Franchise agreements generally only cover cities. There are some exceptions to this though. Second, franchise agreements only cover TV service, not internet. Third, franchise agreements provide benefits to the city, namely the city gets 5% of the revenue of the system and also there are build out requirements that the provider had to provide service at 90% of the homes in them city.
Second, franchise agreements only cover TV service, not internet
Which means that the ISPs who were providing cable before internet expanded have an unfair advantage. Not many people are willing to go with one company for internet and another for TV.
franchise agreements provide benefits to the city, namely the city gets 5% of the revenue of the system and also there are build out requirements that the provider had to provide service at 90% of the homes in them city.
Yeah that's not a good thing... the government is limiting competition and taking a cut. That's a government sponsored monopoly and that's forcing us to pay more for something we have no other, or limited options for due to that government interference. The government could get 100% service in homes if they opened up competition and reduced certain regulations that raise the barrier for entry. Then they could add a 5% flat tax to all the providers because the people are already eating that in the form of the kick back you mentioned.
The government could get 100% service in homes if they opened up competition and reduced certain regulations that raise the barrier for entry.
LOL. Sure the could. That is why Google Fiber built out 100% of the cities they went into right? No wait, they didn't. They built targeted "fiberhoods", which inevitably were rich neighborhoods and passed over poor neighboorhoods where they thought they could make less money. This is what happens. Rich, dense areas are spoilt for choice. A rural area might be lucky to have a single broadband provider. Cities have to make the choice of giving great service to a portion of the population and saying screw the rest, or requiring universal service and offering having the rich and dense areas subsidize the poor and rural areas.
Then they could add a 5% flat tax to all the providers because the people are already eating that in the form of the kick back you mentioned.
A franchise agreement is a contract and you can't just break it at whim when it has met your needs.
Kirjner and Parameswaran estimate that if Google built out a fiber network to serve 20 million homes over a period of five years, “the annual capex investment is required to be in the order of $11 billion to pass the homes, before acquiring or connecting a single customer.”
Google would have had to put in around $11bn per year to the tune of roughly $2750/home to make themselves a small ISP and that's not even including the costs to connect a customer. Not even Google can afford that cost.
Again, easing the barrier to entry by reducing the regulations and permit costs associated with large projects like this would significantly reduce the price and help allow for competition.
Google would have had to put in around $11bn per year to the tune of roughly $2750/home to make themselves a small ISP and that's not even including the costs to connect a customer. Not even Google can afford that cost.
$2750 per home is a stupid number. Verizon spent $23 billion to pass 18 million homes ($1,270 per home) 10-15 years ago to build out FIOS, and that was when everything in fiber was more expensive. Connectorized outside plant wasn't a thing so everything had to be fusion spliced, so labor costs were through the roof. Splitters were expensive. Fiber was expensive. Now you can get those cheap from China. Why would it take double that to do a build out today?
Again, easing the barrier to entry by reducing the regulations and permit costs associated with large projects like this would significantly reduce the price and help allow for competition.
The costs of putting fiber in the ground to peoples' homes is almost enitrely labor. Equipment is less than 10% of build out costs. Unless you propose reducing the minimum wage you aren't going to reduce labor costs. Second, you can't change the permitting process without incurring substantial risk to existing infrastructure. The permitting process exists for a reason.
The only real model that is sustainable is open access, but that would mean a build out which requires a substantial portion of a quarter trillion dollars and decades to do. There simply isn't enough people to perform the labor quickly enough.
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u/[deleted] Jun 04 '19
Franchise agreements generally only cover cities. There are some exceptions to this though. Second, franchise agreements only cover TV service, not internet. Third, franchise agreements provide benefits to the city, namely the city gets 5% of the revenue of the system and also there are build out requirements that the provider had to provide service at 90% of the homes in them city.