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pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma

If providing service was profitable AT&T wouldn't leave

If providing service in Kentucky were profitable, AT&T wouldn't want to leave. There is often a duopoly in most areas for wired Internet. Usually a telephone company and a cable company. Of the two, it is probably easier to be a cable operator.

We need to better understand the economic decisions AT&T or Verizon make. Assuming AT&T wants out, and it is profitable to provide service to Kentucky, shouldn't another company be ready to move in?
--
Congress could mess up a one piece jigsaw puzzle.

axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

1 recommendation

Selling LTE is *more* profitable. Getting cheap spectrum from the cable co in exchange for virtual monopoly is more profitable . Why have 5% margin when you can have 50%.

Groups like Frontier have tried to take over that 5% margin and haven't made it work.

pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma

2 recommendations

said by axus:

Selling LTE is *more* profitable. Getting cheap spectrum from the cable co in exchange for virtual monopoly is more profitable . Why have 5% margin when you can have 50%.

Groups like Frontier have tried to take over that 5% margin and haven't made it work.

Great, head to Kentucky and start stringing wire or fiber optics. See how many you can string up before a cop inquires about the new "service" you are going to offer.

The state of regulation regarding Internet in this country is a total mess. Unless and until we undo the national, state and local mindset that there can only be one cable and one telephone company serving a geographic area and until we deregulate so the barrier to entry isn't high, there will be no competition.

Did you ever visit the FCC site or the Kentucky regulatory site, and view the thousands of pages of regulations a cable to telephone company has to comply with?

If you assume control over a geographic area, ALL within that area must be covered, in Kentucky any new telephone service must be connected if it is within 750 feet of an existing telephone pole. How profitable will it be to run 5-7 poles to one house if they will pay the low $25 rates we read about in Hong Kong. What about maintenance of poles, or damage during natural events. Even pruning of trees can become expensive.

I'm a big supporter of competition. However many are not. They like the idea of competition, within the current regulatory framework.

Competition means there will be winners and losers, that some will have many Internet or phone choices, others will have none. For the most part, most on this forum, like all the mandates. They just don't like paying for them.
--
Congress could mess up a one piece jigsaw puzzle.

dlsauers

join:2005-10-25
Wellston, OH
reply to pandora
said by pandora:
If providing service in Kentucky were profitable, AT&T wouldn't want to leave. There is often a duopoly in most areas for wired Internet. Usually a telephone company and a cable company. Of the two, it is probably easier to be a cable operator.

Maybe in the *URBAN* areas of KY, OH, WV, and just about every other mixed state... but unless you been to and lived/live in those areas... there is NO DUOPOLY.. outside the urban areas. theres POTS and if your really lucky you can get DSL in these areas. Crapble ends most of the time the next hawla over and there is NO PLANS for expansion, unless YOUR PAYING for it, upfront and in cash.

VZ has already sold out most of these rural areas to frontier, especially the GTE areas..

My area is a prime example... go outside the few little urbanized "towns" and you get POTS and DSL available if your REALLY LUCKY, and crapble never was available, and no plans to expand.

pandora
Premium
join:2001-06-01
Outland
kudos:2
Reviews:
·ooma

1 recommendation

said by dlsauers:



Maybe in the *URBAN* areas of KY, OH, WV, and just about every other mixed state... but unless you been to and lived/live in those areas... there is NO DUOPOLY.. outside the urban areas. theres POTS and if your really lucky you can get DSL in these areas. Crapble ends most of the time the next hawla over and there is NO PLANS for expansion, unless YOUR PAYING for it, upfront and in cash.

VZ has already sold out most of these rural areas to frontier, especially the GTE areas..

My area is a prime example... go outside the few little urbanized "towns" and you get POTS and DSL available if your REALLY LUCKY, and crapble never was available, and no plans to expand.

High density population and affluent areas without significant local regulation will almost always have better utility service than poor rural areas.

At multiple levels our government attempts to impose "fairness". Which means as near universal coverage as is possible.

There are great costs to government regulations, in time, litigation, and distraction from the core mission of providing service to new and existing customers.

If you live in a small community, contact your local utility commission and indicate your desire to provide low cost Internet to a few hundred homes nearby. Call your electric company and see if they own the poles, what they charge for pole connects.

In my state, a developer of a large complex tried to offer very low cost Internet within the complex, as a stand alone provider. He was shut down by our utility commission. Only authorized telco or cable companies can provide wired Internet service in Connecticut.

My guess is the rules are similar for most states.
--
Congress could mess up a one piece jigsaw puzzle.

elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
reply to axus
Why would any company chase a 5% margin (if that)?

Historically, notes, insurance, and government securities have paid in that same range without any overhead or real risk, recent government-induced banking nonsense not withstanding.

For investors to risk their capital, there has to be some potential, some perception, some lure. 5% won't cut it.

This is why, historically, non-competitive markets were awarded regulated, monopoly franchises - so that the seller would be assured a guaranteed rate of return. That resulted in much higher prices, but service was available.

We probably should have a discussion on the merits of returning certain low-density markets to protected monopoly status for data and dialtone, which will include a surcharge on LTE use, but don't act surprised when the rates are substantially higher than urban areas.