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Networking The Almighty Buck IT

Why Is Connectivity So Cheap In Stockholm? 443

Posted by timothy from the umlauts-defy-gravity dept.
lpress writes "Symmetric, 100 Mbps service in Stockholm, costs $11/month. Conditions in every city are different, but part of the explanation for the low cost is that the city owns a municipal fiber network reaching every block. They lease network access to anyone who would like to offer service. The ISPs, including incumbent telephone and cable companies, compete on an equal footing."
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Why Is Connectivity So Cheap In Stockholm? More

Why Is Connectivity So Cheap In Stockholm?

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  • Some crazy conspiracy? (Score:4, Funny)

    by evolx10 ( 679412 ) on Saturday April 18, 2009 @02:34PM (#27629145)
    Socialism?

    • Re:Some crazy conspiracy? (Score:5, Insightful)

      by should_be_linear ( 779431 ) on Saturday April 18, 2009 @02:42PM (#27629199)
      yeah, Sweden is socialist country in many areas and for many decades, but it kinda works so well that free-market evangelists never mention anything about it, they prefer talking about Cuba.
      • We could have the post office do the same thing, but we have an ideological barrier.

        • Uhhh, yeah... (Score:3, Insightful)

          by Jane Q. Public ( 1010737 )
          like the "idealogical barrier" that prevents the Postal Service from doing an efficient job at anything.

          When I was a child, my father often spoke proudly about the U.S. Postal Service, bragging about how a first-class letter could get to just about anywhere in the United States in just 2 days, for the cost of a 7 cent stamp.

          Today, it costs 6 times as much, and as often as not takes 6 times as long. What is wrong with this picture?

          • Hey, I live out in the boonies of the midwest, smack dab in between Denver and Chicago. I've never had a letter take more than three days to get to me. A UPS package, via Ground, takes 5 working days.

          • Re: (Score:3, Informative)

            by brusk ( 135896 )

            Your father lied to you.

            First-class postage in the US was never exactly 7 cents. It went straight from 6 (1968) to 8 cents (1971). It's very difficult to compare prices over time meaningfully, but in inflation-adjusted terms postage rates have actually held pretty constant since about the 70s. See http://en.wikipedia.org/wiki/History_of_United_States_Postal_Service_rates [wikipedia.org]> Wikipedia. Given that the two main costs of the USPS are fuel and labor, which have gone up faster than consumer prices as a whole, th

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        yeah, Sweden is socialist country in many areas and for many decades, but it kinda works so well that free-market evangelists never mention anything about it, they prefer talking about Cuba.

        Both Sweden and the US are mixed economies. The word socialism is completely taboo in Sweden as much as it is in the US. Even when you discuss systems where there clearly is socialism, such as the public road system.

        • Re:Some crazy conspiracy? (Score:5, Insightful)

          by Anonymous Coward on Saturday April 18, 2009 @03:11PM (#27629455)

          If you're Swedish, get a fact check, the word that is taboo in Sweden is capitalism.

          Say that you're doing anything capitalistic, and people will see you as someone who wants to attack our welfare.

          -Socialist liberal Swedish guy.

        • Re: (Score:2, Insightful)

          by Holammer ( 1217422 )
          Socialism taboo? Above post is confusing wishful thinking with reality.

        • Re:Some crazy conspiracy? (Score:5, Interesting)

          by BlueParrot ( 965239 ) on Saturday April 18, 2009 @05:01PM (#27630525)

          Both Sweden and the US are mixed economies. The word socialism is completely taboo in Sweden as much as it is in the US. Even when you discuss systems where there clearly is socialism, such as the public road system.

          Well, when the party that has ruled Sweden for most of the past century and still has the most voters is called the "social democrats" I think you can have a guess how "taboo" socialism is here. It is true we are a mixed economy however. The main difference to places like the US is that we don't pretend to be capitalist. We have a reasonably free market with necessary regulations that is complemented with a comprehensive welfare state. Oh, and over here "liberal" is something you accuse politicians of NOT being, as opposed to the surreal American situation where you're apparently pro freedom but anti liberty. Doublethink at its finest.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        In Western Europe socialist is not the same as communist. Socialists believe in a government-corrected free-market (e.g. Sweden) in contrast to communists who believe in a government-planned economy (e.g. Cuba).
        Personally I think prices for products depend more on the local market situation, the price people are willing and able to pay for goods and services. In Sweden telecom services, house rents and medical services are cheap, but food, alcohol, cars and taxes are expensive.

