Charter Charges More Money For Slower Internet On Streets With No Competition (arstechnica.com) 100
An anonymous reader quotes a report from Ars Technica: [According to an article yesterday by Stop the Gap] Charter charges $20 more per month for slower speeds on the street where it faces no serious competition. When customers in two areas purchase the same speeds, the customer on the street without competition could have to pay $40 more per month and would have their promotional rates expire after only one year instead of two. [...] "Charter's offers are address-sensitive," Stop the Cap founder Phillip Dampier wrote. "The cable company knows its competition and almost exactly where those competitors offer service. That is why the company asks for your service address before it quotes you pricing."
Dampier found that Charter offers 200Mbps service for $50 a month "[i]n neighborhoods where Spectrum enjoys a broadband monopoly." Charter charges $70 for 400Mbps service in those same competition-free neighborhoods. But "[j]ust one street away, where Greenlight offers customers the option of gigabit speed over a fiber-to-the-home network, Spectrum's promotional prices are quite different," Dampier wrote. On the competitive street, Charter charges only $30 a month for the same 400Mbps service that costs $70 nearby. As previously noted, customers on the noncompetitive street have to pay $50 for 200Mbps. "Spectrum does not even bother offering new customers its entry-level 200Mbps plan in areas where it has significant fiber competition," Dampier noted, referring to the promotional offers that pop up when you type in an address. "For $20 less per month, you get double that speed." For gigabit-download service, Charter charges $90 a month on the competitive street versus $110 on the noncompetitive street. These are the base prices without fees and taxes.
Charter also offers to lock in the monthly rate for two years in the competitive area, compared to just one year in the noncompetitive area. And that's not all. Charter "charges a hefty $199.99 compulsory installation fee for gigabit service in noncompetitive neighborhoods. Where fiber competition exists, sometimes just a street away, that installation fee plummets to just $49.99," Dampier wrote. He added: "Note similar pricing variability exists in Spectrum service areas around the country, with the most aggressively priced offers reserved for addresses also served by a fiber-to-the-home provider or multiple competitors (e.g., cable company, phone company, Google Fiber or other [competitor]). Current customers typically have to cancel existing service and sign up as a new customer to get these prices." In a statement to Ars, Charter said that "Spectrum Internet retail prices, speeds, and features are consistent in each market -- regardless of the competitive environment." But, as Ars notes, "retail prices" are the standard rates customers pay after promotional rates expire. Stop the Cap showed that Charter's promotional rates vary between competitive and noncompetitive areas.
Dampier found that Charter offers 200Mbps service for $50 a month "[i]n neighborhoods where Spectrum enjoys a broadband monopoly." Charter charges $70 for 400Mbps service in those same competition-free neighborhoods. But "[j]ust one street away, where Greenlight offers customers the option of gigabit speed over a fiber-to-the-home network, Spectrum's promotional prices are quite different," Dampier wrote. On the competitive street, Charter charges only $30 a month for the same 400Mbps service that costs $70 nearby. As previously noted, customers on the noncompetitive street have to pay $50 for 200Mbps. "Spectrum does not even bother offering new customers its entry-level 200Mbps plan in areas where it has significant fiber competition," Dampier noted, referring to the promotional offers that pop up when you type in an address. "For $20 less per month, you get double that speed." For gigabit-download service, Charter charges $90 a month on the competitive street versus $110 on the noncompetitive street. These are the base prices without fees and taxes.
Charter also offers to lock in the monthly rate for two years in the competitive area, compared to just one year in the noncompetitive area. And that's not all. Charter "charges a hefty $199.99 compulsory installation fee for gigabit service in noncompetitive neighborhoods. Where fiber competition exists, sometimes just a street away, that installation fee plummets to just $49.99," Dampier wrote. He added: "Note similar pricing variability exists in Spectrum service areas around the country, with the most aggressively priced offers reserved for addresses also served by a fiber-to-the-home provider or multiple competitors (e.g., cable company, phone company, Google Fiber or other [competitor]). Current customers typically have to cancel existing service and sign up as a new customer to get these prices." In a statement to Ars, Charter said that "Spectrum Internet retail prices, speeds, and features are consistent in each market -- regardless of the competitive environment." But, as Ars notes, "retail prices" are the standard rates customers pay after promotional rates expire. Stop the Cap showed that Charter's promotional rates vary between competitive and noncompetitive areas.
FCC Maps. (Score:5, Informative)
In other words service maps are fine-grained enough to engage this behavior.
