Why There Are So Few ISP Start-Ups In the U.S.

An anonymous reader writes "Despite whispers of growing dissatisfaction among consumers, there are still very few ISP start-ups popping up in communities all over the U.S. There are two main reasons for this: up-front costs and legal obstacles. The first reason discourages anyone who doesn't have Google's investors or the local government financially supporting them from even getting a toe in the business. 'Financial analysts last year estimated that Google had to spend $84 million to build a fiber network that passed 149,000 homes in Kansas City, with the cost per home at $500 to $674.' The second reason will keep any new start-up defending itself in court against frivolous lawsuits incumbent ISP providers have been known to file to bleed the newcomers dry in legal fees. There are also ISP lobbyists working to pass laws that prevent local governments from either entering the ISP market themselves or partnering with private companies to provide ISP alternatives. Given these set-backs and growing dissatisfaction with the status quo, one has to wonder how long before the U.S. recognizes the internet as a utility and passes laws and regulations accordingly."

Ah, Crony-Capitalism!

[BlueStrat]

Where government creates regulations and laws to favor "connected" businesses and interests. That's how the established ISPs have come to have so much power.

."..one has to wonder how long before the U.S. recognizes the internet as a utility and passes laws and regulations accordingly."

Now the author of TFS thinks *more* laws & regulations from the *same* crooks that have intentionally worked long and hard to *create* this situation are suddenly going to help!?

If there's enough crap stirred up to occupy the news cycle for more than a day or two, they'll do what they always do. Put together some Bill with a great-sounding name and at a quick glance looks good, but there will be sub-clauses and sub-paragraphs buried deep in the weeds of the Bill that actually make things *worse*.

Hmm, on second thought, where did I put that property title to that bridge? I may have found a prospect!

Strat

Address exhaustion

[Anonymous Coward]

Address exhaustion means all new entrants are locked out anyway. To become a major US ISP you would need to control several /8s worth of IPv4 address space. There is no longer enough unallocated space to grant that to a new company. So the only way, regardless of other considerations, to become a big ISP is to buy an existing big ISP.

The same is true in Europe. You cannot build a new European ISP, because you would need a sizeable network allocation and they're all gone. As a new entrant you would receive roughly the address space needed to run your data centre, leaving nothing for customers. And that's it, forever. Could you buy what you need on the "open" market? Sure, buy from your competitors at a price they specify, that sounds like it would definitely work...

Different views on a free market

[staalmannen]

I often see to very different views on the concept of a free market. One is "free from intervention" and is producer-focused, which often leads to one or a few domninant players due to network effects and/or scale advantages. The second one can be interpreted as "optimal competition" and is consumer-focused, where regulations (antitrust, enforced standards, consumer protection etc) try to make sure that the consumer always has a choice and that a market can not stagnate into its stable state of one or a few dominant players. I think the telecom market in the US vs EU (and probably most of the world) is a good example. In most places, the government has mandated a single standard (for example GSM) and rules for roaming on a network. This has led to a big market of small service providers on a few networks (there is for example stiff competition on prepaid SIMs). What I have understood from the US, differing standards between the providers coupled with a subsidized payment plan for the phone effectively causes a lock-in situation for the consumer. I am definitely leaning in favour of the "optimal competition" interpretation of a free market (how can a market be free if the consumer does not have a choice?).

You people are so ignorant...

[Karmashock]

All these idiot posts about how its the market that is constraining ISP development.

Never mind that it is a heavily regulated industry that is very hard to launch on a small scale despite logistically being very easy.

What drives the costs up are the pole fees. They're way too high.

Sell the poles to a co-op. And then let that co-op spread the cost of maintaining the poles around its members.

This should not be under the control of the cities. They just see it as a revenue making opportunity. And that attitude keeps the cost of using the poles high.

Sell it to a co-op. Then we can all use the poles/pipeline for anything.

You could have tiny mom and pop ISPs. That would be in everyone's interest except for the big telecoms.

Re:You people are so ignorant...

[Karmashock]

And that's fine. But at least recognize what the problem is instead of hairing off in a dozen retarded directions that have NOTHING to do with the problem.

Then if people ACTUALLY care they can have an ACTUAL discussion about the ACTUAL problem.

It doesn't stop at ISPs. Its a big deal with power companies as well. Take your monthly power bill. Do you know that a big chunk of that is a connection fee? Same deal as with the ISPs. Lets say you've got a big solar array on the top your house and you actually don't use any net power. Guess what... Local utility still wants a connection fee. And that connection fee is set by the cities and counties. Not by what it actually costs but by what they change YOU.

All of this needs to get sold to a series of non-profit co-ops. They need to not turn into huge organizations or they'll get corrupt. Keep them small and problems will be local problems and corrupt leadership will be replacable.

Let it get huge and you'll get some national political cartel in charge of it all and they'll just rape it like its already being raped.

Re:Regulate last mile

[gnupun]

But utilities are upgraded at a very slow pace because the govt regulates how much profit a utility company can make, putting brakes on innovation. With the internet, we want to replace/upgrade everything every 10 to 15 years and that is not possible if the internet is classified as a utility.

Utilities are fine for phone and electricity because they are mature technologies that don't change much year-to-year.

Re:Loser Pay Legislation

[Lumpy]

Except it makes it even easier to bully people in court.

I crash my car into your house, I then show up with 500 lawyers and sue you for 22.2 million dollars for building your house in my way. you are looking at $10 million if you lose, How about we settle out of court for $150,000 instead? you cave in because your lawyer states that I can bleed you dry in legal fees and you really should take the settlement.

It already happens today, but now I can financially MURDER you easier. What is needed is a LIMIT or CAP on legal fees that can be spent in a court case to 10% of the lowest income persons total income, so if AT&T sues you, they cant spend more than 10% of your income, thus keeping them from bleeding you dry.

There may be a way

[DaMattster]

To become a small town ISP by providing longer range WiFi and deploying it in the 5GHZ or 24GHZ spectrums. Ubiquity makes very reliable equipment to make this happen and if the area is terrain-friendly, it certainly is possible. To build out a high speed, broadband wired infrastructure is nearly impossible with the government and regulatory issues alone. Ever notice how the large telecom corporations wine about free markets when bills are introduced that don't favor them but when the legal winds are in their favor, it is "fuck free markets, we want to own it!"