      • There is a world of difference between Sweden and Cuba. Cuba is a totalitarian regime with communist economy. Sweden is free market economy and democratic society. The so-called "socialist economy" has never been precisely defined, but *please* don't get confuse what's called "socialist economy" in some western countries with those countries which call themselves "socialist" and whose economy is completely centralized and controlled by the state.

        Free market evangelists know what they are talking about. You

      • No system is perfect, each has its own trade-offs. That being said, one problem of socialism is that it can hide the true costs. The taxpayers had to pay for the lines to be put in place and continue to pay for maintenance, some of which I am sure is covered by the ISP leasing fees. Taxes cover many of the costs and so the true cost is more than $11 a month. It is $11 a month for those who access it. Personally, I think it is a very important distinction. You may not.

      • Re: (Score:2)

        by Jurily ( 900488 )

        yeah, Sweden is socialist country in many areas and for many decades, but it kinda works so well that free-market evangelists never mention anything about it, they prefer talking about Cuba.

        And when you hear Chinese immigrants laughing about how the whole world thinks they're Commies but they're actually National Socialists makes you wonder whether any labels are to be trusted anymore. Like Democracy.

    • Re:Some crazy conspiracy? (Score:5, Insightful)

      by erroneus ( 253617 ) on Saturday April 18, 2009 @03:18PM (#27629511) Homepage

      Imagine what would happen if all roads were owned by private companies. Would we ever seen an end to toll roads? Doubt it.

      Some things, especially utilities, simply work better when public owned. Electric, water and yes, even telephone. And internet access isn't too far removed from a telephone utility.

      I think the next time we hear about a communications company suing a municipality over their intention to install their own fiber in their city, I think the case of Stockholm needs to be cited as the reason why they don't want it and the reason the people should have it.

      • You could see an end to some toll roads. The toll would be paid for by the business the road benefits. Similar to how Vegas has cheap flights. If you were to build Vegas between LA and Phoenix and cut the time down from 8 hours to 2 hours and half way you could stop at a place of gambling, shopping and debauchery, would you take a plane (3 hours) or your car with a light rail augment(2 hours)?

    • Not quite. Even libertarians will tell you that the rights should grow with the size of administrative unit (with fed govt having least rights and individual having most rights). Socialism is the reverse system: the bigger the administrative unit, the more rights it has. This is municipal government building local infrastructure according to its needs. When you get down to municipal level, bureaucracy is much easier to keep in check through voting process. So this might not be so bad. Now, if a nation

  • Because... (Score:2, Insightful)

    by Jah-Wren Ryel ( 80510 )

    Why Is Connectivity So Cheap In Stockholm?

    Because their taxes are so high, it had better be cheap!

    • Re: (Score:3, Insightful)

      by dogmatixpsych ( 786818 )
      That is very true. Just like healthcare there or in Canada, the people are paying for it, just in different ways than we do in America (not that we have internet access that is that fast available to the general public here in America). I'm not saying one method ("socialism" versus "free market") is better than another in this case, that's a different discussion, I'm just supporting what the parent poster said - that they do pay more than $11 a month for it!

      • Yes, but if you use that rational I pay more than $50/month for my DSL or Cable too. Think of all the lobbyists and laws it takes to keep a virtual monopoly. Think of all the government kick backs and discounts. The consumer is pretty much always going to get a better deal when you restrict the market to put all the competitors on an even footing, rather than restricting the market to provide a monopoly like we do. Under both "capitalism" and "socialism" (I'm assuming in this case we're talking about US vs.

    • Re: (Score:2)

      by Alef ( 605149 )
      IMHO, if there is anything the government should invest in, it is infrastructure. It's just a plain waste of resources having lots of parallel networks unless it is needed for redundancy reasons, for the same reason that you wouldn't build triplicate roads or railways between two cities. Add to that the vendor lock-in which usually follows when they're privately owned.