Re: FCC Maps. (Score:4, Informative)
Service area maps are very precise, and yes, when one street is on the boundary, the next street over is another service area. I don't understand why this confuses people. Municipal boundaries are the same way - property taxes on one street may be significantly higher than for the next street over when the two are divided by a boundary. Kids on one street may attend a significantly better/worse school than the kids one block over who attend a different school.
The purpose of a boundary is to separate defined areas.
Why would one street have competition and the next street over May not? Well, perhaps they are located in different cities. Perhaps one neighborhood is full if 40 year-old homes and TBE next street over us new construction.
Internet/cable service is not statewide, it is overseen at the local level, subject to local laws and regulations. And finally, yes, when faced with competition, providers adjust prices to win over customers, where no competition exists, there is little pressure to lower prices.
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Service area maps are very precise, and yes, when one street is on the boundary, the next street over is another service area. I don't understand why this confuses people. Municipal boundaries are the same way - property taxes on one street may be significantly higher than for the next street over when the two are divided by a boundary. Kids on one street may attend a significantly better/worse school than the kids one block over who attend a different school.
The purpose of a boundary is to separate defined areas.
Why would one street have competition and the next street over May not? Well, perhaps they are located in different cities. Perhaps one neighborhood is full if 40 year-old homes and TBE next street over us new construction.
Internet/cable service is not statewide, it is overseen at the local level, subject to local laws and regulations. And finally, yes, when faced with competition, providers adjust prices to win over customers, where no competition exists, there is little pressure to lower prices.
In Montreal and most of Canada, in urban areas, speeds are close to fibre capability. I download a 2.5gig file in about 8 minutes. I am not sure of the bit rate, but it is certainly double of what Charter provides. The government wants rural and urban speeds to be double of what we have, given the tendency of many more "work from home" employees,
ya. so? (Score:1, Insightful)
isnt that how competition works? You see a chance to gain market share by artificially lowering your price below that of your competitor for a short time to snag the contract? This benefits the customer (assuming comparable products) and the company doing the marketing. The price is $50 everywhere. But if there is a competitor they temporarily lower to $30 for years 1-2. The term loss leader must be foreign to the author.
Re:ya. so? (Score:5, Insightful)
Unfortunately, if there is no competition, then you get gouged by not having the same deal available that potentially your neighbor across the back fence just got. And that's the beef here.
SpaceX needs to keep launching StarLink satellites so that these motherfuckers have competition EVERYWHERE.
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SpaceX needs to keep launching StarLink satellites so that these motherfuckers have competition EVERYWHERE.
Why do people keep saying this?
"I want to be clear, it's not like Starlink is some huge threat to telcos. I want to be super clear it is not," Musk said. "In fact, it will be helpful to telcos because Starlink will serve the hardest-to-serve customers that telcos otherwise have trouble doing with landlines or even with... cell towers." [arstechnica.com]
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Yeah, I forgot where having options is terrible.
You know that the places where Charter is able to do this is more than likely out in semi-rural areas where there are not more than one provider, right? You know, exactly where StarLink makes sense?
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Not starlink, but wireless in general is now a viable option. T-mobile is kicking ass and taking names in this regard; they're directly competing with fixed line broadband and they're expanding like hell. T-mobile doesn't even have data overages, unlike the cable cos (including cox, who charges data overages even for fiber.)
Re: ya. so? (Score:2)
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I didn't know you could even get fiber that slow. Makes me wonder if they're just throttling your connection to segment the market.
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Re: ya. so? (Score:2)
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Because if a telco can limit something, they WILL limit that thing. That is their entire business model.
People are used to having asynchronous tx / rx speeds now, so they're just playing along to create artificial scarcity.
Re: ya. so? (Score:2)
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Its physically not possible to actually pull that much without stacking multiple download streams.
I hope you're not suggesting that's an unrealistic scenario. Not that I actually need 1000 or anything. I'd be happy with the 150 I have now if it were consistent and had good latency.
Re: ya. so? (Score:2)
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The solution is competition. Not cuthroat competition, but competition. Maybe $50 is too much and $30 is too cheap? Choice is always good for a consumer because it forces the supplier to always innovate. I pay $65/mo for 200x200 fiber and static ip. I honestly dont find it excessive nor do I pine for 1gig x 1gig. With 200mbps I can still stream 8 simultaneous 4k streams and host a zoom call. I have only 1 4k screen. Updates to devices are limited more by the far end than my total available bandwidth. As long as my latency is still only 3ms I see no reason to spend more.
