possible.

Community broadband isn't some mystical panacea. But it's absolutely a valid idea for communities that have been left behind for twenty years to improve their own infrastructure if that's what the community wants. Better yet, such efforts almost always result in lazy monopolies trying a little bit harder than they usually would under the one/two punch of limited competition and feckless, chickenshit regulators. But instead of embracing these efforts, our industry-captured regulators have chosen to demonize communities as the US FCC pretends that blind taxpayer subsidization, mindless deregulation, and more mergers are somehow going to fix rampant monopolization.

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Filed Under: broadband, community broadband, competition, municipal broadband


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  • identicon
    Anonymous Coward, 15 Jan 2021 @ 7:25am

    20 Year failure

    If the failure in broad band is as long as twenty years, then Obama is as bad as the Trump/Bush-ites.

    Remember too, for two years Obama had a Democratic House and a Democratic Senate (and no impeachment claptrap). As such, the failure of broadband is attributable to both Democrats and Republicans.

    Neither party cares about the nation, just about ruling it.

    Think not, with the Ukraine indictment against Joe Biden, he becomes an international fugitive from justice. Has Biden withdrawn from the the aspiration to the Presidency? Of course not. Is it even legal to swear into office an international fugitive? Will the military follow the orders of a commander in chief who is an international fugitive?

    What about Kamala Harris and the other Democratic leader aiding and abetting Biden in his flight from justice by trying to get him into an office which has protections against prosecution?

    Well, Biden/Harris will solve the broadband problem. The resulting social/political/economic disaster of the U. S. after the swearing in of a fugitive and those aiding and abetting him will end any need for broadband telecommunications.

    Fundamental to the Democratic socialism is that all speech is the correct socialist speech. Free and critical speech (opposing socialism) is to be suppressed, so says several high ranking Democrat/socialist leaders.

    The national wreck Biden & Co. create will leave shouting as the only method of long distance communications.

    reply to this | link to this | view in chronology ]

  • icon
    crade (profile), 15 Jan 2021 @ 7:38am

    The trouble isn't that they are starting their own ISPS, the trouble is that "starting your own ISP" just means signing up with the existing providers and paying them to get access to their government funded infrastructure and then subleasing it out

    reply to this | link to this | view in chronology ]

    • icon
      crade (profile), 15 Jan 2021 @ 8:11am

      Re:

      It's a bit tough to meaningfully compete when you have to pay your competition to be allowed to offer your service

      reply to this | link to this | view in chronology ]

    • icon
      TKnarr (profile), 15 Jan 2021 @ 9:33am

      Re:

      Not really. In this case, if you read the article, he ran his own infrastructure (fiber-optic cable) so he's not leasing it from anyone. His upstream connection would be with a backbone provider at an Internet Exchange, bypassing the local ISPs entirely (who probably also lease capacity on the backbone at the IX instead of building their own national-level hardware infrastructure).

      reply to this | link to this | view in chronology ]

      • icon
        crade (profile), 15 Jan 2021 @ 9:42am

        Re: Re:

        The "backbone at the internet exchange" is just a fancy name for the government funded internet provider who are supposed to be his competition if he ever wants to expand his operation.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 15 Jan 2021 @ 11:09am

          Re: Re: Re:

          While not inherently true, it has become more true that ISPs also own most of the transit. But it doesn't matter, the IX is the IX, not an ISP, and peering is different from being some sort of bulk reseller of an ISP's service. Plus he owns all his downstream pipes.

          You know peering has always worked between competitors? That's why it's peering.

          reply to this | link to this | view in chronology ]

          • icon
            crade (profile), 15 Jan 2021 @ 11:28am

            Re: Re: Re: Re:

            If they are peering, one of those peers is charging the other one to access publicly funded infrastructure and the other is paying them to access it.

            reply to this | link to this | view in chronology ]

            • icon
              crade (profile), 15 Jan 2021 @ 12:17pm

              Re: Re: Re: Re: Re:

              I'm trying to read up on this, but it's a lot :) Are you trying to say that AT&T's huge network and public funded infrastructure doesn't give them any leverage over this guy's 100k fibre line if they want to compete as ISPs?

              reply to this | link to this | view in chronology ]

              • icon
                TKnarr (profile), 15 Jan 2021 @ 5:21pm

                Re: Re: Re: Re: Re: Re:

                Not over his fiber. If I were building an ISP, say, I'd be getting upstream connectivity from SIX or PAIX-SEA. AT&T probably also peers at those exchanges since they're a big backbone provider, but their contract is with the exchange and interfering with traffic from another of the exchange's customers would almost certainly be a breach of that contract. SIX and PAIX-SEA probably wouldn't de-peer AT&T over that, but they'd likely make it costly for AT&T to keep it up. At worst I'd simply request that my traffic be routed to the other backbone providers that peer there and go back to ignoring AT&T.