      You can still have private companies build and operate the networks, if you think they will do it more efficiently than the government cou
    • Damn straight; socialists did it..

    • Re:Because... (Score:5, Insightful)

      by debrain ( 29228 ) on Saturday April 18, 2009 @03:22PM (#27629559) Journal

      Because their taxes are so high, it had better be cheap!

      When one factors in the cost of exorbitant privilege (i.e. the eventual realization of the cost of printing money as a reserve currency) to the United States citizens, the ultimate cost to taxpayers in the United States is probably significantly higher than any day-to-day taxes anywhere else in the world.

      To put this latent tax in perspective, the United States federal government has well over $52 trillion in outstanding obligations (over $12 trillion to foreign countries). That's $189,000 in present-day value U.S. dollars (i.e. relative to the basket of world currencies) that the federal government has spent on behalf of each citizen in the United States above and beyond what the U.S. federal government was taking in as taxes (i.e. they printed the money). When it comes time to pay this off, the amount will be significantly higher relative to the present-day purchasing power of the dollar, given the near certainty of exceptional inflation of prices or alternatively (or equivalently) depreciation of the value of the dollar inherent to paying off such a volume of debt. The "real cost" of this debt when realized is probably four times the amount I've stated there (based on observable data and projections from the fifty or so other countries that have become insolvent since World War 2).

      It's worth noting that AT&T and others were "gifted" $500 billion dollars in the late 1990's to upgrade telecommunications infrastructure, with virtually no results whatsoever, I understand. Why this half-a-trillion didn't result in the same or similar subsidized infrastructure when compared to Sweden boggles the mind.

      So to say Sweden has oppressive taxes is folly. Sweden does have day-to-day higher taxes per capita, but they have leaps and bounds better services (cheap and fast internet access among them, but also better, cheaper policing, health care, high speed rail, and education), and they have not burdened future generations with oppressive or odious amounts of debt.

      High taxes do not give rise to cheap internet. The United States has exposed its citizens impossibly high obligations, way beyond what Sweden or virtually any other country does, but internet in the U.S. can be described as backwards in price and quality compared to other countries. Following David Lande's hypothesis, I'd say the reason Sweden has cheap, fast internet and the United States does not is culture: Sweden has educated people who elect a progressive government that spends money with accountability and forward-thinking reason; the United States has something different.

      • Except of course they will never get round to paying off their debt. They will inflate their way out, like every other time they got into trouble.

        So don't keep cash; only land and gold hold their value.

    • Re: (Score:2)

      by Kjella ( 173770 )

      Yeah, my taxes here in Norway (same or worse as Sweden) is high. Then again, I didn't pay a dime in tuition for five years of a Master's degree. I don't have a health insurance, I do have a disability insurance but that's only if I become a cripple. The public transportation I use is subsidized. If you want to do a proper comparison, do it apples to apples after you've paid for equal services in the US. I do talk to people in the US, and the worst examples I've seen have been private companies using their l

  • This is one place local governments have failed... (Score:5, Insightful)

    by ducomputergeek ( 595742 ) on Saturday April 18, 2009 @02:38PM (#27629169)

    I'm not a big fan of a huge federal government, but at the local level, cities and towns should have been building out the last mile of service instead of granting local monopolies. If building that infrastructure IS so expensive that no business would do it without the monopoly status, then it probably is something best left to local governments to fund/build and then lease out to whomever wants to offer services to the residents.

    My Dad has this problem. He has the choice between the sucky local phone monopoly for DSL or the sucky local cable monopoly for cable.

    • Re:This is one place local governments have failed (Score:5, Insightful)

      by arth1 ( 260657 ) on Saturday April 18, 2009 @02:44PM (#27629227) Homepage Journal

      Dragging the fiber can't be that expensive. I mean, compared to water or sewer pipes (which they can even be bunded with).
      What's wrong here in the US is a strong public distrust of having the government do anything, because the government may screw you over. So instead people prefer to give important tasks to businesses, who will screw you over.