Competition indeed! Spectrum gradually raised my 20Mbi connection price to $40/mo by repeatedly using the "your promotion has expired" scam. With no competition my choice was $60/m for a 40Mbi connection. Then, within the space of two months, Jan and Feb, they sent me TWO scam letters. The first said my new price would be $75/m for 40Mbi and the second said my price would be $120/m for 40Mbi. Spectrum was the only game in town but a new optical fiber company was laying glass and I anticipated they
Re:ya. so? (Score:5, Interesting)
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On the other hand, cities tend to be cheaper to wire than BFE, since the number of homes passed per linear km of cable is MUCH higher, and thus the amortized cost per home is much lower (unless you live somewhere where the city is big on graft and have the kiss the ring before you're allowed to do business--but I'd argue that's for the people living there to deal with).
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Starlink is never going to provide strong competition in cities. Or if it does, the night sky will be unrecognizable, because it will have to be blanketed with low orbit satellites. Municipal broadband is a far better solution.
Re: ya. so? (Score:1)
Your neighbor across the street is in another service area - perhaps a newer neighborhood than yours, perhaps in the next city/municipal area. There's a reason your neighbor has competition and you don't, identify the reason and adjust accordingly.
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Oh, so I should only move, or start my own telco in order to "adjust accordingly" then?
Super helpful to people that are getting gouged for hundreds of dollars per year.
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Too bad you don't know what a loss leader is.
It's not when you have low introductory pricing.
It's when you price something low, potentially below cost, to get people "in the door" (real or virtual) — where they are likely to buy other products at full price.
If you're not lowering the price to induce sales of other products, it's not a loss leader.
Re: ya. so? (Score:2)
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while you are technically correct (the best kind of correct), the loss leader in this case is the cheaper year 1-2 service with the hope of you buying the year 3 service at full price. its a stretch but not a big enough one that Id feel obligated to correct someone that used it in this manner.
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Yep, works perfectly.
Look out for your local charter provider actively campaigning and lobbying to PREVENT any competition on that street, or any others like it, or have engineers disconnect/damage competitors equipment in cabinets.
Because Americans - you guys rock.
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it belies a number of boilerplate industry arguments against net neutrality; that's why this is a big deal to nerds
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Yea, I'm assuming - nay, asserting - that those are vaporous strawman excuses that might at best apply to a tiny fraction of the real world scenarios, all of which came overdue decades past.
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have his neighbor piggyback off his connection, and split the cost.
This arrangement is common but illegal.
You are unlikely to get in much trouble even if you get caught, but you could be in serious trouble if your neighbor is downloading kiddie porn or selling plutonium on TOR.
Re: ya. so? (Score:2)
Depends whose name is on the bill.
Re:ya. so? (Score:4, Informative)
isnt that how competition works?
Don't like it, you're perfectly free to string up your own wires on the poles and compete.
Except you're not.
I'm all for free markets, but this is a publicly funded monopoly.
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Don't like it, you're perfectly free to string up your own wires on the poles and compete.
Except you're not.
But you should be. There should be a single public conduit, say a buried 8-inch PVC pipe, that any bonded company can pull cable through.
We don't expect every delivery company to construct their own roads, nor should we expect every ISP to dig another trench.
Trenching is 90% of the cost of new installations, so eliminating that barrier would make the market much more competitive.
Re: ya. so? (Score:3)
The barrier to such things are typically your local politicians, not the mean cable companies - they'd be happy to outsource drenching and having shared conduit thru out a city, especially if you can get someone else to pay for it.
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I'd be happy if local politicians keep not paying for 'drenching', we're getting soaked by Comcast as it is.
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And a public cable too that goes to a central point where any service provider can access the cable to your house.
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Don't like it, you're perfectly free to string up your own wires on the poles and compete.
Except you're not.
I'm all for free markets, but this is a publicly funded monopoly.
The monopoly is on electrical service. They own the poles.
There were cable TV monopolies in the 1980s-2000s, but all of them have expired by now. Even if cable TV monopolies still existed, that isn't internet service.
If you want to become your own ISP, the electric company is required to lease space on the poles to you in most jurisdictions.
However, you will now run into the natural monopoly caused by the cost of rolling out your new service. The existing cable and phone companies already paid for that,
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They own the poles.
Varies a lot. There are some companies that own nothing but poles and lease space on them to the electrical/cable/phone companies. Some land owners own the poles that cross their properties, Some cable companies own the poles and lease space to the electric companies. Some municipalities own the poles. The same goes for conduits. There are more variations, the utility that I worked at had a department of 8 people just to keep track of that in the single county they operated in.