                Oh, one thing the exchange could do: since AT&T probably co-locates their connection from their backbone to their local ISP infrastructure at the exchange (since they have to have equipment there anyway to connect their backbone network to the exchange), the exchange could terminate the co-location leaving AT&T to figure out how they're going to connect their own local network to their backbone (finding or building a data center to hold the equipment and running fiber to extend their backbone and local physical plant to the new data center). AT&T might pull their backbone peering over that, but SIX/PAIX-SEA are big enough and connect to enough backbone providers that that'd hurt AT&T more than them.

                reply to this | link to this | view in chronology ]

          • icon
            crade (profile), 15 Jan 2021 @ 12:49pm

            Re: Re: Re: Re:

            Reaching the IX with his own small network basically means he has the ability to negotiate for peering agreements with other networks but it seems to me that the big subsidized telecoms who will have much larger networks and should control access to at least everything oversees would not let him peer with their networks on equal terms.

            I admit I am working off assumptions, perhaps I am completely off base here and he doesn't need to compensate the subsidized ISPs for using their networks at all, but if so then I can't figure out what's in it for them.

            reply to this | link to this | view in chronology ]

            • icon
              TKnarr (profile), 15 Jan 2021 @ 5:38pm

              Re: Re: Re: Re: Re:

              You're right, as a leaf network I'd primarily be receiving traffic for my network and not carrying transit traffic. That means I'd be paying for bandwidth, but I'd be factoring that in to my budgets. I have a choice of multiple backbone providers at any given exchange, so if one provider wants to mess with me I just go talk to one of the others. All the major telcos are backbone providers as far as I know, but there's plenty of large backbone providers who aren't telcos and who make their money providing transit between exchanges. If one telco doesn't want to take my money to handle my traffic, one of the other providers will (as long as I accept that I'm not a backbone network and won't be able to "pay" for my bandwidth by carrying traffic for them in return).

              reply to this | link to this | view in chronology ]

              • identicon
                Anonymous Coward, 15 Jan 2021 @ 8:06pm

                Re: Re: Re: Re: Re: Re:

                You're right, as a leaf network I'd primarily be receiving traffic for my network and not carrying transit traffic. That means I'd be paying for bandwidth

                I've never really understood this. If primarily receiving traffic means the ISP will be paying more, why are they all so hostile to their customers uploading? Slow upstream speeds, "no server" rules, etc.

                reply to this | link to this | view in chronology ]

              • icon
                crade (profile), 18 Jan 2021 @ 7:12am

                Re: Re: Re: Re: Re: Re:

                Right, so he has choices of provider, but that level would be the real competition in my mind. He isn't really another options to those providers, everyone still needs to pay one of them, and this guys customers are just paying them through him.

                reply to this | link to this | view in chronology ]

                • icon
                  TKnarr (profile), 19 Jan 2021 @ 11:42am

                  Re: Re: Re: Re: Re: Re: Re:

                  The local cable company and telcos pay those same providers too. That's why you hear big ISPs screaming about how Google and other content providers are "free-riding" on the ISP's bandwidth and should have to pay the ISPs to reach the ISP's customers: those ISPs are consumer-heavy so their traffic's highly asymmetric (high download, low upload) and they're having to pay the backbone providers to carry traffic to their networks. Everyone has to pay the backbone providers eventually, but this guy's paying them directly and doesn't have to pay any of the local ISPs as well as the backbone.