      • We're being told it costs like $4k-8k per household to wire fiber. Don't ask me where all the money is going.

        • Some companies are born with a bailout, some companies have a bailout given to them and some companies create their own bailout.

      • Re:This is one place local governments have failed (Score:5, Insightful)

        by Tacvek ( 948259 ) on Saturday April 18, 2009 @03:24PM (#27629575) Journal

        Yes, the fear of government and of Government regulation can be quite misplaced.

        It is well known that in some markets regulation is the only thing that keeps the market even remotely resembling a free market, rather than an oligarchy.

        Now regulation can have its issues too. N o doubt that some government regulation is actively harmful. Some of it is well intention regulation that goes sour, which is pretty common considering that macro-scale economics is not a science by any means. Other harmful regulation is that which is supported by the major players in the regulated industry. In general that indicates that the regulation dictates what they would be doing anyway, yet makes it more difficult for competitors to enter the market, or compete with the big players.

        In a similar way, having the government perform some function may be very helpful, or may be quite harmful.

        Look at the United States Postal Service. People complain about them, but they function pretty well all things considered. The pricing on first class mail is definitely very competitive despite the complete lack of competitors. If the market were opened do you really think UPS, FedEx, or DHL could offer first class mail services at a significantly lower price? Probably not. Perhaps a few cents lower, but not much. The USPS does tend to be slightly more expensive than the alternatives when shipping packages, but that does not really matter, because they have competition there.

        Overall the USPS works well. Why does it work well? Perhaps the most important thing to notice is that it is well insulated from the elected politicians. They can't continually mess with it, making changes all the time. It is not profit driven. The apparent goal is to net exactly zero profit, with income covering all the expenses, and employee salaries, upkeep etc, thus requiring no treasury funding. It does reasonably well at that, although they almost never actually reach that goal.

        That goes to show that a government institution can work effectively. One that owns last mile infrastructure could also work well, if set up well, such that the politicians have little influence over it, it is set up such that it must price fairly (be this some sort of per endpoint, or bandwidth based pricing scheme, the important thing is that Ma Bell gets no better deal than Joe's DSL Shack), and be set up so that the net profit is zero (the all income covers infrastructure, maintenance, and upgrades).

        But alas, the average American is to scared of the government to allow such a thing, and don't see the absurd television, phone, and internet pricing as a real issue.

        • Re: (Score:3, Insightful)

          by Darby ( 84953 )

          It is well known that in some markets regulation is the only thing that keeps the market even remotely resembling a free market, rather than an oligarchy.

          This is not in some markets. This is absolutely true in every market. A "Free Market" can't possibly ever exist in reality. Approaching that theoretical ideal is the best we will ever be able to do in that arena. A completely unregulated market will always be far away from a free market.
          This is easy to prove absolutely.

          Want to win in a market without being

    • Here in Australia the government owns just about all the last-mile copper, and the only difference is the sucky local phone monopoly is nation-wide, and there is no sucky local cable monopoly.

    • Re: (Score:3, Interesting)

      by fuzzyfuzzyfungus ( 1223518 )
      It really comes down to the fact that last mile connectivity is pretty much a natural monopoly(not quite as severe as roads; but pretty much on par with water and power).

      For reasons that, I assume, have to do with a mixture of lobbying by incumbents and a strong distrust of "socialism" we've mostly been denying this fact for years.

      It is a simple matter of empirical fact that free markets work pretty well. However, when you are dealing with natural monopolies, free markets aren't really an option, so t

    • Re:This is one place local governments have failed (Score:4, Insightful)

      by Fumus ( 1258966 ) on Saturday April 18, 2009 @03:12PM (#27629469)

      Internet access is slowly becoming another "must have" commodity. And as with water, electricity, telephones (the landline type), mail, public transport, etc. They are simply best left to the government to finance. Or subside.

      If running water, electricity, or mail would be left only for big corporations to run, citizens of smaller (sub 10,000 people) cities would barely have running water.