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Every deed in my county has a perpetual easement for the power and phone company to do anything they want to do. This was set up in the 1950's I believe and somehow Adelphia got rights to use the easement. Then Comcast, the parasites that they are, bought Adelphia ~20 years and have proceeded to do absolutely nothing for additional rollout yet continually increase prices.
Re: ya. so? (Score:2)
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They are also a set of anti-gauging laws on the books too. Cases where there is either a temporary and rather local spike in demand, or drop in supply. The normal Economics Law of Supply and Demand, say this will cause the price to go up. However they put laws on the books to curb the behavior of changing prices.
This is done because Gauging will give the Seller a minor bump revenue, however the wider customer base would be greatly hurt from paying emergency prices.
If you are a local monopoly, S&D wi
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This is done because Gauging will give the Seller a minor bump revenue, however the wider customer base would be greatly hurt from paying emergency prices.
Price increases in a shortage benefit almost everyone. They ensure people don't buy more than they need, leaving supply available for others. Without price increases people stock up "just in case" and shelves are bare for anyone arriving later. They also send a signal that more supply is needed, so it can be diverted from other places that have plenty. Without the price increase there's little incentive to do that.
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The word is 'gouging'. And it has a specific meaning, and that meaning is not 'the price of something went up' or 'I don't like the price'. For instance, New York defines price gouging as 'raising the prices of goods or services vital to the health, safety, and welfare of the public to an unconscionably excessive price during an abnormal disruption of the market'.
Quadrupling the price of food in the aftermath of a severe storm may be price gouging. An ISP charging diifferent customers different rates is
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Have a look at Europe where free choice reigns for internet and people have true choices for low prices. I live in a village and have unlimited internet for 30€/month. We have that freedom because regulators prohibit the evil practices that victimize most Americans.
Governments should work for the peopl
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Comparing monthly rates like that is a fool's game that only a fool would do. The rates tell you absolutely NOTHING about 'being victimized'. A way that actually makes sense is to look at the net margins of the companies involved. This is about Charter, so we will look at them. Except for a few outlier quarters (which were obviously the result of either mergers and acquisitions or special charges), their net margin is generally in the low single digits. That is hardly 'vicitmization' territory. I woul
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Part of the reason is that in the EU corporate executive pay isn't insanely out of control like in the US, nor do they have the huge internal middle-management bureaucracy that US companies tend to accumulate.
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Uh, yeah. OK. Let's see, Charter's top 5 executives had a total of $105M compensation. Charter had $43.6B revenue. Executive pay is 0.25% of revenue. If they eliminated the pay for those 5 executives, my $75 internet bill would plunge all the way down to $74.81.
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What's the title of the article: "A Tale of Two Homes in Spectrum Territory: What Competition Does to Pricing"
What's it about: "Competition is a wonderful thing. A case in point is the enormous difference Charter Spectrum charges new customers in areas where competition exists, and where it does not."
You can stop the Chart dick sucking now.
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"isnt that how competition works? You see a chance to fuck over your customers
FTFY
Re: ya. so? (Score:1)
Business Idea! (Score:2)
2. Set up a chain of wifi repeaters and boosters and carry the signal to some adjacent street without competition
3. ... ?
4. Profit!!
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I am impacted by this, and I considered setting up an ISP to address it. But, in the end even if I could get 40 customers there is only a $10k delta per year, and I could barely pay for the upstream bandwidth.
The irony is the incumbent telco’s central office is 1,000 feet away from me, and its power actually comes from my street.
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It might appear to be very easy to mess with their power supply. Back in college you might have heard of freshmen students throwing bicycle chains over the overhead wires and shorting them out, the night before a big examn. Then plead with the profs, "But, Dr D'Minus Awarder , there was a power failure in the dorms, none of us could not prepare, Sir, please ... " and be tempted to something like that and send ranso
Cox (Score:2)
Cox has been doing this for years, if you peruse dslreports you'll find plenty of people complaining about exactly this.
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This isn't new (Score:2)
Re: This isn't new (Score:2)
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After the hue and cry of the 1990s-early 2000s where the DSL proponents were so adamant about the "superiority" of the technology, watching HFC scale into the gigabits with minimal cable plant upgrades on the part of the carriers while DSL languishes has been quite amusing.
Re: This isn't new (Score:2)
Different rates in different service areas? Those bastards!