                  Oh, and if you're running fiber long distances, you won't be talking to any of the local ISPs to get access to fiber either. You'll likely start by talking to the railroad line that owns the rights-of-way in your area (in my case, Union Pacific). They either own the fiber along the right-of-way or lease it out to a reseller. Most of the big backbone providers and local ISPs don't run their own cross-country fiber, they lease capacity in the fiber runs the railroads laid down.

                  reply to this | link to this | view in chronology ]

        • icon
          R.H. (profile), 15 Jan 2021 @ 6:38pm

          Re: Re: Re:

          In this particular case, Mr. Mauch is buying bandwidth from ACDnet and 123Net. Both of which compete with the local major providers (AT&T, Comcast, Charter, etc.) for backbone and business customers.

          reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jan 2021 @ 8:22am

    of course the assertion that "Broadband Market Failure Keeps Forcing Americans ..." is a biased and incorrect political viewpoint.
    There is no ISP free market, so it is impossible for it to have failed.

    the problem, as constantly attested to by TD, is lackof genuine market competition -- caused by heavy government political interference and monopolistic regulatory policies across the US.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jan 2021 @ 8:39am

      Re:

      From the point of view of the rest of the world, it is a case that the US fails in creating effective regulatory agencies. Make the infrastructure a heavily regulated monopoly, and you can have competing ISPs using a common final mile infrastructure.

      reply to this | link to this | view in chronology ]

      • icon
        crade (profile), 15 Jan 2021 @ 9:09am

        Re: Re:

        The trouble is basically the U.S. is just pretending it's a free market system while actually funding it from the gov't. It's lose-lose, you have both no market forces and also no oversight they give the telecoms billions in tax money and then let them do whatever they want with it. The telecoms are more or less government owned companies with no oversight

        reply to this | link to this | view in chronology ]

    • icon
      Koby (profile), 15 Jan 2021 @ 8:52am

      Re:

      the problem, as constantly attested to by TD, is lackof genuine market competition

      If the lawmakers want to do something about the problem, one thing they could do halt the ISP vs. ISP lawsuits that prevent competition.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jan 2021 @ 8:03pm

      Re:

      Also...

      one Michigan resident who had to build his own ISP from scratch after "the market" couldn't be bothered to service his address

      That's what "the market" is. It's not some fixed-in-time set of companies. It includes every person who noticed that there was something missing, then started a business to provide it.

      I'd count this as a broadband market success. Unlike many communities, this one has good broadband—with good prices and good customer service. Presumably, Karl wouldn't be calling it a "market failure" if they'd got Comcast or AT&T service instead—although by most standards they'd have been worse off.

      "Market failures" should refer to all the times someone wanted to start a broadband ISP, and got blocked by "bullshit protectionist laws" or whatever.

      reply to this | link to this | view in chronology ]

  • identicon
    Dave, 15 Jan 2021 @ 8:43am

    The big legacy ISPs simply have too much of a vested interest in keeping the broadband market in a state of failure.

    reply to this | link to this | view in chronology ]

  • icon
    virusdetected (profile), 15 Jan 2021 @ 9:07am

    We're in an "urban interface" area where the only Internet connection we can readily obtain is crappy DSL, so we've banded together and are implementing wireless 100Mbps. Fiber would be preferable, but we're a long way from fiber and are on 5-acre lots, which makes fiber installation expensive. One of our neighbors asked for a quote from Comcast and got a response: $80,000 for just his house. (Comcast cable if about 200 yards from his house.) Not that we would actually want to deal with Comcast...

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Jan 2021 @ 11:04am

      Re:

      Do you not know somebody with a back hoe? It is possible to do it yourself fibre Intenet. There are also a couple of HPR episodes on the same installation.

      reply to this | link to this | view in chronology ]

    • icon
      R.H. (profile), 15 Jan 2021 @ 6:42pm

      Re:

      The guy in the article was quoted $50,000 for the same. He said that he would have paid if it'd been $10,000. Also, unlike Comcast, the neighbors who put in a few thousand each to help fund the initial investment will each get their investment's worth of internet which comes up to multiple years of already paid service.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Jan 2021 @ 9:10am

    Frustrated by high prices, lack of competition, spotty coverage, and terrible customer service.

    All valid reasons but you didn't mention the main one. That too many of those in Congress, law makers and politicins in general are lining their own pockets in preference to aiding their voters by encouraging competition, refusing tax breaks and other incentives to the main players and forcing those same main players to do what they're supposed to do, ie give a respectable service for a sensible price!

    reply to this | link to this | view in chronology ]

  • icon
    Christopher (profile), 20 Jan 2021 @ 8:46am

    Congratulations on your unregulated private infrastructure.

    I believe the laws are in place to change this, but we have the wrong people at the controls. I'm pretty sure unless and until we have the right people at the FCC and at the state level looking at punishing bad behavior, this continues. No solutions are going to bear fruit without penalties, because they only thing they understand is fucking with their money. --#

    reply to this | link to this | view in chronology ]


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