      Consider mail. Do you really think the post office wants to deliver mail to everyone? If the recipient lives in an urban area and the postman gets an average of at least 5 letters per mile, then it isn't bad. But when someone lives in the middle of nowhere and the postman needs to travel five miles per letter, then it simply isn't profitable. Yet people would rebel if suddenly half of the country wouldn't be able to receive mail or have electricity.

    • Companies are building up without the monopoly benefit. Here where I live, Comcast cable is a fiber backbone with coax last mile system, and Verizon fiber to the premises (fiber backbone and last mile, coax and twisted pairs inside the house) is promised to be on the way in less than four years, although it's expected in two.

      Verizon's fiber is fast, but as half the customers get off of Comcast, that's more capacity for those who stay. Duopoly here we come.

      • what about all that tax money of yours that went to the telcos, long before Verizon came along, to lay fiber to your house? Where is the fiber? Where is the money?
    • but at the local level, cities and towns should have been building out the last mile of service instead of granting local monopolies.

      You are a councilman.

      In a city where 45% of your population are on Food Stamps.

      You can vote to raise sales and property taxes across the board to lay and maintain municipal fiber or you can let Comcast finance the project and collect a franchise fee.

  • Rough (Score:5, Insightful)

    by DirtyCanuck ( 1529753 ) on Saturday April 18, 2009 @02:39PM (#27629175)

    Lafayette, LA, Cox Cable $140 5 50

    Capitalism working for the consumer as usual.

  • Interesting... (Score:5, Interesting)

    by SkuzBuket ( 820246 ) on Saturday April 18, 2009 @02:40PM (#27629185)
    My first thought was that because the city owns the entire network, much of the reason for the low cost is self-explanatory. But then I imagined if a similar arrangement were formed in the US, I would be extremely surprised if the same prices were attained. Local governments would likely see this as a source of income and either charge a similar rate to competitors, or possibly undercut their neighbors by a narrow margin in order to appear generous and possibly gain a few extra votes for the incumbents. Does anybody know more particulars of this arrangement and local laws in the area? Is the portion of the Stockholm government that runs this program have any sort of "no-profit" legislation?

    • Re: (Score:3, Interesting)

      by j. andrew rogers ( 774820 )

      My first thought was that because the city owns the entire network, much of the reason for the low cost is self-explanatory. But then I imagined if a similar arrangement were formed in the US, I would be extremely surprised if the same prices were attained. Local governments would likely see this as a source of income and either charge a similar rate to competitors, or possibly undercut their neighbors by a narrow margin in order to appear generous and possibly gain a few extra votes for the incumbents.

      This

  • More like 80/20 (Score:5, Informative)

    by Anonymous Coward on Saturday April 18, 2009 @02:44PM (#27629229)

    I'm on the Stockholm network mentioned in the summary, and it's more like 80Mbps downlink and 20Mbps uplink in actual usable bandwidth. But I can live with it.

    • Re: (Score:3, Funny)

      by cyber-vandal ( 148830 )

      I could live with that too instead of 8Mbps/448Kbps I have here. Sweden has beautiful women and superfast porn pipes - truly it is paradise on earth.

  • Lack of profiteering (Score:5, Insightful)

    by topham ( 32406 ) on Saturday April 18, 2009 @02:44PM (#27629231) Homepage

    It's the lack of profiteering that keeps the price down.

    If you see communications as a service to be provided to your community; rather than something to be exploited for profit then the dynamics change drastically.

    • What is the upstream like? Something that seems popular in various contries is selling more or less a WAN type connection. What I mean is you sell a very fast conneciton to the person's home, however there isn't the kind of bandwidth to back that up at higher levels.

      Net effect is it ends up working kind of like a campus WAN. If you are on campus, you'll have probably 100mbit, maybe even gigabit to your desktop. You of course get those speeds to others in your building. However the building itself then has o

  • Why Is Connectivity So Cheap In Stockholm? (Score:5, Funny)

    by rts008 ( 812749 ) on Saturday April 18, 2009 @02:49PM (#27629261) Journal

    The Pirate Bay, of course!

  • Why's it so expensive everywhere else? (Score:5, Insightful)

    by Weedhopper ( 168515 ) on Saturday April 18, 2009 @02:55PM (#27629311)
    This is a prime example of the mistake people of any nation state thinking that any company, particularly one that's granted a local monopoly will in any way, shape or form act in the consumer's best interest.