They likely spin it more like... (Score:2)
We charge less on streets with competitors.
Re: They likely spin it more like... (Score:2)
Standard operating procedure: (Score:5, Informative)
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That old you may remember when ISDN was a thing. The last time there was competition. Now it's 5G this, and 5G that.
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That old you may remember when ISDN was a thing
Consumer BRI was never a real thing in the US--it was overpriced and almost entirely un-marketed by the carriers. You could find BRIs more easily on the commercial side, but it was still overpriced and the Bells were far more interested in selling DS1s or some number of DID/CO trunks. Even fractional PRIs were FAR more common than BRIs.
Re: Standard operating procedure: (Score:2)
Other differences (Score:2)
The author found a correlation between competition and lower rates. Did he consider other factors, like rural versus urban, ease of installation, zoning, etc? I'm guessing not, since he didn't mention any of that stuff. It's also possible that competition means some people are getting an especially good price rather than the other way around.
As you have read here many times: Correlation does not imply Causation
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Did he consider other factors, like rural versus urban, ease of installation, zoning, etc?
If I understand right, we're talking about different streets in the same town/city. So there is a border where there is competition on one side and none on the other, and people on one side of the street are charged a different price. I don't see how any of the factors you mention could be an issue.
Distorted definitions are screwing us (Score:3)
First we sit here and watch companies become absolute Too Big To Fail behemoths, and we ignorantly play legal games and refuse to call that a monopoly.
And now we find that ISPs are pulling this kind of shit, and we refuse to call it price gouging? How much longer are we going to delude ourselves and allow Greed to rape definitions and create the inevitable?
We justified these anti-competitive laws for a damn good reason. Perhaps it's time we stop ignoring them before the planet is reduced to a dozen multi-trillion dollar (not) monopolies with enough power to manipulate entire countries and industries.
This really isn't anything unusual though... (Score:2)
When I lived in a small town in Maryland, all the gas stations charged me at least 20-30 cents a gallon more for gas than it cost only 20 minutes away, in a larger city. Is that price-gouging, or is that just the reality that they're going to charge me more when there's less competition and when they have to pay more for fuel delivery?
Charter could reasonably argue they're trying to charge a standard rate for service but were forced to discount it where competitors popped up with offerings that made them a
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Re: Charter (Score:2)
Ok... so you're all about bashing any company you think costs more than you'd like to pay for their service, whatever the situation? Got it!
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The bullshit here is more the idea that it's a "monopoly" every time a company invests huge $'s for infrastructure for a service that others aren't so motivated or financially able to roll out in tandem.
I've said for a LONG time that if you really wanted to compete with the existing broadband "overlords" (generally your cable company and telcos), you just need to devise systems that move the information over other pathways. There were people talking about such things as broadband over water pipes or electr
So Does Telus In Canada (Score:3)
I can name that solution in four words: (Score:3)
Make internet a utility.
Until we do, companies will price gouge all they want. The lucky few will live in an area with true competition and decent rates. Most everyone else will have to suffer paying too much money for not enough internet. But if we were to make it a utility, then all that ridiculousness goes away.
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But if we were to make [Internet service] a utility, then all that ridiculousness goes away.
You are absolutely right. I know this because I've experienced it first-hand. I had Mediacom for Internet access for a couple years (after dumping AT&T's crappy U-Verse). My local utility company recently buried fiber throughout the entire city (and some nearby areas outside the city), and opened it up to ISP's to provide service. Quantum Fiber (a division of CenturyLink) is the first ISP to offer service.
When I had Mediacom, I got 100mb down and 20mb up, with a 1TB cap for $75/month. When I got close t
Re: I can name that solution in four words: (Score:1)
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Competition (Score:2)
My dad's cable price collapsed and channels exploded when a competitor moved in as an experiment in his little city, decades ago.
Competition works.
"Yeah!"
Remember that, by the way, the next time the echo chamber tells you Uber is awful...just awful.
"No!"
So what? (Score:1)
"The Goal" (Score:2)
Streets (Score:2)
Public streets. Where utilities have to pay a franchise fee to install their gear. Why not charge a fixed fee per customer along a street? To be split between the service providers. If your company is the only one there, you pay the whole thing.
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If their company is the only one, you pay the whole thing.
Questionable collusion (Score:1)
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Yep, but they don't really care because they're careful not to let any documentation to that effect escape into the wild. The insurance companies do the exact same thing.
Two Words - Municipal Internet (Score:1)
Yay capitalism! (Score:1)