    • Re: (Score:2)

      by Dunbal ( 464142 )

      This is a prime example of the mistake people of any nation state thinking that any company, particularly one that's granted a local monopoly will in any way, shape or form act in the consumer's best interest.

      It's not usually a mistake made by the people, but rather it's what gets voted for by political shills at every level of government, be it municipal or federal. They are bribed or coerced into thinking that the "free" market is the best system in the world, and they lack the intel

  • Must be nice (Score:2, Interesting)

    by code4fun ( 739014 )
    I don't think we'll see this in US. I work for a network equipment provider and we do xDSL and FTTH. Even when our customers deploy fiber technology, they still limit the pipe. With video becoming more prominent, they'll have to increase the bandwidth. However, the only advancement we'll see is if there were more players as opposed to only one or two choices.

  • Where do I turn to get this cheap connection?

  • Fiber in gas pipes? (Score:3, Interesting)

    by doronbc ( 1434117 ) on Saturday April 18, 2009 @03:16PM (#27629485)
    The U.S. should use an infrastructure already in place. Pipe fiber through residential gas lines. It's only light traveling across the line so it shouldn't ignite the fuel.

  • The way it should have been! (Score:3, Insightful)

    by macraig ( 621737 ) <mark.a.craig@gmail . c om> on Saturday April 18, 2009 @04:30PM (#27630203)

    This is exactly what I've been saying - to anyone that would listen, including the California Public Utilities Commission - should have happened in the United States. What sets the described situation completely apart from anything here is that the "people" collectively own the telecom infrastructure: the companies that built it were paid ad CONTRACTORS and not allowed to retain ownership of that common infrastructure.

    The sad thing is that there are other examples of that here in the U.S., like out public highway system; we paid the construction companies (through taxes) to build the roads, but the ownership remains in public hands.

    That is what SHOULD have happened with our entire telecom infrastructure, but we screwed up way back in the Eighteen Hundreds; we allowed American Telephone & Telegraph - remember them? - to build telegraph and telephone systems but keep ownership of it. That misperception is perhaps solely responsible for getting us in the mess we're in now here in the U.S. We actually had a chance to rectify this during the anti-trust proceedings against AT&T in the 1970s: we could have reclaimed the wires or forced the monopoly to become "nonprofit" similar to the USPS. What we did instead was to slice and dice the beast but let all the parts keep control of the wires in their new little fiefdoms.

    Forget all the breathless FUD about "socialism": common shared infrastructure SHOULD be publicly owned. The fact that Sweden is a nation with a marginally socialist economy is quite possibly irrelevent; what is relevant is that Sweden observed and learned a bit from our mistake.

  • Wrong summary (Score:5, Informative)

    by denoir ( 960304 ) on Saturday April 18, 2009 @06:39PM (#27631421)
    Stockab has fibers connected to municipal housing. That's about 20% of all fiber, and they cost more as both ISP and stockab get paid. The reason why it's so cheap is because of fierce competition between the different broadband providers. There was zero regulation and great tax benefits during the IT-boom era which led to a large number of broadband providers. That made a huge difference.

    I pay (in Stockholm) about $7/month for a 100 Mbit connection and that's through privately owned fiber, not the municipal one. It also varies from city to city. In the case of Västerås (another Swedish city) they did actually build a full municipal fiber network and through laws and regulations made it a monopoly (the fibers, not the service). Prices there are about $30-40/month for a 20 Mbit connection.

  • Nonsense (Score:5, Informative)

    by Skitsnack ( 1535783 ) on Saturday April 18, 2009 @09:43PM (#27632719)
    I live in Stockholm, please tell me where I can sign up for a 100Mb/s connection for $11/month. The blog post is pure nonsense. The uplink speed is not really that interesting. Sure you can get a connection with that kind of uplink but how does that differ from a 1Gb/s service? Hell I can sell you a 10Gb/s service for 12$/month. It won't connect anywhere but it will give you a really cool uplink and you will a nice 10Gb/s to all my other customers in your appartment.

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